Real Estate 2021

Last Updated April 13, 2021

Netherlands

Law and Practice

Authors



HabrakenRutten is an industry sector boutique law firm focusing on all legal aspects of built and natural assets. The firm’s expertise not only encompasses traditional buildings and infrastructure but also all linear and portable assets, such as trains, ships, offshore rigs, networks and related technology. Widely recognised as the market leader, HabrakenRutten has been part of nearly every significant project in the Netherlands in the past ten years. The firm has unparalleled knowledge of best market practice and the distribution of risk in this sector. HabrakenRutten represents clients not only with advice, drafting and negotiation but also in litigation and arbitration. HabrakenRutten has 6 partners and 17 lawyers, all specialists in aspects surrounding real estate. The firm's recent track record includes the redevelopment of a former Marine airbase into a residential area of up to 10,000 homes, retail and office development in the Schiphol Amsterdam Airport area and the Amare landmark performing arts centre in The Hague.

The main source of private real estate law is the Dutch Civil Code (DCC) (Burgerlijk Wetboek) and, in particular, Books 3, 5 and 6 of the DCC.

The main sources of public real estate law are the Spatial Planning Act (Wet ruimtelijke ordening) and the Environmental Permitting General Provision Act (Wet algemene bepalingen omgevingsrecht). These two acts, together with 24 other acts, will be combined into one Environmental Act (Omgevingswet), which is expected to enter into force in 2022.

The main trend has been that sustainability is becoming more important for investors and financers, partly due to new laws. Among others, from 1 January 2023, all buildings that are used as office space must have at least an energy label C.

In real estate transactions, there is an ongoing growth of share deals.

The coronavirus has had an influence on transactions and lease agreements. Investors seem more careful. Lessees tend to have a right of rent reduction, depending on the decrease in turnover, which has consequences for the cash flow of investors. 

Real estate investors, developers and lenders seem to work on a small scale with the recent emergence of blockchain and other disruptive technologies. Changes take time and in this case it also requires further technical development. Therefore, no major changes are expected in the next 12 months.

The residential market is in flux due to a large housing shortage. Various bills have been submitted to Parliament; among others, to maximise the rent increase and allow temporary rental of housing. In addition, a bill that makes it possible to take protective measures against the purchase of homes by investors. At this time it is not clear whether they will come into force and when.

The main categories of property rights in the Netherlands are as follows. Ownership is the most comprehensive property right. This right encompasses the powers to possess, use, encumber and transfer real estate. Other rights are rights in rem (zakelijke rechten) are derived from the right of ownership and are known as “limited rights” (beperkte rechten). Such limited rights include:

  • leasehold (also called a long lease or ground lease);
  • servitudes/easements;
  • rights of superficies;
  • usufructs; and
  • apartment rights (also called condominium rights).

The primary source of real estate law in the Netherlands is the DCC, especially Articles 3:80–106 (transfer), 5:20–36 (ownership) and 7:1–50 (sale and purchase). A special law could apply, for example, for the sale and delivery of schools and care complexes.

The purchase agreement concluded between the parties forms the basis for the delivery of the real estate or the establishment of a right in rem. Delivery takes place at the civil law notary who registers the deed with the Land Registry. Full cadastral registration is a precondition for being able to deliver real estate or establish a right in rem.

The Netherlands is divided into parcels of land that are individually registered in the Land Registry. The Land Registry does not provide a guarantee that the registered information is correct; however, as civil notaries are involved in the registration, in principle the risk should be limited. The Land Registry is available online, therefore everyone can check the information in the Land Registry.

Title insurance is not common in the Netherlands, probably due to the fact that everyone can receive information from the Land Registry, including regarding ownership, but also other rights in rem.

The scope of due diligence depends on the kind of real estate transaction. When the transaction is based on an “as is, where is” principle, a more comprehensive due diligence by the buyer is common. The seller usually provides relevant information for the buyer regarding, among others:

  • title;
  • lease;
  • zoning and public law (including environmental);
  • tax;
  • construction agreements;
  • warranty certificates;
  • insurance documentation;
  • maintenance contracts; and
  • surveys and management plans relating to the property.

Further to the assessment of documents provided by the seller, the buyer often also carries out its own investigation and search for documents in the Land Registry and other public registers.

Lease agreements are always part of the due diligence process, but due to the coronavirus, the actual paid rent, temporary rent discounts and rent arrears are even more important to investigate.

The representations and warranties depend on the kind of real estate transaction. A lot of real estate transactions are based on an “as is, where is” principle. In those situations the seller usually warrants that it has valid title to the property and that the property is free from any mortgages and attachments. There are often more warranties in a more balanced sale and purchase agreement, which could include:

  • title;
  • limited rights of third parties;
  • lease agreements;
  • permits;
  • zoning plan; and
  • proceedings and claims.

The seller must provide the buyer with an energy label or a similar document, in accordance with the Energy Performance Buildings Decree (Besluit Energieprestatie gebouwen).

The buyer's remedies for misrepresentation depend on the agreement, but in general they include annulment or dissolution of the agreement, replacement, repair or damages. These claims can be excluded in the agreement.

The DCC only contains mandatory law in the case of real estate transactions with consumers. However, there is a lot of public law that should be taken into account by an investor.

Public law is established at various levels: by the central government, the province and the municipality. This means that the applicable regulations can vary from place to place and even within a place. In addition to legislation at national level, for example, the zoning plan applicable within the municipality, the building regulations, general local ordinances and, if it concerns housing, the housing ordinance must also be considered.

The municipal ordinances could contain a charge fee for public law co-operation.

In principle, the polluter is responsible for soil pollution. In practice, a buyer/owner suffers the consequences of (severe) soil pollution even if this was not caused by the buyer/owner, since it is forbidden to build a building where humans stay where there is dangerous pollution. Therefore, a soil investigation report has to be filed with a permit application. If this report shows serious soil contamination that was caused before 1 January 1987, the permit for the project only comes into force after the administrative authority has approved a remediation plan. One is obliged to carry out a remediation in accordance with the plan if the project is executed.

Furthermore, in the case of brownfields, the owner is statutorily obliged to remediate in the event of severe pollution and if urgent remediation is required.

Every zoning plan is made available on the internet via www.ruimtelijkeplannen.nl. On this site you can enter the address of a parcel and building and it shows the applicable zoning plans that can be viewed. As explained further below, it is possible to enter into agreements in order to facilitate a project.

If the government needs land or a building for the public good, such as for the construction of a road, it must try to obtain it in an amicable way. Therefore, it has to buy it from the owner. If the purchase is not successful, expropriation can take place as a last resort. The owner of the property to be expropriated (often land) has the right to self-realisation, which means that if he demonstrates that he can reach the new destination (which the government wishes) himself, expropriation is not an issue.

Expropriation is only allowed under strict legal conditions, because ownership is a fundamental right. Anyone who has to deal with expropriation is entitled to full compensation (compensation).

Expropriation Procedure

The expropriation procedure consists of two stages: the administrative procedure and the judicial procedure.

Administrative procedure

In this phase, the government asks the Crown to take an expropriation decision. The draft of this decision is available for inspection within the municipality for six weeks. Stakeholders, such as the owner and tenants, may give their opinion on the draft decision. The expropriation order (Royal Decree) will follow no later than six months later.

Legal proceedings

After the expropriation decision, the government asks the court to pronounce the expropriation and determine the compensation that the government must pay. The judge checks whether the administrative procedure has been carried out properly.

Real estate transfer tax (RETT) of 8% is applicable in the case of transfer of:

  • an immovable property; for example, a house for rent, business premises or piece of land; and
  • rights to immovable property, such as right of superficies, leasehold, shares in a public limited company (naamloze vennootschap, or NV) or private limited company (besloten vennootschap, or BV) whose assets consist for the most part of immovable property and a membership right of a (co-operative) apartment association.

The percentage is 2% if the transaction relates to residential premises that will be used as a home for the buyer.

Several exemptions for the payment of RETT apply.

There are no general legal restrictions on foreign investors acquiring real estate in the Netherlands. However, a bill has been submitted to Parliament that makes it, among others, possible for a municipality to take protective measures against the purchase of homes by investors. This will be applicable to Dutch and foreign investors.

Acquisitions of commercial real estate are usually financed by a combination of external financing and the borrower's capital, the latter in the form of shareholder's loans and/or capital injections. The type of external financing depends on the size of the acquisition (a large real estate portfolio or single asset). Large-scale acquisitions could be financed by Loan Market Association (LMA) standards. Smaller acquisitions are often financed in accordance with the general applicable terms of the bank.

The type of security that is almost always created by a commercial real estate investor who is borrowing funds to acquire or develop real estate is a mortgage (hypotheekrecht) on the real estate involved. In addition to a mortgage, the borrower often creates pledges on a number of assets, such as rights and receivables (including rent and insurance), bank accounts and shares in the borrower. The borrower may also provide personal securities, such as a parent company guarantee or a suretyship (borgtocht) by a director and major shareholder.

There are no specific restrictions on granting security over real estate to foreign lenders. Under the Money Laundering and Terrorist Financing Prevention Act (Wet ter voorkoming van witwassen en financieren van terrorisme), a law implementing EU directives, Dutch institutions/individuals such as banks, civil law notaries and lawyers have to perform a client due diligence on both national and foreign clients and report to the Financial Intelligence Unit-Nederland (FIU) any suspicious transaction, which are transactions that could involve money laundering or terrorist financing.

The European Commission has published a list of high-risk third countries. Parties coming from those countries require an extra-thorough client due diligence and/or their transaction may be more likely to be reported as a suspicious transaction. The EU list is updated frequently and involves North Korea and Iran, but currently also countries such as the Bahamas and Jamaica.

A mortgage is created by a notarial deed and registration thereof in the Land Registry. In that regard, the notary's fee and the registration costs of the Land Registry have to be paid.

Mortgages are generally enforced by selling the real estate through a public auction (see 3.6 Formalities When a Borrower Is in Default). The execution costs will be deducted from the proceeds of the sale. The mortgagee may recover the debt on the net value of the sale in accordance with its rank.

Ultra Vires (Doeloverschrijding)

A company may annul a legal act that it has entered into if that legal act was in conflict with the company's objectives and the counterparty knew or should have known without performing research by itself that there was such a conflict. The legal act should be in the interest of the company, for which all circumstances should be taken into account, including intra-group relations.

Financial Assistance

The Civil Code contains a prohibition on public limited companies providing financial assistance to third parties for the acquisition of shares in the capital of the company. This prohibition does not, strictly speaking, apply to private limited companies.

Conflict of Interest (Tegenstrijdig Belang)

A director of a company is not allowed to participate in deliberations and decision-making if it has a direct or indirect personal interest in the outcome of the decision that conflicts with the interest of the company and the affiliated undertaking.

Consent Spouse

If someone, such as a director and major shareholder, personally vouches for the debt, such as by providing a suretyship, the spouse of that director may annul that suretyship if he or she had not given his or her consent to that suretyship, provided that the director has entered into the security outside the normal course of their business. To prevent any uncertainty in this regard, it is advised to have the spouse countersign the documentation for every personal security provided.

Formalities

A mortgagee has the right of summary execution (parate executie), which means that the mortgagee can sell the real estate through a public auction in the presence of a civil law notary under the sole condition that the borrower is in default. The mortgagee may request the court in summary proceedings (voorzieningenrechter) to allow a private sale of the real estate, for which the mortgagee has to submit a fully signed sale and purchase agreement.

If the mortgage deed contains a clause explicitly prohibiting the mortgagor from renting out the real estate and the mortgagee wishes to sell the real estate free of leases, the lender should invoke the letting clause (huurbeding) if it has reason to assume that the real estate is rented out. The lender should do so before executing the mortgage. A number of formalities have to be taken into account in the enforcement of the letting clause.

Obstacles

A creditor who has control over the real estate (such as a contractor on site) may, under certain conditions, suspend its obligation to hand over the real estate. Such a creditor may exercise this right of retention against a mortgagee who – in short – has a younger right or if the borrower was allowed to enter into the agreement with that creditor.

For the cooling-off period, please see 3.9 Effects of a Borrower Becoming Insolvent.

Execution by Other Creditors

There are no additional steps that must be taken to give priority of the lender’s security interest over the interests of other creditors. If the real estate is being executed by means of an executory attachment or by a lower-ranking mortgagee, the lender having a (higher-ranking) mortgage may take over the execution, but that is not required for it to keep its priority over the other creditors. The lender may recover its claim on the borrower from the proceeds of the execution regardless of whether the creditor has initiated the execution.

The possibility for existing secured debt to become subordinated to newly created debt depends on the type of security. Mortgages can change rank by a notarial deed and registration thereof in the Land Registry, provided that the mortgagees involved agree to such change in priority. 

In the absence of a legal provision and case law in that regard, it is uncertain as to whether pledges can change rank by an agreement between the pledgees. Pledgees that wish to do so could seek alternatives, such as a repledge (herverpanding) or a cross assignment (kruislingse cessie) of the secured debts. Each of these approaches has its uncertainties and should therefore be used carefully.

A mortgagee is, in principle, not liable under environmental laws for pollution of real estate. Exceptions are possible if the mortgagee has been involved in causing the pollution, but the position of the mortgagee in that regard does not differ from other third parties involved.

Security interests in the form of a mortgage or pledge generally remain unaffected if the borrower becomes insolvent. Mortgagees and pledgees have a "separatist" position, which means that they can enforce their rights as if there was no insolvency. There are, however, a few effects of the borrower's insolvency that could affect the lender. 

Actio Pauliana (Failissementspauliana)

The bankruptcy trustee (curator) may, under certain conditions, annul legal acts performed by the insolvent borrower. A distinction is made between voluntarily performed legal acts and non-voluntarily performed legal acts.

Voluntarily performed legal acts can be annulled if the legal act disadvantages other creditors and the debtor knew or should have known that other creditors would be disadvantaged. Certain evidentiary presumptions apply to this knowledge criterium if the legal act was performed less than one year before the bankruptcy.

Non-voluntarily performed legal acts can only be annulled in two specific circumstances: that the creditor knew that the debtor's bankruptcy had already been petitioned for or that the legal act was the result of a consultation between the creditor and the debtor with the intention to favour the creditor over other creditors.

As it is much harder to annul non-voluntarily performed legal acts, it is in the interest of the lender to adopt provisions in the security documentation that oblige the borrower to grant additional security on the lender's request (positive pledge). In this regard, it could also be helpful to oblige the borrower to provide additional security by co-operating with any mutual surplus value arrangements (overwaardearrangement) with other creditors, also by means of a third-party clause in favour of those other creditors.

Power of Attorney

Any rights or powers granted by the borrower to the lender in the security documents by means of a power of attorney are no longer enforceable once the borrower becomes insolvent.

Cooling-Off Period (Afkoelingsperiode)

If the borrower is bankrupt, the delegated judge may allow a cooling-off period for a maximum of four months, in which no creditor can take recourse over the property of the bankrupt borrower without the permission of the delegated judge. This includes a mortgagee's right to execute the real estate.

In the Netherlands, EURIBOR is the most frequently used benchmark. Most of the recent loan documentation in which LIBOR is used, such as LMA agreements of the past one and a half years, contains a mechanism by which a new benchmark is selected. Older loan documentation or documentation without such mechanism will have to be amended. That amendment will have to appoint a new benchmark or provide for a mechanism to select a new benchmark.

The use of land and buildings (ie, construction of buildings and activities) is governed by (mostly) municipal zoning plans. The zoning plan holds rules and regulations for specific areas/zones that are designated on an electronic map (www.ruimtelijkeplannen.nl). It sets down, inter alia, where construction may take place, what may be built, the size of the structure and what it may be used for. National and provincial rules apply to the content of zoning plans.

A so-called all-in-one permit for physical aspects (omgevingsvergunning) is required for the construction of buildings. The application for such a permit must be in accordance with:

  • the applicable zoning plan;
  • the Building Decree; and
  • reasonable spatial quality requirements.

The Building Decree holds technical regulations for all structures related to safety, health, usability, energy efficiency and the environment.

Municipalities are the primary authorities for zoning plans and all-in-one permits. For large projects, the provincial executive or the minister can be the relevant authority. The Building Decree is national legislation. Municipalities and provinces are not allowed to set their own rules regarding subjects dealt with in the Building Decree.

For most activities with regard to building, renovation, demolition, construction, living, monuments, the environment, nature and open space, an "all-in-one permit for physical aspects" is required. Depending on the nature of the project, a simple procedure or an extensive procedure is required. A simple procedure consists of an application and a permit grant without third-party involvement. In an extensive procedure, a draft permit is published within six weeks, during which a third party may bring forward their opinion. After this, the decision is taken.

In the case of a permit decision prepared with the simple procedure, interested parties may object against the decision with the permit authority. Those parties may subsequently appeal with the district court against the decision on their objection. Appeal against the court decision is possible at the Administrative Jurisdiction Division of the Council of State (Afdeling Bestuursrechtspraak van de Raad van State).

In the case of the extensive procedure, an interested party can appeal with the district court and subsequently with the Administrative Jurisdiction Division.

For a zoning plan, the extensive procedure is applicable. For this decision, only an appeal with the Administrative Jurisdiction Division is possible.

It is common to enter into an agreement with municipalities regarding a development project. The agreement can deal with the following subjects:

  • if a zoning plan does not allow the development project, the co-operation of the municipality is required to change this zoning plan or deviate from it (this is possible with an all-in-one permit for physical aspects); parties make arrangements about procedures, cost of procedures, etc;
  • the municipality owns land required for the project; the agreement holds agreements about the sale and conditions; and
  • a development project requires the construction and/or adjustment of public works (infrastructure, utilities, public parks, etc).

The municipality can charge the project with these costs. If the parties do not reach an agreement, the municipality can adopt a so-called exploitation plan. This is attached to a zoning plan. It sums up the public works, the costs and the allocation of these costs to various designated areas.

Restrictions on development and designated use are first enforced by the all-in-one permit for physical aspects. If a project is not in accordance with a zoning plan, no permit can be granted (unless the authority is prepared to deviate from the zoning plan).

Furthermore, the municipality oversees projects and the use of land and buildings. It may impose on the offender a duty backed by a penalty.

Entities Available for Investors

The types of entities that are available for investors to hold real estate assets are:

  • the private limited liability company (besloten vennootschap);
  • the limited liability company (naamloze vennootschap);
  • the fiscal investment vehicle, which is a (private) limited liability company with a special tax regime (fiscale beleggingsinstelling);
  • the co-operative (coöperatie); and
  • the limited partnership (commanditaire vennootschap).

Preferred Entities

The entity that is most commonly used is the private limited liability company. The limited partnership is also commonly used. The limited partnership cannot directly hold real estate assets. A limited partnership consists of at least one managing partner (beherend vennoot) and one limited partner (commanditaire vennoot). The managing partner (often a private limited liability company) becomes the legal owner of the real estate assets.

The main feature of the constitution of a private limited liability company, limited liability company and a fiscal investment vehicle is a notarial deed of incorporation, including the articles of association.

The constitution of a co-operative requires a notarial deed of incorporation, including the articles of association, and member agreement(s).

The main feature of the constitution of a limited partnership is a private deed of limited partnership agreement.

The required minimum capital to set up a limited liability company is EUR45,000. No minimum capital is required for other entities.

No information is available in this jurisdiction.

No information is available in this jurisdiction.

A distinction can be made between public registered rights in rem and personal rights to use a property.

Rights in Rem

Rights in rem are, for example, ownership, leasehold, superficies, a right of easement (erfdienstbaarheid) and the right of usufruct (vruchtgebruik).

Personal Right

A personal right is a right to use a property based on an agreement with the owner or leaseholder. For example, a lease agreement or farm lease agreement (pacht), or a loan for use (bruikleen), which is the situation when the user does not have to pay any compensation for the use. 

All leases are subject to the general statutory provisions on leases, which are laid down in Sections 7:201–231 (excluding Section 7:230a) of the DCC. These general provisions set out the main rights and obligations of lessors and lessees. Depending on the use to which the property in question is put, a lease of immovable property will be subject to one of four legal regimes.

  • Lease for unbuilt immovable property – for such unbuilt property, only the general provisions of the DCC apply. Tenants of unbuilt property do not have any special protection.
  • The regime for leases of residential premises – the tenant of residential space that has been leased for an indefinite period has tenancy protection, which means that special articles apply regarding the termination of the lease agreement. In principle, all tenants of residential premises have rent protection, although the size depends on whether there is regulated rental or liberalised rental.
  • The regime for leases of “290 business premises” – leases of premises that are used as a retail, handicraft or camping establishment, or as a hotel, restaurant or café are subject to the regime laid down in Section 7:290 et seq of the DCC. Such premises are therefore referred to here as "290 business premises".
  • The regime for leases of “230a premises” – a lease of immovable property that is not used as 290 business premises or as residential premises is subject to the regime laid down in Section 7:230a of the DCC. Consequently, leases of office space and of warehouses, for example, are governed by the “230a premises” regime.

In the case of non-residential premises, most of the general provisions are directory in nature. This means that they will apply unless deviated from by the parties in the lease contract. The degree to which the lessee enjoys security of tenure varies depending on the regime applicable to the lease.

In principle, the rent can be determined between the parties in the lease agreement; however, the possibility to amend the rent depends on the applicable lease regime. The rent for residential premises can be assessed by the rent assessment committee (huurcommissie) within a period of six months. This period is longer if the parties have first concluded a temporary lease.

Lease agreements in the Netherlands are often based on one of the models established by the Counsel of Real Estate (ROZ) and applicable general conditions. The ROZ is a co-operation of landlords. The models are applicable for residential premises, 7:230a premises, 7:290 premises and car parks. For the typical terms of lease agreements regarding business premises, the 7:230a premises and 7:290 premises have to be distinguished.

For 7:230a premises, parties are, in principle, free to agree upon the rent and the contractual lease period. The authors often see lease agreements for an initial period of five years, but shorter or longer periods are possible. The lease agreement for 7:290 premises has, in principle, a term of five years, to be extended by five years.

In general, for both 230a premises and 290 premises, the tenant is responsible for day-to-day maintenance and the landlord for major maintenance, although a triple-net lease is also possible.

The rent usually has to be paid per month or quarter in advance.

The coronavirus has not, in general, resulted in amendments in the terms of new lease agreements yet.

Parties often agree upon a yearly indexation of the rent based on the increase of the consumer price index (CPI). For the lease of 290 premises, there is, furthermore, a legal possibility to amend the rent after the first initial term and thereafter every five years based on the average change in the rental price of comparable industrial space on site over the past five years.

For 230a premises, parties can agree upon a rent review based on the market price; however, that is not very common.

A yearly rent adjustment usually takes place on the basis of the change in the monthly price index according to the CPI, published by Statistics Netherlands (CBS). The adjusted rent is calculated according to the following formula: the adjusted rent is equal to the rent applying on the adjustment date multiplied by the index for the calendar month that is four months before the calendar month in which the rent is adjusted, divided by the index for the calendar month that is 16 months before the calendar month in which the rent is adjusted. The rent will not be adjusted if indexation of the rent results in a lower rent than the most recently applicable rent.

A rent review depends on the applicable legal regime. For 230a premises, the law does not provide for a rent review procedure and it depends on the lease agreement as to whether a rent review is possible. For 290 premises, Article 7:303 of the DCC is applicable, which provides for a rent review after the initial lease period and thereafter after five years, based on the average change in the rental price of comparable industrial space on site over the past five years. Before submitting a request, the parties must try to reach an amicable solution and when that is not possible, an adviser works for both parties. If that is not possible, the party that wants the rent to be amended may request the court to appoint an expert. After the latter has issued a report, and the parties have not yet determined a new rent, it can be demanded that the court determine the new rent.

A lease for industrial or business space is exempt from VAT; however, parties can agree that the landlord will charge the tenant turnover tax on the amounts payable. If a lease is agreed that is not subject to turnover tax, the tenant often shall be responsible to make a separate payment to the landlord in addition to the rent, to compensate for the loss that the landlord or its legal successor(s) suffers or will suffer because the turnover tax on the capital expenditures and operating expenses is not (or is no longer) deductible.

Parties can only opt for a rent increased with VAT when, by signing this lease, the tenant declares that it intends to use or allow the leased property to be used for purposes that render it eligible for a full or substantial deduction of turnover tax further to Section 15 of the Turnover Tax Act 1968, this declaration being made in respect of the current agreement and all future agreements with the landlord and/or its successors.

In addition to the rent, the costs of the supply, transport, metering and consumption of water and energy for the leased space, including the costs of entering into the contracts concerned and the meter rental, together with any other costs and penalties charged by the utility companies, will be borne by the lessee. The lessee itself is required to conclude agreements for supplies with the companies involved, unless the leased space does not have separate connections and/or the lessor takes care of these matters as part of the supplies and services agreed.

If the parties have agreed that additional supplies and services will be provided by, or on behalf of, the lessor, the lessor will determine the sum payable by the lessee on the basis of the costs arising from the supplies and services and the accompanying administrative work. The services are paid on an advance basis. Following the end of the services charges year, the lessor will, in general, provide the lessee within 12 months of the end of the year with an itemised list of the costs of the supplies and services for each year, stating the manner of calculating them and, in so far as applicable, the share of the lessee in the costs, in such a way that the lessee itself can independently establish the allocation of the costs.

In so far as the leased space forms part of a building or a complex of buildings, usually the supplies and services provided by the landlord also relate to other parts of that building or complex of buildings and therefore to maintenance and repair of these common areas. In that case, the lessor will determine a reasonable sum for the lessee’s share of the costs for these supplies and services. The lessor need not take into account the fact that the lessee does not make use of one or more of these supplies or services.

If one or more parts of the building or complex of buildings are not in use, in determining the lessee’s share of the costs, the lessor will ensure that this share is no larger than would be the case if the entire building or complex of buildings were in use.

It depends on the building as to whether utilities and telecommunications are arranged via the service charge or by the tenant itself.

Usually the landlord arranges the insurance for the building against fire (opstalverzekering) and the tenant the insurance for the furnishment and fittings, including inventory, of the tenant (inboedelverzekering).

The lease agreement often states what the leased space may be used for by the tenant and that the lessee is not permitted to use the leased space for any purposes other than those stated in the lease without the prior written permission of the landlord. There could also be further restrictions in the use of the leased space; for example, in the applicable zoning plan, other public regulations and the deed of delivery may include (qualitative) rights and obligations that the tenant must take into account.

Without the landlord's consent, the tenant may only make changes to the leased space that can be undone without significant costs at the end of the lease. If the landlord does not give permission, the tenant can demand an authorisation from court.

All leases are subject to the general statutory provisions on leases, which are laid down in Sections 7:201- 231 (excluding Section 7:230a) of the DCC. These general provisions set out the main rights and obligations of lessors and lessees. Depending on the use to which the property in question is put, a lease of immovable property will be subject to one of four legal regimes.

Lease for Unbuilt Immovable Property

For such unbuilt property, only the general provisions of the DCC apply. Tenants of unbuilt property do not have any special protection.

The Regime for Leases of Residential Premises

The tenant of residential space that has been leased for an indefinite period has tenancy protection, which means that special articles apply regarding the termination of the lease agreement. In principle, all tenants of residential premises also have rent protection. Since 1 July 2016 it has been possible to sign a lease for a definite period of two years or shorter for residential space that expires at the agreed date, which means that the tenant has to vacate the space at the end of the lease.

The Regime for Leases of 290 Business Premises (Retail, Etc)

Leases of premises that are used as a retail, handicrafts or camping establishment, or as a hotel, restaurant or café are subject to the regime laid down in Section 7:290 et seq of the DCC. Such premises are therefore referred to here as "290 business premises". The tenant of 290 business premises has tenancy protection that has several similarities with the tenant of residential space. Termination by the landlord is also only possible based on mandatory termination grounds for the landlord and it is possible to adjust the rent.

The Regime for Leases of 230a Premises (Industrial/Offices)

A lease of immovable property that is not used as 290 business premises or as residential premises is subject to the regime laid down in Section 7:230a of the DCC. Consequently, leases of office space and of warehouses, for example, are governed by the 230a premises regime. The tenant of 7:230a premises only has vacation protection (ontruimingsbescherming) at the end of the lease. 

In the case of non-residential premises, most of the general provisions are directory in nature, which means that they will apply unless deviated from by the parties in the lease contract. The degree to which the lessee enjoys security of tenure varies depending on the regime applicable to the lease.

In the event of bankruptcy, both the landlord and the trustee can terminate the lease under the bankruptcy law with due observance of a period of three months.

The landlord generally requires security from the tenant in connection with the fulfilment of the obligations under the lease. This could include:

  • a bank guarantee;
  • a deposit; and
  • a parent guarantee.

Usually, the security amount is equal to three months' rent increased with VAT and advance payment for the service charge including VAT.

7:230a Lease (Industrial/Office Lease)

The obligation for the tenant to vacate the leased space is suspended for two months after the date on which the landlord gave notice of the eviction. During this period, the tenant can request the subdistrict court to extend the period of eviction protection. The subdistrict court can extend the term to a maximum of one year after the end of the lease. If the tenant's request is granted, it can then make a maximum of two more requests.

The tenant is not entitled to a suspension of the obligation to vacate if:

  • it has given notice of termination on its own behalf;
  • it has expressly agreed to the termination of the lease; or
  • a court order has been obtained as a result of the tenant's default that requires it to vacate the leased premises.

7:290 Lease (Retail, Hotel, Etc)

The landlord can only terminate the lease by giving notice to the tenant as at the end of the current rental period, or in the case of a lease for an indefinite duration, at any moment in time, the foregoing with due observance of a notice period of at least one year. The landlord shall observe the legal grounds for termination in this regard. When the tenant does not accept the termination of the lease agreement, it can use the leased space until the court has unconditionally and irrevocably terminated the lease agreement, which means that the tenant can also use the leased space during an appeal.

In principle, the tenant is not allowed to assign its lease to a third party. Only in the case that the regime of 7:290 is applicable is there an exemption in the event that the tenant wants to sell its business and has an urgent need to do so. When the landlord is not prepared to consent in the transfer of the lease in that case, the tenant can request an authorisation from court.

Subleasing is allowed based on the DCC; however, it is not often allowed based on the lease agreement without the prior consent of the landlord.

Lease agreements can only be terminated by notice of termination at the end of a period. Depending on the applicable lease regime, the landlord has to include legal termination grounds in the notice.

A lease agreement can also be dissolved out of court by the tenant if there is a breach on the part of the landlord. If the tenant fails to fulfil its obligations, the landlord cannot dissolve the lease agreement extrajudicially, but must – under mandatory law – demand the dissolution of the lease agreement in court.

In addition, the lease can be dissolved extrajudicially by the landlord and the tenant if the leased space contains a defect that the lessor does not need to repair and that makes the use of the leased space entirely impossible.

Parties can always terminate the lease agreement by mutual consent.

Based on Dutch law, there are no special requirements for a lease agreement; it can even be agreed verbally.

A tenant can be forced by the court to leave the leased space before the end of a term in the event of default. Regular procedures usually take about one year in first instance and one and a half years for an appeal. In the case of an urgent matter, the landlord can also demand vacation during summary proceedings.

A municipality can close a leased space under strict conditions if there is a danger to public order; for example, because hard drugs are being traded. In addition, a tenant may have to vacate as part of an expropriation procedure, which is not often the case.

The two regular types of pricing methods are:

  • for the contractor to charge net costs plus a fee; and
  • for the contractor to charge a fixed fee.

If the net costs plus a fee method is used, the contractor specifies the relevant pricing factors (such as materials, mark-ups, labour hours).

If the fixed fee method is used, the contractor submits a fixed fee to construct the works in the relevant quotation.

Several methods of allocation of responsibility for the design process and the construction process are used in construction contracts.

In construction contracts with a traditional allocation of responsibilities, the employer is responsible for the design and for the site. The contractor is responsible for the construction. Even though responsibility for the design rests with the employer, the contractor is obliged to warn the employer regarding obvious faults in the design. After completion, responsibility for the works shifts to the employer. The employer is also responsible for maintaining and operating the works.

In a construction contract labelled as "building team" (bouwteam), the responsibilities are divided in the same manner as in the contract, with a traditional allocation of responsibilities, as set out in the paragraph before, with the addition that the contractor advises the employer in the design process. The contractor bears the responsibility for this advising role in the design phase.

In an "integrated contract" (geïntegreerd contract), responsibility for the design process is partly assigned to the employer and partly to the contractor. The extent to which design responsibility is assigned to the contractor can vary from very limited to almost fully.

In integrated contracts, functions other than the design and construction can also be assigned to the contractor. Examples of these functions are maintaining, operation and financing.

The construction risk on a project can be managed by indemnifications, warranties, limitations of liability and waivers of certain types of damages. Under Dutch law, some mandatory statutory provisions apply. For example, the liability for wilful misconduct (opzet) and gross negligence (bewuste roekeloosheid) cannot be excluded under Dutch law. Parties are, in general, flexible in using these devices in construction contracts to manage the construction risk of the project.

It is common for parties to agree upon a time schedule for the works and to certain milestones and milestone payments. Generally, parties also agree to predetermined fixed penalties or remuneration per day or week in the event of the contractor failing to meet a milestone date or the completion date.

It is common for the contractor to provide a bank guarantee to the employer for its performance under the contract. Alternatively, parties can agree to the contractor providing a parent company guarantee to the employer. Letters of credit and escrow accounts can also be used, but are less common. 

Dutch legislation allows contractors to exercise their right of retention (retentierecht) in the event of non-payment. If the contractor exercises this right, the contractor takes exclusive possession of the works until that contractor’s rightful claim has been paid. This right can be contractually waived by the contractor. In general, the contractor only agrees to waive this right if alternative payment security is given by the employer.

The use of the works has to correspond to the relevant zoning plan (the zoning plan is issued by the local municipality). If the works are constructed on a property held pursuant to a ground lease (erfpacht), the actual use has to correspond to the use specified in the ground lease (if the ground lease specifies a use). Residential buildings may need a housing permit.

In principle, a transfer of real estate is exempt from VAT. The following transfers are subject to VAT (at a rate of 21%):

  • a transfer of (part of) a building and land within two years after its first occupation (ie, newly (re)developed real estate);
  • a transfer of a building site; or
  • if the buyer and the seller opt for a transfer that is subject to VAT (certain conditions apply).

VAT is, in principle, levied from the seller, unless a reverse charge mechanism applies. This is the case when a buyer and a seller have opted for a transfer that is subject to VAT, in which case, VAT is levied from the buyer.

RETT at a rate of 8% (or 2% in the case of residential properties where the buyer is going to live) is levied from the buyer upon the transfer (acquisition) of immovable properties and rights to immovable properties (eg, rights of usufruct and leasehold).

A RETT exemption may be available, for example, when the transaction is subject to VAT.

No information is available in this jurisdiction.

The municipality charges property tax on an annual basis to the owner and users of the property. This is calculated on the so-called WOZ value of the property, which is the value established on the basis of the Valuation of Immovable Property Act (WOZ).

No information is available in this jurisdiction.

No information is available in this jurisdiction.

HabrakenRutten

Weena 690
3012 CN Rotterdam
Netherlands

+31 088 374 4900

+31 010 412 7941

h.raven@habrakenrutten.com www.habrakenrutten.com
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Trends and Developments


Author



HabrakenRutten is an industry sector boutique law firm focusing on all legal aspects of built and natural assets. The firm’s expertise not only encompasses traditional buildings and infrastructure but also all linear and portable assets, such as trains, ships, offshore rigs, networks and related technology. Widely recognised as the market leader, HabrakenRutten has been part of nearly every significant project in the Netherlands in the past ten years. The firm has unparalleled knowledge of best market practice and the distribution of risk in this sector. HabrakenRutten represents clients not only with advice, drafting and negotiation but also in litigation and arbitration. HabrakenRutten has 6 partners and 17 lawyers, all specialists in aspects surrounding real estate. The firm's recent track record includes restructuring/refinancing the Y Towers project (Amsterdam) for a German pension fund, the acquisition of a portfolio of solar farms, and advising a US-based food science company on its European real estate strategy.

Market Trends and Developments 

At first glance, trends and developments in the Dutch real estate sector seem very much driven by the coronavirus. Looking more closely, however, it seems that longer-term underlying developments, such as the structural shortage of (affordable) housing and web-based shopping and working, are the real drivers, albeit that COVID-19 may well act as a catalyst.  

Shortage of housing 

The country is looking at a shortage of some 300,000 houses, which is expected to rise to some 400,000 houses in 2025. Demand for (affordable) housing, especially in the big cities in the west (the metropolitan area called "Randstad"), remains at a high-pitched level. Prices are being driven up by demand and low interest rates. In 2020, prices rose by more than 11%. There are no signs of a cooling off. These market conditions have also fuelled the introduction of private investors in the housing market, driving prices up further and effectively denying "starters" a chance to buy a house or an apartment. This may give rise to market regulation measures, limiting the possibilities to privately buy houses and apartments for investment purposes only.  

A shortage of adequate locations has increasingly forced developers to redevelop industrial and office space. Another trend is the clustering of residential and office space on or near important public transport hubs, such as railway and lightrail terminals. These developments are, however, complex, costly and cumbersome. As a result, pressure to turn to greenfield developments again is rising as well. 

Furthermore, in order to keep up with demand and more flexible client preferences, construction is increasingly starting to use "industrial" production methods. All large (developing) construction companies have developed their own factory-based production lines for important construction parts or even complete houses. Building is increasingly becoming more about assembling parts than actual bricklaying. Houses can be ordered digitally "off the shelf" and can already be assembled on site within one working day. 

These developments have so far not been influenced much by COVID-19, but markets do expect a certain mitigating trend, should unemployment rise and consumer trust diminish accordingly. This will, however, not change the underlying trend, in which residential will remain very much in demand for the foreseeable future.  

Web shopping and working from home 

COVID-19 has, of course, led to a surge in web-based shopping, as well as working from home. But, again, web-based shopping and a consequent rethinking of retail development was already very much under way. Here as well, the coronavirus may have acted as a strong catalyst. 

Large retail developments have been scarce and are mainly confined to the big urban areas in the west of the country. Near The Hague, the "Mall of the Netherlands" has seen a muffled opening. Other retail "hotspots", such as the Market Hall in Rotterdam, are struggling with rent adjustment. New developments have been stalled and the market is still suffering from the departure of the likes of Hudson Bay. Future developments will see more "gentrification" of landmark, monumental buildings, like the former Rotterdam Central Post Office, offering a variety of experiences, including boutique hotels, trendy restaurants and event shopping. 

As for office space, the picture is mixed, but the underlying direction is clear there as well. The trend of working from home is here to stay, albeit that COVID-19 has shown the importance of physical contact and connection. The expectation is that the demand for office space will gradually diminish, but physical meeting places will remain in demand. Here as well, there is a strong tendency – stimulated by governments – to combine office, retail and residential developments on or near transport hubs, such as railway and lightrail terminals. New technological trends are also maturing. Retail as well as office space has changed from "buildings with installations" into "computer systems with a roof". These developments will only be accelerated by the need for more flexible use, monitoring "visitor traffic" and climate adaptation. 

Finally, all these developments combined have spurred on the development of data centres and logistics centres, such as warehouses and distribution centres. The Netherlands has become a hotspot for these developments. This may not come as a surprise, given the location of the Netherlands with its two main transport hubs, Schiphol-Amsterdam airport and the Rotterdam harbour. But the high fibre network penetration in the Netherlands also acts as a stimulant for this development. These developments have attracted much attention from all parties involved, developers, construction companies, investors and financiers alike. 

Climate adaptation and Brexit 

Finally, and to a lesser extent, developments in the real estate sector have been influenced by the growing effects of climate change – or, rather, climate adaptation – as well as, to a lesser extent, by Brexit. The effects of climate adaptation and sustainability are, for the most part, technological. So far, these have taken the form of ever more effective isolation, the introduction of solar panels and heat pumps, and – a game changer in the Netherlands – the abolition of natural gas as an energy source for new developments. The increasing use of electrical cars has also fuelled the need for charging stations at home and in the office or car parks. These developments, in turn, may give rise to increasing pressure on grid capacity; a shortage of grid capacity has already stalled the development of data centres and warehouse projects.  

Lastly, the Netherlands, especially the Amsterdam region, has, to a certain extent, benefited from Brexit in the form of increasing demand for office space from financials. 

Legal Trends and Developments 

Seen in the market perspective as outlined above, the following two trends and developments in the legal sector can be highlighted. 

Nitrogen deposition 

At the end of May 2019, the infrastructure and real estate sector were startled by a decision by the highest administrative court in the Netherlands, the Council of State (Raad van State), ruling the existing practice of environmental permitting for projects illegal. All permitting for new infrastructure and real estate projects has largely ground to a halt; permits already granted ran the risk of injunction procedures.  

The established practice of regulating the effects of nitrogen deposition on so-called Natura 2000 areas (mainly natural parks) was deemed insufficient and in violation of EC law. State legislators have been grappling with this issue since, and a viable solution has not been found to date. 

The issue seems to hinder infrastructural projects more than real estate projects; eg, area development and housing. In the course of 2020, some creative "workarounds" have been introduced and the issue so far seems manageable for smaller and inner-city real estate projects. For larger greenfield developments, including logistics developments, a structural solution still has to be found, however. 

Technology 

Tech – in the sense of ICT, privacy regulation, sourcing and platforms – is becoming ever more relevant in the real estate sector, also from a legal perspective. Both on the buyer and the seller side, money is increasingly made with tech solutions. The safety and sustainability as well as user management of buildings is run by ICT; the design and production of buildings is done by using ICT. Business models of real estate are increasingly created by assembling and mining (big) data. Legal advice and legal advisers have to diversify along with the sector as a whole. 

In another sense, technology has an impact on the legal sector as well. It is to be expected that a large chunk of legal due diligence work in real estate transactions that is now done by (junior) lawyers and notaries will be performed by computers in the near future. Software and hardware is already available, but the costs are still high and quality standards have not yet been tested and accepted by the market. This will only be a matter of time, however, and the re-entry of the big accounting firms with their deep pockets is expected to speed up this process. 

HabrakenRutten

Weena 690
3012 CN Rotterdam
Netherlands

+31 088 374 4900

+31 010 412 7941

h.raven@habrakenrutten.com www.habrakenrutten.com
Author Business Card

Law and Practice

Authors



HabrakenRutten is an industry sector boutique law firm focusing on all legal aspects of built and natural assets. The firm’s expertise not only encompasses traditional buildings and infrastructure but also all linear and portable assets, such as trains, ships, offshore rigs, networks and related technology. Widely recognised as the market leader, HabrakenRutten has been part of nearly every significant project in the Netherlands in the past ten years. The firm has unparalleled knowledge of best market practice and the distribution of risk in this sector. HabrakenRutten represents clients not only with advice, drafting and negotiation but also in litigation and arbitration. HabrakenRutten has 6 partners and 17 lawyers, all specialists in aspects surrounding real estate. The firm's recent track record includes the redevelopment of a former Marine airbase into a residential area of up to 10,000 homes, retail and office development in the Schiphol Amsterdam Airport area and the Amare landmark performing arts centre in The Hague.

Trends and Development

Author



HabrakenRutten is an industry sector boutique law firm focusing on all legal aspects of built and natural assets. The firm’s expertise not only encompasses traditional buildings and infrastructure but also all linear and portable assets, such as trains, ships, offshore rigs, networks and related technology. Widely recognised as the market leader, HabrakenRutten has been part of nearly every significant project in the Netherlands in the past ten years. The firm has unparalleled knowledge of best market practice and the distribution of risk in this sector. HabrakenRutten represents clients not only with advice, drafting and negotiation but also in litigation and arbitration. HabrakenRutten has 6 partners and 17 lawyers, all specialists in aspects surrounding real estate. The firm's recent track record includes restructuring/refinancing the Y Towers project (Amsterdam) for a German pension fund, the acquisition of a portfolio of solar farms, and advising a US-based food science company on its European real estate strategy.

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