Storage space and still have rent protection? Is that possible?

Real estate appurtenances: the importance for rental practice

Type of rental agreement

For both the tenant and the landlord of business premises, it is very important which legal regime a business premises falls under. What rent protection does a tenant enjoy? Can the rent be reviewed? Important questions that depend on what type of lease is in place. Important because it can determine whether the desired expansion of a store, for example, can take place.

Retail space or office/storage space?

Retail space falls under the description of Article 7:290 of the Civil Code ("BW"). Examples are a café, supermarket, do it yourself business or a camping store. The common denominator is that products or services are sold/delivered directly. If an enterprise does not fall under the retail space regime, it is called 7:230a business premises. The so-called spaces are then also referred to as office/storage spaces. Think of a factory, warehouse, but also, for example, a real estate agency. Given the large amount of case law on this point, it is not always easy to determine under which regime the leased space falls.

Immovable appurtenances

It can also happen that a leased commercial space is actually to be classified as storage space, but still falls under the retail space regime because this space is to be classified as so-called "immovable appurtenances." In that case, the tenant of storage space can also invoke the rent protection provisions that apply to retail space. The following shows what consequences this can have!

Rent protection, rent review and substitution

The legal regime of retail space offers a tenant more rent protection than the regime of storage/office space. For example, a lessor of retail space cannot simply terminate the lease. He must observe the legal grounds for termination and a notice period of at least one year. Termination by the landlord only leads to the end of the lease if the tenant subsequently agrees to the termination. If a tenant does not agree to the termination, the landlord will have to ask the subdistrict court to assess whether the lease can end. During the large-scale renovation of Hoog Catharijne in Utrecht, this led to many proceedings.

In addition, if the lease of retail space is continued, the tenant and landlord may periodically review the rent. If the lessee and the lessor do not reach a revised rent by mutual agreement, they can ask the Subdistrict Court to further determine the rent. Among other things, the subdistrict court will look at the average rent of comparable business premises in the vicinity of the leased property over the past five years. This also frequently leads to proceedings at shopping centers, but also, for example, at gas stations. In the latter case, for example, the location of the gas station is important, in the border region, on an industrial estate with a construction market nearby or elsewhere.

Being able to enforce a substitution by going to court is another important consequence, if retail space is involved.

Rental regime of 'immovable appurtenances'

The above examples show that for both tenants and landlords, what rental regime you are dealing with can be hugely important. This interest is also there with real estate appurtenances, and it can also play an important role especially with DIY properties. This is illustrated by an important ruling from 2012. Before that ruling is discussed, first briefly the basic rule used by the court wort.

Bicycle parking judgment

In the so-called Bicycle Storage Judgment, the following occurred. The tenant of a house with a basement had sublet the house and used the basement as a storage space for bicycles. In fact, he had rented a second building across the street, in which he operated a bicycle shop. The premises in which the bicycle shop was located had been leased by the tenant from a different landlord than the premises across the street. The landlord of the premises with the parking space subsequently wished to terminate the lease and did not observe the rules then in place for the retail space. In fact, the landlord did not believe that it was retail space. He felt that there was only a parking space.

The tenant thought otherwise. He felt that the parking space was part of the bicycle store. He therefore felt that as a tenant of the parking space, he was also entitled to rent protection.

The Supreme Court had to assess whether there was "connexity" between the bicycle shop and the parking place on the basis of which the tenant of the parking place was also entitled to rent protection. Since this ruling, that connexity can be assumed even if there are two different landlords. This requires that the lessor of the parking space, when concluding the lease, had agreed that this space together with the retail space would be used as retail space.

Further elaboration of connexion rule in case law

Storage space for a hardware store - property

In 2012, the Supreme Court further sharpened the connexion rule given in the Bicycle Storage Judgment. In this case, the operator of a construction market rented the adjacent business premises as a warehouse. The lessee owned the premises in which the construction market was located and operated. On behalf of the construction market, an adjacent building was rented for storage purposes. The question was then whether the warehouse should be classified as retail space, because of its connection to the construction market (which would have been classified as retail space, if this space were leased). The Supreme Court ruled that even though the construction market was not located in leased premises, the warehouse could still follow the regime of the construction market.

Basement at a restaurant - different tenants

The connexion rule has also been frequently invoked in subsequent case law. Last year, the Amsterdam Court of Appeal ruled on a dispute regarding the question of whether a basement qualified as an immovable appendage to the adjacent restaurant. The basement was used as storage for the benefit of the restaurant, but was not directly accessible from the restaurant. The restaurant plainly qualified as retail space. The lease agreement regarding the basement provided that the basement would be used as storage for the restaurant. Therefore, the Court held that the landlord had agreed that the leased space would be used together with the restaurant as business space. Thus, the tenant of the basement was entitled to rent protection because of its connexion with the retail space. The fact that the restaurant was leased by the B.V. whose management was formed by the tenant of the basement - and thus was not actually the same tenant - did not alter this.

Importance for practice

If a tenant rents additional storage space for the purpose of their DIY store through a separate lease, pay close attention. Determine in advance what type of lease you are dealing with. This can make a difference to the protection a tenant has, the amount of rent and the possibility of substituting another tenant. Especially with these types of spaces like extra storage sheds or outdoor areas that you want to use for a hardware store, it's extra careful. You then quickly have to deal with the so-called immovable appurtenances. Spaces are interrelated and it doesn't even matter whether you are dealing with different landlords, tenants or whether there is ownership.