Temporary lease of business space: what is possible?
In real estate, there are two types of leases for business premises: lease of medium-sized business premises (think of a store or catering establishment) or the lease for other business premises (such as office space). This article explains the options for entering into a short-term lease for the different types of commercial space.
What lease terms apply to medium commercial space?
Leases for medium-sized business premises are characterized by a high degree of protection for the tenant. This protection is expressed, among other things, in fixed lease terms. In principle, the lease of medium-sized business premises is concluded for the period of 5 + 5 years. The rent may only be terminated at the end of a certain rental period and the landlord must take the legal grounds for termination into account. Termination is therefore often only possible after the first five years.
Would you like to know more about lease terms and the termination of rent for medium-sized business premises? Read our article about the termination of a lease for medium commercial premises.
What rental terms apply to other commercial property?
A large degree of contractual freedom applies between the parties for the lease of other business accommodation. The tenant and the landlord may determine themselves how long the rental agreement for the ‘other business space’ lasts and in which manner notice is given. In these leases, the parties are free to agree on any rental period they wish.
Temporary lease for medium-sized businesses possible
Despite the fixed rental periods that apply to the rental of medium-sized business premises, it is possible to agree on a rental period that is shorter than five years. This rental period is then two years or less. In practice, this is often chosen as a trial period. With a lease for two years or less, the tenant of the medium business accommodation has the option to terminate the lease if it appears that his business is not going well. With a lease of two years or less, the landlord is given the opportunity to rent out the business space for a short period of time, if it is not available for five years, or to terminate the lease for medium business space at the end of the temporary lease period if the tenant does not like it.
No rent protection for temporary leases of medium-sized business premises
It is important to note that when the tenant and landlord of medium-sized business premises enter into a lease for the duration of two years or less, there is no rent protection for the tenant. After all, the idea is that parties are free to agree on what they want for a certain duration. The tenant and the lessor of the medium business accommodation may, in the case of a lease for two years or less, choose how the contract will end. This may be by notice, by the occurrence of a resolutive condition or by operation of law at the end of the agreed contract period. It is also possible that only one of the parties can terminate the lease or that certain conditions apply. Consider the case where the tenant of medium-sized business premises can terminate the lease after the first two years if his turnover remains below a certain level. In the case of termination by the landlord, the landlord is not bound by the statutory grounds for termination and the lease does not end only after the courts have been involved if the tenant does not agree to the termination.
Conversion of temporary lease into a five-year lease for medium-sized business premises
If a temporary lease is extended for two years or less, the trial period lapses and the rent protection rules that apply to the lease of medium-sized business premises apply. The lease will then last for five years after all. Renewal of such a temporary lease may also be tacit. To prevent such a temporary lease from being qualified as a regular lease for the duration of five years (with rent protection) it is important that the intention of the parties is clearly recorded in the lease. It must also be clearly written down how the temporary rental agreement ends.
Lease period of two years or less must be expressly included in the lease agreement for medium-sized business premises
If, for instance, a lease for medium commercial premises is concluded for a period of five years, but with a possibility of premature termination after two years, it makes sense to explicitly state that the first two years are intended to be a two-year lease, pursuant to Section 7:301 of the Dutch Civil Code. In order not to run a risk, a lease for medium business accommodation can always be entered into for the duration of two years or less. After that temporary rental period, the tenant and the landlord can discuss entering into a new rental agreement with rent protection or for the additional duration of the temporary rental agreement.
Rental period for medium-sized businesses longer than two years but shorter than five years only possible with court approval
If the tenant and the landlord of a medium-sized business accommodation want to agree on a rental period that is longer than two years but shorter than five years (for example three years), permission must be sought from the court. After all, in the case of a three-year lease, the normal rent protection rules apply, which entitle the tenant to a minimum rental period of five years. Deviating clauses can be annulled by the tenant. Annulment is not possible if the court has approved the clause containing the deviating rental period. This request to the court can also be made after the tenant has annulled the clause. However, the court will only give its approval if the clause does not substantially affect the tenant’s rights or if the social position of the tenant compared to the landlord is such that he does not reasonably need the legal protection. The request to the court must be made by filing a petition by a lawyer.
Lawyer rental law business space Rotterdam
Are you a tenant or landlord of commercial property and do you want to know what possibilities there are in your case for concluding a temporary lease agreement for commercial property? Please contact Yvonne Jansen. It is important that the agreements are properly written down in the lease.