Municipal Debt Counselling Decree

The ratio thereof is that rent debts are identified at the earliest possible stage, so that the municipality can offer assistance to the tenant in limiting and paying off the debt. This article discussed the reporting obligation of the landlord and the possible sanctions for non-compliance.

The reporting obligation

The Decree stipulates that when a landlord is confronted with rent arrears, he is obliged to report this to the municipality in which the rented property is located. However, a landlord cannot simply do so. He must first go through a so-called ‘social debt collection process’ before making the report. This process consists of four steps:

1. The landlord must personally contact the tenant to inform them of the rent arrears and how this can be prevented and payed off;
2. The landlord must inform the tenant about the possibilities of debt counselling from the municipality;
3. The landlord must then send the tenant at least one written reminder (i.e., summons) regarding the rent arrears; and
4. With that written reminder, the landlord must request the tenant’s consent to share their information with the municipal council providing debt counselling.

(Only) if the tenant does not respond negatively – meaning they do not respond or respond positively – is the landlord obligated to report the tenant’s contact information and the amount of rent arrears to the municipality.

No sanction

If the landlord fails to do this, the Decree does not stipulate a sanction. In principle, the landlord retains the option to seek termination of the lease agreement and eviction of the rented property in case of rent arrears. The rent arrears also remains due. However, case law indicates that judges do take into account the fact that the landlord has not followed the aforementioned steps and thus has not reported the debt when assessing a request for termination and eviction.

Some examples of sanctions by the court include:

• Rejection of the landlord’s claim for the tenant to be ordered to pay the legal costs;
• The absence of a report is taken into consideration in assessing the ‘unless’ rule of article 6:265 of the Dutch Civil Code. This article contains the measure for termination. It states that, in principle, any failure to fulfill an obligation under a (lease) agreement justifies its termination, unless the seriousness of the failure does not warrant termination. A judge may rule that the absence of a report makes the tenant’s failure – non-payment of rent – in that specific case not severe enough to warrant termination;
• The tenant is granted a so-called grace period. A grace period is a final term to fully pay off the rent arrears to prevent termination and eviction. A good example of this is the ruling of the Rotterdam Court dated January 13, 2023.

Rotterdam Court January 13, 2023

This case concerned a tenant renting a property for a monthly rent of € 824.35. The tenant had accrued rent arrears of €7,202.05, equivalent to over 8.5 months’ rent. The tenant fully acknowledged the rent arrears as well as their addiction which was the reason for the accrued rent debt. The landlord had initiated legal proceedings against the tenant, seeking termination and eviction, and payment of the rent arrears with additional costs.

The court ruled that the rent arrears were initially severe enough to justify termination of the lease agreement (pursuant to article 6:265 of the Dutch Civil Code). However, because the landlord had not complied with the Decree by failing to report the rent arrears to the municipality, the court granted the tenant a grace period of one month. The tenant was given the opportunity to pay the full rent arrears plus additional costs to prevent termination and eviction.

Although the Decree does not entail a sanction, non-compliance can therefore have significant consequences for a landlord.

Rotterdam Court Policy

Following the Decree, the Rotterdam Court recently published a policy as of March 1, 2024, under which it is stipulated that between reporting rent arrears to the municipality and initiating legal proceedings against the tenant due to rent arrears, at least two and a maximum of six months may elapse.

After reporting the debt, a landlord must wait at least two months before initiating legal proceedings against the tenant. They must, however, not wait too long; the summons must be served within six months after reporting. Failure to adhere to these deadlines will result in the Rotterdam Court rejecting the landlord’s claims for termination and eviction as per said policy.

Conclusion Municipal Debt Counselling Decree

Since January 1, 2021, all landlords of residential premises are obligated to report rent arrears to the municipality. While the Decree does not entail a sanction, case law shows that non-compliance with it in judicial proceedings can have significant consequences, potentially leading to rejection of claims in extreme cases.

More information

Are you confronted by a tenant who is not paying their rent? If you would like more information on municipal debt relief decisions or have a different dispute with your tenant. Please contact us for advice.