The main difference between 230a and 290 business premises is the minimum term of lease. The longer lease term for 290 business premises gives retail and hospitality businesses more time to recoup their investments. What are the lease terms for the different types of business premises?
In this blog, we outline the main rules on the time limits for leasing and letting business premises. These are particularly strict with 290 business premises. However, exceptions to the main rules are possible.
The lease terms of 290 business premises are laid down by law. As for all 290 rules, this may not be deviated from to the detriment of the tenant, unless the court gives permission.
Starting point is that the lease will last for 5 + 5 years. Both parties are bound by this. Thus also the tenant whose interest is primarily protected by this arrangement. At the end of the first five-year term, the agreement is extended by operation of law for another five years. Parties may agree that the first term is longer than five years and the second term shorter, provided that both terms together add up to 10 years. For example, 7 + 3 years, but not 6 + 3 years. A shorter first term requires court approval, which, however, is not readily given.
Termination after the first five-year term is only possible for the landlord with the permission of the court if the tenant has not treated the property with all due care or if it is urgently required for one’s personal use. In addition, a notice period of at least one year must be observed. There is more room in the event of termination towards the end of the second term (after ten years). But even then, a notice period of one year applies. We will discuss the rules for termination of a lease for 290 or 230a business premises in more detail in a subsequent blog.
Interim termination by one of the parties is possible only in exceptional cases:
However, parties can terminate the lease by mutual consent by means of a termination agreement. The tenant’s consent must be clearly and unambiguously stated in the agreement. It is not possible to include such termination in the lease agreement right away. After all, that would mean circumventing the tenant’s legal protection.
It is also possible to include a break option for the tenant alone. In this case, the tenant has the right to terminate, in the interim, the lease at one or more pre-agreed terms. This can be done, for example, after three years or every five years. Because the landlord does not have the option to terminate, the break option still meets the legal protections of the tenant.
If the parties conclude a lease for an indefinite period, the legal terms of 5 + 5 apply as well. Only after ten years does it then become a lease for an indefinite period for which an own termination arrangement can be agreed.
After ten years, the lease becomes a lease agreement for an indefinite period, unless a fixed term has been agreed. This may have already been done in the earlier agreement, for example, by a provision that if the lease has not been terminated by either party, it will be extended for a specified period. Notice must always be given. A lease for an indefinite period will not end by operation of law. The notice period is at least one year.
There is a special regulation that allows for a lease of two years or less. This option can be used if the tenant first wants to test the suitability of a certain location or if it concerns temporary use of a location, such as a pop-up store or a replacement location during a major renovation or while waiting for delayed construction. The method of termination can be freely chosen. If nothing is arranged, the agreement ends by operation of law at the end of the term.
When renting for two years or less, it is also possible to deviate from mandatory law to the detriment of the tenant without prior court approval. Articles 7:291-300 of the Dutch Civil Code do not apply. However, these deviation provisions become voidable by the tenant when the lease exceeds two years.
If the tenant continues to use the leased property after two years with the landlord’s approval, the normal regime for renting 290 business premises applies again. The lease will then expire after five years at the earliest, including the first two years. If the parties want a longer term than five years, they must conclude a new agreement before the expiry of the two-year term. This must be for at least five years, in which case the duration of the previous lease(s) will not count, unless the parties expressly agree that this period will be counted. This can be done, for example, by antedating the effective date of the new lease to the effective date of the previous short-term lease.
If the parties wish to extend with a shorter lease term than five years, the court’s approval is required, unless the total lease does not exceed two years. If the court’s approval is not requested in time (before the expiry of the two-year term), the court will not give it and thus the common 290 regime applies. The determining factor here is the time of the request. Approval may still be given even if the two-year term has already expired. If the court refuses approval, it can also determine that the business premises must be vacated and by which date this must be done.
If the tenant stays in the leased premises against the landlord’s will, obviously the additional rent protection does not apply, because it is contrary to reasonableness and fairness. This will be the case, for example, in the case of an agreed end by operation of law, after which the tenant does not vacate. However, it is wise to notify the tenant before the end of the lease term that the lease will not be continued even in the case of a termination by operation of law.
|5 + 5 years||6 + 3 years (not 10 years)|
|6 + 4 years||3 + 7 years (first term too short) *)|
|2 years||2.5 years (more than 2 years)|
|1 + 1 year||1 + 2 years (together more than 2 years)|
|2 + 3 years (in case of tacit continuation)||2 + 2 years (must be 5 years together) *)|
|2 + 5 years (new lease term)||2 + 4 years (second term at least 5 years) *)|
*) Possible with consent by court
Sometimes people try to make the first two years of a “standard” five-year contract subject to the regulation for short leases by including an option to terminate the lease after two years for both parties. However, this is risky. After all, the court could easily assume that the five-year term is decisive and then the termination option would lapse. Also, it is not possible to enter into an entirely new agreement after five years that falls under the regime for short leases and can therefore be terminated after two years or earlier.
The parties can, of course, decide to continue the lease before the expiry of the second-year term for a period that will bring the total lease term to between two and five years. However, this is a risk. Such an agreement is voidable as it requires court approval. This does not apply to a termination agreement entered into by the parties after the 290-regime has come into force. They must abide by that agreement.
The subtenant of 290 business premises cannot make an independent claim on 290 lease protection against the landlord. So, if the main tenant sublets in the eighth year, for example, the subtenant will not have a new 5 + 5 year lease. The subtenant would then run the risk that the lease could be terminated within two years. However, the subtenant can claim damages if it turns out that the main tenant gave wrong information (e.g. about the lease term) or if the main tenant did not take the interests of the subtenant into account (e.g. by accepting a termination without consulting the subtenant).
The main tenant may be entitled to compensation by the landlord if the subtenant remains in the rented property after the termination of the tenancy.
There are no prescribed lease terms for other business premises. Both fixed-term leases and leases for an indefinite term are possible from the very beginning of the contract. A fixed-term agreement ends by operation of law by the expiry of the agreed term, while a lease for an indefinite term ends by notice of termination.
If the tenant stays in the leased property with the landlord’s approval after the expiry of the lease term, the lease is extended for an indefinite period. For this “approval”, it is sufficient that the tenant continues to use the leased property tacitly, unless the landlord has expressly indicated that the lease ends (by notice of termination or dissolution). Also, still negotiating the new terms of the lease after the old one has expired does not count as renewal of the lease “by approval” of the landlord.
The landlord must always give notice of eviction, even in the event of termination by operation of law. Even when giving notice of termination, it is wise to make it clear that this means the leased property must be vacated by a date after the day by which notice is given. The tenant may remain in the leased property for two months after the notice of eviction date. After that, the tenant must either vacate the leased property or apply to the court for eviction protection. The two-month period only starts when the eviction notice has been served. If notice is not served, the period within which the tenant must make a decision does not start.
After the landlord has served notice of eviction, the tenant may apply to the court three times to extend the eviction period by up to one year. In practice, a court will not readily grant an extension as the tenant will have already had over a year to look for replacement business premises.
As eviction protection is mandatory law, the tenant can annul a notice and eviction regulation that deviates from this protection. However, there may be exceptions. For example, the protection does not apply to tenants of 230a business premises who have had a lease under the 290 regime. They must make do with the one-year notice period of the 290 regime. After all, otherwise the tenant would be able to choose from two rent regimes only those regulations that suit the tenant best, which is not intended.
Do you have any questions about the common lease terms, or do you want to know which scheme best suits your plans for your business? We will also be happy to help you in disputes with the tenant or landlord of your business premises. Please contact us:
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