Indexation of rent by 14.5% in 2023 not unreasonable
Many lessees of commercial space faced indexation of the rent according to the consumer price index (CPI) by a percentage of 14.5% in 2023. Several tenants of commercial space disagreed, and there have since been court cases about this. From the court rulings, the view emerges that indexation of the rent in 2023 by 14.5% is not unreasonable.
Rent indexation stipulated in lease agreement
Many leases for business premises stipulate that the rent is indexed annually based on the CPI. The ROZ model, for example, states that when the rent is indexed annually in January, the CPI of four months earlier is considered. For a rent increase as of Jan. 1, 2023, the CPI of September 2022 that came out to 14.5% is looked at.
Tenants disagree with 14.5% indexation
Tenants of commercial space believe they are being doubly burdened by the indexation. The tenants of commercial premises have to bear the high energy costs themselves and, in addition, get the increase in energy costs passed on in a higher rent. The Central Bureau of Statistics (CBS) has now adjusted the calculation method. In other words, the percentage of 14.5% is too high. However, CBS has chosen not to apply the new calculation method retroactively. After all, a percentage of 0.21% applies to the rent price indexation as of January 1, 2024, because the previously used percentage of 14.5% was taken into account.
Court rulings on 14.5% rent indexation for business premises
There have now been rulings by the District Courts of The Hague, Gelderland, Rotterdam, Midden-Nederland and Oost-Brabant on the validity of the indexation of the rent by 14.5%. The broad outlines found in those rulings are described in this article and are as follows.
Tenants of commercial premises have raised two grounds in court to indicate their disagreement with the 14.5% indexation. First, an appeal is made for modification of the lease due to unforeseen circumstances. Second, an appeal is made to reasonableness and fairness.
The first ground fails in the various courts. There is no question of an unforeseen circumstance, because by including the indexation provision in the lease, the lessee and lessor of business premises have precisely taken into account the fact that energy prices (in this case partly as a result of the war in Ukraine) can rise sharply. The parties have explicitly agreed on the manner in which the rent change is calculated.
As a second basis, the tenants argue that the landlords’ reliance on the indexation provision is unacceptable by the standards of reasonableness and fairness. Nor do the courts go along with this. The courts rule in the various cases that there are no unacceptable consequences. Moreover, it is impossible to see why indexing the rent by 14.5% is not part of the tenant’s normal entrepreneurial risk. It is at the tenant’s risk that the parties opted for the CPI methodology without attaching a ceiling to it.
Conclusion
Courts in the Netherlands rule that indexation of the rent of business premises by 14.5% in accordance with the CPI is not unreasonable. There are no unforeseen circumstances and a reliance by the lessor on the indexation provision is not unacceptable by the standards of reasonableness and fairness. In other words, indexation of the rent by 14.5% is in principle allowed.
Advice for lessees and lessors of commercial premises regarding rent indexation
Lessees and lessors of business accommodations are free to make other arrangements in deviation from the indexation provision in the lease. It is not inconceivable that when indexation of the rent by 14.5% would lead to unacceptable consequences for the tenant of business premises, this percentage must be adjusted. In determining whether this is the case, all the circumstances of the case are taken into account. On the other hand, when adjusting the rent for 2023, the lessor in turn does not have to agree to indexation of the rent by 0.21% as of January 1, 2024. This, in turn, could lead to unacceptable consequences for the landlord. The parties should therefore consult with each other.
Leaseholding advice from a lawyer Rotterdam
Are you a tenant or landlord of business premises and looking for a lawyer in Rotterdam or do you have questions about the indexation of the rent of business premises, please contact Yvonne Jansen. She regularly assists tenants and landlords of business premises.
