How does temporary rental work?

Private clients find a temporary lease contract generally very pleasant, because they can take a look at what kind of meat they have in the rental tank. Until now, the temporary letting was always fine, but today the tenant has suddenly canceled the temporary lease contact after 3 months, while he signed a contract for a year. Can the tenant just cancel his temporary lease contract?

Wet Doorstroming Huurmarkt – “Law on the flow of the rental market”
Since the law on the flow of the rental market came into effect on 1 July 2016, it is possible to opt for three types of lease agreements that vary in terms of legal protection and duration.

The first type is the lease for an indefinite period, where the tenant benefits from rental protection. The landlord cannot just terminate this agreement, but is dependent on the legal termination grounds. And if the tenant disagrees with the termination, the case goes to court.

The second category – and that is new – consists of temporary leases, which end when the agreed time has expired. The tenant does not have rent protection. Independent living spaces may be rented out for a maximum of two years; the tenancy agreement must specifically state how long the house is rented out.

Finally, there are the lease agreements for a definite period of time, longer than two years. Then rent protection does apply: if the tenant does not agree with the termination, the landlord needs permission from the subdistrict court.

Intermediate cancelling
It is noteworthy that indefinite contracts gives the tenant the right to terminate a temporary lease contract before the end of the term. In theory, he can give it after roughly three months, despite the agreement to rent the house for one or two years. The landlord in turn is bound to the agreed rental period. The underlying idea is that this provision somewhat restores the balance of power between the tenant and the landlord, which is affected by the new law in the direction of the landlord.

Landlords often are not waiting for such premature cancellations. This entails all sorts of extra costs: temporary vacancy, administration costs and they must again hire a rental agent. In this case, the grubbing-up often arises. The landlord has no desire to pay another month’s rent to the rental agent within such a short period of time; the rental agent has no desire to do twice as much work for the same amount. In practice, the parties often agree to reduce the brokerage proportionally. For example, if the tenant withdraws the plug from a one-year contract after six months, the rental agent will receive half of the commission. This is, of course, a commercial choice: there are also agents who take the risk entirely at the expense of their client.

Starting term
Another issue is the (in) possibility to agree on a minimum starting lease term. Professional landlords regularly enter into lease agreements whereby the landlord and tenant agree that the agreement cannot be terminated prematurely. Usually it is a rental contract for an indefinite period with a minimum starting lease period of one year. The landlords hereby have the certainty that the tenant will stay for at least one year and pay the rent. There is debate about whether this is allowed under the Law on the flow of  the rental market. After all, it is easy to argue that this type of lease agreement is covered by the temporary contracts. And then the tenant has the right to cancel in the meantime.

For landlords who want to keep their tenants for a certain period of time and want to go completely safe, there is only one option which remains: a contract for more than two years. But then of course they are bound for the rent protection again.

Information obligation
Finally, two more important things. Although the temporary lease agreement ends automatically – without the need for cancellation – it does not mean that the landlord can lean back. He must inform the tenant in writing about the end of the rental contract, at the latest three months to one month before the end date. This can be done by e-mail (the landlord would be wise to ask for a confirmation of receipt), but in order to avoid misunderstandings, it is advisable to return the notification by registered mail and to have it sent with a signature. Be alert to this, advise your clients to enter these dates in their diaries. Because if the landlord does not inform the tenant in time, a rental agreement will be created for an indefinite period of time – with the usual rent protection.

Last but not least  landlords can only have a temporary lease contract with the same tenant once. After the first contract has expired, the landlord must therefore rent the house to someone else. A contract for an indefinite period of time will be automatically agreed upon, if the landlord does not terminate the agreement.