Temporary law to extend fixed-term leases: a solution for landlords and tenants during the corona crisis

With the emergency law “Tijdelijke wet verlenging tijdelijke huurovereenkomsten” (hereinafter: “The Emergency Act”), the Cabinet ensures that the landlord and tenant can extend a temporary lease in the corona era without far-reaching consequences.

The Emergency Act was unanimously adopted by the House of Representatives on April 16, 2020. In this blog, I will discuss the main points of attention for this law.

Fixed-term lease, less than two years

Since the introduction of the Rental Market Act on July 1, 2016, a new type of lease for housing can be concluded. This is a lease that is entered into for a fixed period of less than two years. In the case of room rental, this concerns a maximum period of five years.
The landlord can terminate the lease by informing the tenant in writing of the impending termination one to three months before the end date. There is therefore no cancellation or recourse to the legal grounds for cancellation. On the other hand, the tenant also has the right to terminate the lease prematurely.

If the landlord informs the tenant incorrectly, too late or too early, or if a new lease is subsequently entered into with the same tenant, this lease will automatically be considered an indefinite lease. In that case, the rented person has extensive rent protection and other rules regarding termination apply. Under current law, if a landlord agrees to temporarily renew the lease due to the COVID-19 pandemic, a landlord would be directly tied to an indefinite lease and a tenant who enjoys maximum rental protection. The Emergency Act offers a solution.

Temporary law extension fixed-term leases

The Emergency Act applies to temporary rental agreements of less than two years (regular living space) / five years (room rental), the rental period of which in principle expires after March 31, 2020 and before July 1, 2020. Under the Emergency Act, there are several applicable scenarios, depending on when the landlord informs the tenant.

Informing before March 12, 2020

• If the landlord had already informed the tenant before March 12, 2020 about the end date of the lease, the lease can only be extended if the landlord and tenant agree in writing (Article 5 Emergency Act). It concerns an extension of one to three months, until no later than September 1, 2020. If the parties cannot agree, the original end date will apply.

Informing after the Emergency Act comes into effect

• The landlord must inform the tenant in the legally prescribed manner and within the applicable one to three months before the end date of the end date of the lease, and must also inform the tenant about the possibilities of the Emergency Act (article 6 paragraph 1 Emergency Act);
• The tenant can then request the landlord in writing within one week after this notice to extend the lease by one to three months, until no later than September 1, 2020 (article 2 paragraph 1 in conjunction with paragraph 2 Emergency Act);
• If the tenant does not send a request to the landlord, the original termination date applies;
• The landlord has one week after a request for extension to refuse this request, but can only do so for the following exhaustive reasons. If the landlord:

1. 1. has sold to a third party and has undertaken to transfer the property to that third party free of rent and use,
   2. has re-rented and the lease commences,
   3. wants to live in the house himself and no longer has any other accommodation,
   4. wants to renovate, which is not possible without termination of the rent, and they have undertaken towards third parties to make the house available for rent and use thereof,
   5. wants to demolish and has undertaken towards third parties to make the house available for rent and use for that purpose, on a date that is before the expiry of the extension requested by the tenant and the landlord has entered into the obligation before 1 April 2020 ( Article 4 paragraph 1 Emergency Act).

The landlord can also refuse the tenant’s request for an extension if the tenant has not behaved as a good tenant;

• If the landlord has another reason for refusal, he can request the court to set an end date before the end date proposed by the tenant (Article 4 paragraph 1 Emergency Act);
• If the landlord does not refuse the request in time or does not make a valid appeal on the above grounds, the lease will be extended by one to three months (article 2 paragraph 1 Emergency Act), in which case this will not automatically lead to a lease for an indefinite period;
• If the landlord refuses the request in time, the tenant can request the court to extend the lease (Article 4 paragraph 2 Emergency Act);
• In that case, the lease remains in force by operation of law until the decision of the judge (Article 4 paragraph 4 Emergency Act);
• No appeal can be made against the decision of the judge (article 4 paragraph 6 Emergency Act);
• The landlord may request the tenant to agree to extend the lease by one to three months, until no later than September 1, 2020. If the tenant refuses, the lease will end on the original end date. If the tenant agrees, the lease will be extended in accordance with the proposal.

Inform between March 12, 2020 and the Emergency Act enters into force

• If the landlord has informed the tenant about the end of the lease between March 12, 2020 and the date of commencement of the Emergency Act, the above applies as well; mutatis mutandis;
• The only exception is that in that case the tenant has one week from the moment of entry into force of the Emergency Act to make an extension request (Article 8 paragraph 1 Emergency Act).

General points of interest

Pursuant to Article 7 of the Emergency Act, it can be decided that the Emergency Act also applies to the period after 1 September 2020, so that even lease agreements that have already been extended can then be extended once more.

The diagram below is included for clarification.

Source: Parliamentary Papers II, 2019/20, 35431, no.3, p. 6.

No evacuations before 1 June 2020 due to the pandemic

We would like to point out that due to the COVID-19 pandemic, only a limited number of (urgent) cases will be handled by the courts and, in principle, no evacuation will take place before 1 June 2020. This means that even if a lease has been legally terminated, it remains to be seen whether the house can be evacuated.

If you have any questions regarding this weblog, I will be happy to advise you.