On Nov. 14, 2023, the Fixed Lease Law was passed by the Senate. This law provides that landlords of both self-contained and non-self-contained housing may, as a rule, only offer indefinite rental agreements. But what are the exceptions to this rule? AND what does this law mean for already current temporary leases?
Currently, the law provides for residential landlords to offer fixed-term leases to potential tenants. Landlords of independent housing can agree temporary leases of up to two years with tenants. Landlords of non-self-contained housing may additionally enter into leases of up to five years with tenants.
What do we mean by independent and non-self-contained housing?
An independent living unit is a living space with its own access, kitchen and sanitary facilities. In contrast, in the case of non-self-contained housing, the entrance, kitchen and sanitary facilities of the living space are shared by several residents.
Effective date of fixed lease law
It is expected that the Fixed Leases Act and the accompanying Order in Council will take effect on July 1, 2024. Late last year, however, the Minister of Housing did indicate that the law may be able to come into force earlier if the order in council is ready earlier. From the effective date, landlords of self-contained and non-self-contained housing are generally only allowed to offer fixed-term leases.
Exceptions to the rule
Only in certain situations will it continue to be possible to offer temporary leases. The groups to whom this exception applies will be included in an order in council. The draft decision of this general measure of administration was presented to the House of Representatives and Senate on February 2, 2024. This draft decision includes the following groups:
- students who wish to reside temporarily in another municipality within the Netherlands for their studies or are from abroad and are studying in the Netherlands;
- tenants living elsewhere temporarily due to urgent work or renovation of their homes;
- urgent housing seekers;
- tenants with whom the landlord enters into a second-chance contract (tenants whose previous lease was terminated, for example, because they caused serious nuisance);
- orphans and dependents;
- divorced parents;
- tenants who work in the Wadden Islands;
- permit holders (status holders) who come directly from a COA reception site and are awaiting permanent housing.
What does the law mean for leases already in place?
The effective date of the law will not affect fixed-term leases already in effect. These leases can be terminated on the agreed end date.
Until the law takes effect, it will remain possible for landlords to use the option of offering fixed-term leases to potential tenants. Alertness is needed, however, for leases that are signed before the law takes effect but will not commence until after the law takes effect. It does not follow from the bill whether such leases will then continue to qualify as fixed-term leases or whether they will still qualify as indefinite-term leases.
If landlords will still negotiate fixed-term leases with tenants after the Fixed Lease Law takes effect, these leases will still count as open-ended leases.
