On May 16, 2023, the House of Representatives approved the bill to abolish temporary leases for housing. The temporary leases as introduced in 2016. If the Senate also agrees, a number of changes will come your way. Are we then back to square one? Is the law a bad idea? Or are there other options? Jeroen Brinkman, real estate and rental specialist, explains.
Conceivably, a large number of tenants and landlords benefit from fixed and long-term leases. But temporary rentals remain obviously desirable under circumstances. Opportunities to do so still exist.
Intended changes
The Fixed Lease Law has the effect of eliminating some of the temporary rental options introduced in 2016. Temporary leases for independent living space of up to two years are no longer possible. Rooms can no longer be rented for up to five years.
Or is it?
New categories
During the consideration of the bill, an amendment was proposed. Its purpose is that there are categories of tenants to whom it is still possible to rent for two years. Exactly what this will look like remains to be seen. It is also not yet certain whether this applies only to housing corporations, for example.
Categories to consider - abbreviated - are tenants who or with whom:
- temporarily working or studying in a city other than where their home is located (including expats);
- due to demolition/renovation must temporarily live somewhere else until replacement new construction is completed;
- coming from a social shelter and/or tenants in a social emergency (with urgent housing needs);
- with whom (by housing associations) a second or last chance rental agreement is entered into;
- of certain deceased blood relatives rented from a housing corporation.
Extension of termination ground urgent own use
If a landlord wants to terminate, the landlord often invokes urgent own use. This ground for termination will now be expanded. The extension means that a landlord can give notice if he wants to give a rental home to a relative by blood or marriage in the first degree. This includes parents or children and spouse, adoptive parents and children.
It is important, however, that this option is included in the contract at the start of the lease. If the tenant does not agree, a termination procedure will follow. Then also take into account possible compensation, which a tenant can invoke.
Sale after cohabitation
Also new is a somewhat contrived ground for termination. It concerns the possibility of termination for a landlord, who has occupied his own home himself and actually wants to sell this home, but then rents it out temporarily. The landlord is temporarily renting because the landlord himself has gone to live with another person. A kind of "trial cohabitation.
If the test succeeds, the landlord does not have to return his own home and the landlord may terminate the lease. This is because the landlord wants to sell his home in that case. However, there are some conditions attached to this. For example, that a maximum period of two years applies (since the start of the lease).
It is also interesting that cohabitation seems to succeed only when marriage or a registered partnership also follows.
Temporary rentals still possible
Thus, although the temporary lease regime will be abolished, there will still be opportunities to lease temporarily or to take advantage of specific termination options. There are specific categories of tenants to whom temporary rentals can be granted.
In addition, the grounds for termination have been expanded and even new grounds for termination have been added. However, the (partially) pre-2016 temporary lease options should not be forgotten either.
Think rental:
- based on the Vacancy Act;
- based on an agreement by its nature of short duration;
- of flex housing (for which a temporary environmental permit has been granted);
- with an eviction clause (diplomatic clause/intermediate lease);
- for the benefit of certain target groups (senior housing, students, PhD students or large families, for example).
Temporary or still permanent rental ?
But why choose temporary rentals when permanent rentals also offer so many advantages?
If there is a good property and a good tenant, there is nothing against entering into a long-term lease as a landlord. Especially if the intention as a landlord is to rent out the living space for a long time and there are no other plans with a property or the living area.
Advantages fixed rent
Some landlords deliberately choose longer lease terms in order to have security in terms of rental income. As few changes as possible in the rental stock also gives landlords a certain security. Tenants know each other and there is less chance of nuisance. If a tenant does cause a serious nuisance or defaults on obligations, then with both temporary and permanent leases, a judge will assess a claim to dissolve the lease.
Exception situations
Temporary rentals can be understood as the exception situation. If such an exceptional situation arises, then that situation is often known in advance and the law therefore offers all kinds of constructions that can be applied. However, it is important to record this in writing in advance. A written record of agreements that are also required by the Good Landlord Act, which will come into effect on July 1, 2023.
Conclusion
Abolition of temporary leases
The introduction of the Fixed Leases Act which is also likely to be passed by the Senate will lead to the abolition of temporary leases as introduced in 2016. Current leases will simply continue based on the existing rules.
Additional termination options
There will be additional opportunities to terminate a lease but basically it will have to be a permanent contract. This need not be detrimental. Neither for the landlord nor for the tenant. And if there are special circumstances necessitating the conclusion of a temporary lease, those possibilities still exist.
But it avoids having to find a new tenant for a property every two years because the temporary lease expires and renewal is not allowed. For both a tenant and landlord, this gives peace of mind.
Should you wish to discuss the possibilities of temporary or permanent leasing or how this law will affect your day-to-day operations, our specialized attorneys real estate & leasing is the right place to go.
