When leasing real estate in the Netherlands, the “ROZ-model” lease agreement will most probably play an important role in the negotiations between the landlord and the tenant. This article examines the background to ROZ-model lease agreements, and discusses how standard these are in the real estate market in the Netherlands.
On 1 August 2003, Dutch tenancy law was completely reformed, and is now included in the Dutch Civil Code (DCC). The rules applicable to each lease differ according to type of lease, with the following types being distinguished:
- residential leases;
- retail leases (leases of commercial space to be used for retail, hotels, restaurants, etc, that are open to the public); and
- industrial leases of other types of commercial space (eg office space, factories, warehouses, banks, etc).
The primary use of the real estate usually determines the category. The rules applying to residential leases are the most strict, and really aim to protect the tenant. However, where the premises subject to the lease consist of retail space, the DCC provides for some (semi) mandatory provisions, such as those covering the term of the lease and its termination. As far as industrial leases or other types of commercial leases are concerned, there are very few mandatory provisions, though examples would include provisions dealing with the tenant’s protection from eviction.
Lease agreements in the Netherlands do not have a prescribed legal form—they can be written or oral. Thus, the fact that there is no signed, written lease agreement does not mean that a lease does not exist. The existence of a lease is presumed if one party (the lessee) pays rent regularly and the other party (the lessor) accepts the lessee’s occupation of the premises subject to the lease.
However, it is clearly preferable for both landlord and tenant to have a written lease agreement in place in order to protect and/or specify their rights and obligations under the lease. In the Netherlands, the Real Estate Council (Raad voor Onroerende Zaken) (ROZ), acting as a general governing body for land owners, has drafted various model agreements for each type of lease.
In this article we will mainly focus on commercial leases, and in particular on those governing industrial or other commercial space, known as 7:230(a) DCC leases.
The ROZ-model lease agreements
When the new tenancy law was passed in 2003, the Real Estate Council introduced new model lease agreements. These each consist of a template agreement and an accompanying set of general conditions.
As noted earlier, the Real Estate Council acts as a general governing body for land owners, and therefore the general conditions are often considered to be favourable to landlords. It is not surprising then that many, if not all, landlords base their lease agreements on the ROZ standard models.
Although the ROZ-model lease agreement for retail space has been updated twice since 2003 (with the latest version dating from 2012), the ROZ-model lease agreement for industrial or other commercial space still dates from 2003. This can be explained by the fact that retail tenants are more organized and have forced the Real Estate Council to amend the conditions to make them more tenant-friendly. As the ROZ-models are mainly considered to be favourable to landlords, the Dutch retail trade association (Detailhandel Nederland) launched its own template lease agreement in 2010 which is more favourable to tenants. However, many landlords do not accept this alternative standard yet, which is mainly attributable to the position of these tenants on the Dutch real estate market.
How standard are the standard ROZ-models for lease agreements?
The use of the ROZ-models has become so frequent, that many landlords (and even many tenants) regard these models as the standard Dutch lease agreements. In practice, landlords sometimes try to persuade (especially foreign) tenants to accept the ROZ-models, arguing that these constitute the only Dutch form of lease agreement and that they cannot be deviated from.
From a landlord’s perspective such an approach is attractive because leases based on a ROZ-model are easy to draft, easy to manage in a large property portfolio and easy to comprehend for a buyer in the event of a sale of the property (or entire portfolio). And if tenant demand in the real estate market is strong, there might be little choice for a tenant other than to agree to the use of these leases.
However, in a “tenant’s market” (that is, one in which there are lots of vacant premises to let) or if the tenant is in a very strong economic position, the template lease agreement, and especially the general terms of the ROZ-model agreement are, in fact, negotiable. For example, the Dutch Government Buildings Agency (Rijksgebouwendienst) adopted its own model lease agreement in 2003, which every landlord will have (or has already had) to accept.
In summary, for neither landlords nor tenants are the standard ROZ-model lease agreements set in stone, however, they do provide a good starting point from which to negotiate the terms of a lease. These negotiations will be part of the legal game between the landlord and the tenant, and this game will be influenced by the position the parties have on the real estate market and the scarcity/surplus of property in that market in the Netherlands.