Calculation of rent reduction due to lockdown

Publication date: 30 August 2021
How does the court calculate a lower rent due to the lockdown? Does online turnover count? Does it matter whether the tenant or landlord is large or small?


The bottom line in disputes over the lease of retail and hospitality space is clear: the tenant and the landlord must share the pain of the lockdown. Closure due to COVID-19 is an unforeseen circumstance. Therefore, it cannot be contractually excluded if the contracts were concluded before the pandemic. Exoneration clauses, which are included in many rental agreements as standard, are therefore usually not applied by the court.

Equal division of the consequences of loss of turnover

A common starting point for the court is to divide the consequences of the decline in turnover equally between tenant and landlord, resulting in a lower rent. In the event of a 50% loss in turnover, 25% will be for the account of the tenant and 25% will be for the account of the landlord. The court will in this case decide to grant a rent reduction of 25% to the tenant.

Calculation of loss of turnover

But how is the loss of turnover calculated? It seems simple: a shop that is completely closed has no more turnover. The loss of turnover then is 100%. But is that really the case? After all, there are other ways to generate turnover. And do government support measures not count as turnover? In a recent judgment, the Rotterdam District Court answered these questions. It concerned a dispute about the rent of one of the stores of fashion chain Scotch & Soda.

Group level assessment: loss of turnover counts

The court found that the Scotch & Soda stores had indeed suffered a major loss of turnover. However, Scotch & Soda is part of a group with its own online sales. Part of the turnover of the stores may therefore have been transferred to the webshop. The court does not consider the fact that the online turnover is achieved in another legal entity relevant. For that reason Scotch & Soda must first submit the figures for the online turnover in the Netherlands before the court can make a ruling.

Something similar holds for a restaurant that switches to delivery service. However, I think that it can be argued that additional costs incurred for such a switch should be deducted from the turnover. The same applies to savings due to the lockdown (less purchasing, energy consumption, etc.), which should be added to turnover.

Government compensation

Most courts add the reimbursement fixed costs (Tegemoetkoming Vaste Lasten, TVL) wholly or partly to the turnover. After all, part of the reimbursement fixed costs is explicitly intended for paying the rent.

That the NOW scheme is also added to the turnover is less obvious. This scheme is in fact meant to pay labour costs. However, there is something to be said for the reasoning of another Rotterdam judge. This judge states that wages are normally paid from the turnover and that the NOW income therefore counts towards the turnover.

Is the tenant entitled to compensation but has not applied for it? Then the court may rule that this is for the account of the tenant and add the compensation not obtained to the turnover.

Position of tenant and landlord

In the Scotch & Soda case, the position of the landlord was also discussed. After all, the landlord also suffers loss of income due to rent reductions, while the fixed costs continue. Because the loss of income usually remains below the 30% limit, there is usually no right to compensation. However, by the court, the landlord has to substantiate this claim with documents.

Proof of loss of turnover

Whoever wants a rent reduction must provide sufficient information to prove the loss of turnover. And they must be open about other sources of income. A landlord who does not want to reduce the rent will have to prove why this cannot be required from him.

Real estate lawyer

It is important to thoroughly substantiate a request for rent reduction. The real estate specialists at Russell Advocaten will be happy to help you. We will also be pleased to assist you in other disputes concerning rent, lease, purchase and sale of retail space and business premises. Please contact us:

    Share on social media

    • Retail
    • Employment law and dismissal

    Questions and challenges during COVID-19: Dutch employment law, tenancy law and contract law

    13 September 2021

    In this article, we will discuss several questions and challenges in the field of Dutch employment law, tenancy law and contract law during COVID-19.

    read on
    • Franchise, distribution and agency
    • Contracts

    Beware of vague wording in franchise agreements

    24 June 2021

    It is important to use clear and unambiguous language in agreements. This has once again been demonstrated by a recent judgement of the Supreme Court. Because of ambiguities in franchise agreements, franchisees of Albert Heijn may have lost millions.

    read on
    • Expats
    • Employment law and dismissal

    17 June 2021: Employment Webinar “Tricky sickness issues”

    17 June 2021

    If your employee reports sick, this may raise many difficult questions. What are your reintegration obligations during the sick leave period? What are you allowed to record about your sick employee with regard to the privacy legislation? We answered these and other questions during a webinar. Watch the video!

    read on
    • Employment law and dismissal

    Be careful with the employer’s statement!

    14 June 2021

    Before obtaining a mortgage or rental contract, banks or landlords often ask for an employer’s statement. Such a statement can sometimes have unintended consequences for the employer. What do you need to be aware of?

    read on
    • Fashion and luxury
    • Litigation

    The advantages of arbitration

    19 May 2021

    Proceedings do not always have to be in court. There are other ways to resolve legal disputes. An important and often also appealing alternative is arbitration. In particular if you are doing business internationally. What are the advantages of arbitration?

    read on
    • Expats
    • Administrative law and the environment

    The Netherlands: Gateway to Europe

    3 May 2021

    The Netherlands likes to present itself as “the gateway to Europe.” And not without reason: excellent travel connections (Schiphol Amsterdam Airport and Rotterdam Seaport) and a highly educated population speaking several languages.

    read on
    • Art
    • Employment law and dismissal

    Russell Advocaten recommended by The Legal 500 2021

    20 April 2021

    Russell Advocaten has for the 17th consecutive year in a row been included in The Legal 500. We are pleased with the recognition for the quality of our legal services by experts and clients. Please read what they say about us:

    read on
    • Retail
    • Real estate and rent

    Tenant and landlord must share pain of lockdown

    30 March 2021

    When is a tenant entitled to rent reduction? How are the consequences of the coronavirus crisis shared between landlord and tenant?

    read on