As already mentioned in our Quarterly dated 1 July 2016, the Flemish Parliament adopted a new Decree on short-term retail leasing on 8 June 2016. By doing so, Flanders is the first Belgian Region to use its legislative competences in relation to lease legislation after such competence was attributed to it pursuant to the 6th State Reform.
The new Decree on short-term retail leasing proposes an alternative to commercial leases which are subject to the (mandatory, pro-tenant provisions of the) Commercial Lease Act.
Generally speaking, the Decree applies on (i) leases of (parts of) immovable premises, (ii) which are mainly leased for the operation of a retail or craftsmen activity, (iii) with direct contact between the tenant and the public and (iv) which are concluded for a term which is equal to or less than 1 year (i.e. a short-term lease). The Decree contains, among others, the following provisions:
- the short-term lease automatically ends on its expiry date; the tenant is not entitled to renew the short-term lease. The short-term lease agreement can however be extended in writing and under the same conditions if the parties agree so provided that the total duration may not be more than 1 year. Failing this, (i) the short-term lease agreement is deemed to be concluded for 9 years, starting from the date on which the short-term lease initially entered into force, so that (ii) the Commercial Lease Act applies;
- assignment of the short-term lease and sublease are prohibited;
- the tenant can terminate the short-term lease at any time, by giving one month’s notice by means of registered post or by bailiff’s writ;
- the tenant is entitled to carry out works that are useful for its business provided that (i) the cost of the works does not exceed the annual rent, (ii) the works do not affect the safety of the leased property, its esthetical value or its health aspects and (iii) the tenant informs the landlord before the start of the works, unless otherwise agreed in writing;
- the parties can terminate the short-term lease agreement before its expiration date by mutual consent in writing;
- the rent is deemed to include all applicable taxes, unless otherwise agreed in writing.
The Decree provides that it only applies in case the parties conclude an “explicit agreement” regarding the short-term lease. Since “explicit agreements” can be concluded both orally and in writing, it follows that a short-term lease agreement can be concluded orally or in writing. In the latter case, the short-term lease agreement must be registered and is subject to a registration fee of 0.2%.
On 26 July 2016, the Decree was published in the Belgian Official Gazette. It enters into force on 1 September 2016 and is only applicable to “new” short-term leases and therefore not applicable to current short-term lease agreements.