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Corona Crisis and Rent Reduction
The question of whether the corona crisis can lead to a rent reduction is a matter of great concern and has been discussed in numerous lawsuits with various judgments.
This matter is before the Supreme Court and – as is customary in these types of proceedings – the Prosecutor General has issued a preliminary advice to the Supreme Court on September 30, 2021. This preliminary advice is important because in many cases the Supreme Court follows that advice. However, that does not have to be the case.
The core of the preliminary advice is that with regard to agreements concluded before the corona crisis for the rental of business premises, where the tenant depends on the arrival of the public for his turnover in the rented property, such as in the case of catering and shops. that the corona pandemic and its consequences are an unforeseen circumstance, which may mean that the landlord may not expect the lease to be maintained unaltered according to standards of reasonableness and fairness.
Unchanged maintenance means in practice in many cases: rent reduction. In view of the outcome of the advice, it is irrelevant whether or not a business premises has been forced to close as a result of government measures. This means that, for example, the tenants of hotels that were allowed to remain open can also rely on these unforeseen circumstances.
The advice also focused on the calculation of the temporary rent reduction. This temporary rent reduction is based on the disadvantage that the tenant suffers as a result of the loss of turnover in the leased property attributable to the corona crisis. When determining the disadvantage, the amount received by the lessee in respect of the leased property to TVL (Compensation for Fixed Charges) can be discounted. As a starting point, the aforementioned disadvantage must be divided equally (50/50 between landlord and tenant).
The formula to arrive at a calculation is then:
(total actual costs – TVL amount) x (rental part of the actual fixed costs) x (percentage of turnover reduction) x 50%.
Finally, the circumstances of the case may lead to a different calculation or approach, but it would go too far to cover that in this blog.
Pieter studied Dutch law at Leiden University, after which he briefly served on staff at the former Dutch Ministry of Public Housing, Spatial Planning and the Environment.
Afterwards, he was an attorney and partner at the Leiden-based law firm of Van Hartingsveldt & Roest until 1991.
Pieter has worked as a founding partner of BOS VAN DER BURG since 1991.