Business Law Articles
By: Ynze Kliphuis, Esq.
Russell Advocaten B.V.
On 9 February 2016, the Lower House of the Parliament has adopted the bill on rental market flexibility. A key element of the new Act is that more temporary housing rentals will be available, for instance to expats. In addition, there will be new measures against high-income earners who live in low-rent properties. So what does that mean for you?
Rental market flexibility
At the beginning of this month, it was reported that not enough rental property is being built to meet the increasing demand for cheap rental property. The government has tried for some time to increase flexibility of the rental market. Since 2013, lessors of social housing can impose an additional increase on the annual rent increase on high-income earners who live in low-rent properties and who are not part of the target group for social housing.
Rental Market Flexibility Act
Temporary tenancy agreements
There will be a lot more options to conclude temporary tenancy agreements:
- Introduction of the option to let accommodation in the liberalized housing sector for a maximum period of 2 years (or shared accommodation for a maximum period of 5 years), with automatic termination of the lease.
- Extension of the scope of the Diplomats’ clause, so that home owners who leave their accommodation temporarily - for instance due to a stay abroad – will be allowed several short-term lessees consecutively and the period of the lease can be extended in the interim.
- Broadening of the option of the lessor to terminate the lease if the lessee no longer belongs to the target group for which the property was meant. In addition, there will be more target groups than before, such as adolescents, doctoral students and large families.
Action against high-income earners who live in low-rent property
Recently, the highest administrative court has decided that the tax authorities are not authorised to provide information on income of lessees to lessors, whereas lessors need this information to impose an income-related rent increase. The new legislation fills this loophole, probably prior to the next rent increase in July 2016.
Encouragement of construction and maintenance of housing accommodation
The bill encourages housing associations to invest in their housing stock as this is a requirement for the implementation of the income-related the rent increases.
The Rental Market Flexibility Bill still has to be adopted by the Senate. The new rules on short-term rentals/lettings shall only apply to new tenancy agreements that will be concluded after the Act has become effective. Therefore, we recommend to be careful with respect to letting your accommodation temporarily until the Act will be effective. Under the current legislation, temporary rental, in practice, often seems to last (a lot) longer than desired by the lessor.
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