In May 2022, commercial tenants of real estate located in the Netherlands faced a 6.4% rent indexation, which represents an unprecedented increase in rent when compared to other years. The high index is largely the result of increased energy costs for consumers. These costs are expected to rise even more in the coming months, causing the indexation to have a much greater negative impact on tenants, and of course positive consequences for the landlord, who can implement a huge rent increase as a surprise bonus. Or not? Is there a legal remedy for the tenant?
What is going on? As is well known, the energy market has been turned upside down after Russia's invasion of Ukraine and the associated reduction or cessation of gas supplies by Russia has resulted in energy prices rising exponentially.
This affects both consumers and businesses. The peculiarity that arises here is that there are a large number of companies that are doubly affected. They first of all bear the higher energy costs, but in addition, the rent of industrial space is also indexed with an index, in which the increased energy costs are taken into account for 60%, and of which it is currently expected that this will only increase by 2022 and later. the pass will run.
There is a huge imbalance. The tenant has higher energy costs and higher indexation. The landlord has no energy costs, so no increased energy costs, and receives a very significantly increased rent as a gift. The question is whether this is justified. And to ask the question is to answer it.
At first sight there is nothing contractual about it. After all, in the general provisions of the widely used ROZ model, the rent is indexed annually according to the consumer price index (CPI) of Statistics Netherlands (CBS). The parties have therefore agreed on this and the main rule is that the parties must simply fulfill the agreements.
Fortunately, there is still the law that makes all too unreasonable agreements unenforceable, especially when it comes to an unfortunate combination of circumstances that had not been taken into account when the contract was concluded. This seemed like a dead letter of the law for a long time, but it isn't!
The Corona crisis has shown this. In many cases, the judge agreed to a rent reduction in connection with the forced closure of, for example, restaurants and shops. The underlying rule is that reasonableness precludes the landlord from placing the pain unilaterally with the tenant.
And this high unjustified indexation is of course also an unforeseen circumstance. The idea of the CPI index was that the index would not be too out of step with the general increase in costs or the increase in value of real estate. But the indexation for 2022 will lead to a rent increase of 6.4%, according to Statistics Netherlands, and it is anticipated that energy costs will increase een more. According to the CBS, this high index already consists of 3.9% point (situation in May 2022), so more than half of it consists of 'Energy incl. other fuels'. In short, the consumer is confronted with high heating costs and that would justify more than double indexation for the landlord. Obviously, no one intended that this kind of energy price rise caused by the situation in Ukraine would have such extreme consequences. Not the Real Estate Council and not the users of the ROZ model.
So yes, there is a problem that needs to be solved.
The obvious solution is that leases will not be indexed by 6.4% during this new crisis, but with core inflation, for example, of about 3.5%. That is reasonable and does justice to both parties.
Various industry associations advocate these kinds of solutions and I assume that there are landlords who, given the experiences during the Corona crisis, have no problem with a voluntary moderation of the indexation. Tenants should therefore certainly discuss this. I have now assisted various clients in this type of negotiation and I have to say that there are many landlords who are reasonable in the negotiation. That is a positive effect of the Corona crisis. It is now known that sometimes it is simply not enough to look at the letter of the agreement.
There are of course also advantages for the landlord. Satisfied tenants are also worth something. And in the most extreme case, going to court is avoided in any case.
If negotiation doesn't work, going to court is a realistic option. After all, Article 6:258 of the Dutch Civil Code gives the tenant the opportunity to request the court to change the consequences of an agreement, and that is what our firm can do for you!
Hein Kernkamp will gladly help you further.