Business Law Articles
By Ynze Kliphuis, LL.M.
Russell Advocaten, B.V.
In a tight housing market it can be tempting to buy (partly) let property, if you don’t need the space (yet) or as an investment. But don’t forget: If you need the let space yourself, it won’t be easy to end the tenancy.
Especially in the big cities it is not unusual that housing property is bought in which one or more apartments are still let. This can be attractive for the owner, for instance because the remaining space of the property is sufficient for him or her and/or the rental income can help finance renovations. However, when eventually the moment has come that the owner intends to use the let part of the house too - for instance when new family members arrive - can he or she terminate the tenancy?
Urgent Use by the Landlord
The ending of tenancy requires a statutory ground for termination. In this case, urgent use by oneself will be obvious. This will be the case if the owner intends to use the let property by himself or the use will be in his or her interests (for instance, use by a child or parents). Sale of the property is not an urgent use by oneself as is clearly expressed by the well-known rent law principle of “property sold does not annul the tenancy”. However, there are more conditions that have to be met.
The owner, who has bought a let property, has to notify the tenant in writing of the purchase. During the first three years after this notification, the tenancy cannot be ended because of urgent own use by the landlord.
Another condition for ending a tenancy because of urgent own use is that the owner demonstrates that the tenant can get other suitable housing. This alternative accommodation does not have to be similar in, for instance, size, comfort or rental price. The alternative accommodation may even be resale property, provided that it is suitable for the actual family situation of the tenant.
Evaluation of Interests
In case of termination because a property is urgently required for the owner’s own use, the mutual interests of tenant and landlord always have to be evaluated. Case law has indicated that, regarding the tenant, the court often attaches great importance to factors such as the tenant’s age, health, attachment to neighbourhood/property, and dependence on a social network. Landlords seem to profit if their interest is connected with social/general interests, for instance, if the property is part of a comprehensive renovation project through which the landlord seeks to combat vacancies in the neighbourhood.
Reimbursement of Removal Expenses
Finally, the landlord has to take into account that if the termination of the tenancy due to his urgent use will be successful, the court may order reimbursement of the tenant’s removal expenses. Please note: This does not concern total reimbursement! If the termination has to do with demolition or radical renovation, a reimbursement of removal expenses is mandatory and at least EUR 5,993 (as of 16 February 2018).
The owner of (a partly) let property will have to overcome quite a few challenges to eventually end the tenancy and use that part of the property (again).
- Check whether the property you intend to buy is free of tenants.
- In case the property is let: Have a lawyer assess the tenancy agreement before you decide on the purchase. A lawyer can inform you of the opportunities and risks.
- If you don’t want to take over tenants, make sure to include that in the purchase agreement as a suspensory condition. (Please note: it is equally difficult for the seller to make the tenants leave the house as it is for you.)
- Even if you intend to let (part) of your house, make sure to obtain sound information on the legal possibilities and restrictions. Before you know, you will be stuck with a tenant for a long time.
Would you like to learn more about buying or selling property or ending a tenancy? Would you like us to assess your purchase or tenancy agreement? Or do you have any other questions regarding real estate? Please contact us.