Reinier Russell

managing partner

Reinier advises national and international companies

reinier.russell@russell.nl
+31 20 301 55 55

Tenant and landlord must share pain of lockdown

Publication date 30 March 2021

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

huurprijsverlaging-corona-weblijst.fe2d25-1.jpg

Unforeseen circumstances

Courts have frequently dealt with the question whether the coronavirus crisis entitles the tenant of retail, catering or commercial premises to rent reduction. As a matter of fact, this may actually be the case. Several courts have established that tenants and landlords were not able to foresee the lockdown when concluding the tenancy agreement.

Even though it has been established that the coronavirus crisis is an unforeseen circumstance, it has to be assessed whether the circumstances have changed in such a way that the landlord must agree with a temporary rent reduction in accordance with the  criteria of reasonableness and fairness.

Shared pain

The unforeseen circumstance of the coronavirus crisis can involve that it is not reasonable to stick to the agreement that the landlord is entitled to payment of the entire rent. The coronavirus crisis and the government measures created an imbalance in tenancy agreements. For this reason, landlord and tenant must share the pain fairly. But when is there a fair distribution?

Adjusted rent

Courts choose different ways to reach a fair distribution of the pain between tenant and landlord. A frequently chosen solution is to take the decrease in the turnover as a starting point and to equally distribute the consequences between the parties. The percentage of the rent reduction then equals half the percentage of the decrease in turnover. With a decrease in turnover of 100%, the percentage of the rent reduction is 50%.

However, the pain of the decrease in turnover is also relieved by government measures, such as the Allowance for Fixed Costs (Tegemoetkoming Vaste Lasten; TVL). This does expressly include the rent of retail and commercial premises. When determining the amount of the rent reduction, courts sometimes take into account the income from this scheme. The NOW-scheme is not included, as this allowance is only meant to be a compensation for wage costs.
Conclusion

It is not correct that the tenant only has to pay part of the rent in the event of decrease in turnover due to the coronavirus crisis. Many courts consider the coronavirus crisis an unforeseen circumstance, but the circumstances can differ from case to case. For example, think of the measures to compensate decrease in turnover. Hoewver, if a request for rent reduction is made, this must be substantially motivated and submitted to the court.

Real estate and rental law lawyer

Do you want to know whether a request for rent reduction will be successful or whether your tenant is right to ask for this? We will be happy to provide you with advice. And we are also happy to assist you in other disputes concerning real estate and rent. Please contact us:

    We process the personal data above with your permission. You can withdraw your permission at any time. For more information please see our Privacy Statement.

    Related publications

    Lease of business premises: the difference between 230a- and 290-business premises

    Leasing 230a or 290 business premises? What do these terms mean anyway? And, most importantly, what are the consequences of this difference for lessors and lessees of business premises?

    Read more

    Good Landlordship Act – New rules for landlords

    With a new Act scheduled to take effect 1 July, the government seeks to prevent exploitation of tenants by rogue landlords and housing intermediaries. However, the Good Landlordship Act is also important for bona fide landlords as there will be new obligations for all landlords. What do landlords have to consider from now on?

    Read more

    Circular construction: 3 tips to avoid losing your property

    As sustainable products, such as solar panels and reusable floors and walls, can be very expensive, they are increasingly being rented out. This also allows people and companies with smaller budgets to invest in sustainability. However, lessors of these sustainable products risk losing their properties due to legal regulations. How can they mitigate this risk?

    Read more

    Legal Top 2022

    What was the most important and interesting legal news of 2022? Check out our top 10 posts from 2022.

    Read more

    Outdated rule of thumb: Three months of rent arrears not always sufficient for eviction from rented property

    From now on, landlords have to notify the municipality of rent arrears. Failure to comply with this requirement may be grounds for the court not to dissolve the rental agreement and not to have a tenant evicted. Even if the tenant has not paid rent for more than three months.

    Read more

    General terms and conditions: information obligation

    The general terms and conditions you use do not apply just like this. A number of conditions must be met. One of them is that your contracting party has taken note of these general terms and conditions. How can you fulfil this information obligation?

    Read more