Renting commercial property

If you rent commercial premises, you will have to deal with rules, rights and obligations. This information will ensure you are well prepared before signing a contract

The advantages and disadvantages of renting 

Renting property has many pros and cons compared to buying a property. 

Advantages of renting 

• You get more flexibility. Cancelling a lease is usually easier than selling a property. 

• Your lessor will usually pay for major maintenance. 

• You do not have to invest a lot of money at once as you do when buying a property.  

Disadvantages of renting 

• You are dependent on your relationship with the lessor. 

• Rents usually increase every year. 

• Hard to cancel early. Potentially long terms. 

• You have to consult with your lessor before making major modifications. 

Alternatives 

Renting commercial premises comes with certain obligations. Sometimes these are long-term commitments. Is that a problem for you? If so, consider other options, such as renting a chair at a salon or opening a pop-up space. Another option is renting flexible workspace in a multi-company building, where you share the building and its facilities with other self-employed professionals.

Rules for renting commercial property

There are different rules for renting commercial property. This depends on what type of space it is. 

1. Publicly accessible commercial space for businesses 

Some premises are open to the public. Think of shops or catering establishments. For these premises, the initial tenancy period is 5 years. After that, you can extend the tenancy by a further 5 years. The landlord cannot terminate the tenancy agreement during these periods. This is useful if you are building up a customer base or investing in fitting out the premises. The downside is that you cannot terminate the contract early either. The landlord may then claim compensation equal to the amount you would otherwise have paid in rent. The only way to get out of the contract is to find someone willing to take it over, subject to the landlord’s agreement.

Do you find these rental periods too long? Then you can ask the landlord to agree on a shorter period in the first lease. If your business does not do as well as hoped, you will not be stuck with a long contract. The same period of time to terminate the contract applies to the landlord. If you as a tenant and landlord continue with each other after the first contract, the second contract is automatically valid for 5 years.

2. Miscellaneous commercial space 

Miscellaneous commercial space includes rented storage space or office space. You can determine the rental period yourself in consultation with the lessor, deciding on a definite or indefinite period. When entering into a contract, think carefully about your expectations for the future. 

There is no mandatory rental period for miscellaneous commercial space, but you are protected against eviction. This means that the tenant has the right to petition the court for a 1-year extension if the lessor cancels the lease. 

Mandatory energy label for offices 

Office buildings larger than 100 m2 are required by law to have a class-C energy label or higher. Properties that do not meet these requirements can not be used as an office. It is the responsibility of the lessor or owner of the building to ensure that it meets the energy requirements. 

The lease contract

Landlords often use model contracts of the Raad voor Onroerende Zaken (ROZ, Real Estate Council) when drawing up a lease contract. Are you renting hospitality or retail space? There is a so-called Huurdersvariant (renter's version, in Dutch) of these models for your sector. In this version, sector organisations have made changes to the models that take the renter's interests into account.

Consult a commercial estate agent or lawyer when drawing up a lease. They are specialised in making clear arrangements. 

What should be included in a lease contract? 

A lease should contain at least the following information: 

• a description of the space in question 

• the size, surface area, of the space 

• the rent and when it is due

• the building’s zoning category, the inteded use for the building 

• the rental term and cancellation period

• options for extending the lease after the rental period expires 

And also agreements about:

• annual rent adjustments 

• service charges 

• utility costs (gas, electricity, water, etc) 

• maintenance 

• subletting

• municipal tax

Compare the rent 

Have you got your eye on a commercial property? Check what other premises in the area cost. Look into Funda in Business or bedrijfspand.com (both in Dutch). Before you sign a contract, you can still negotiate the price. That is easier than having to adjust the rent afterwards through legal proceedings. Estate agents determine the rent for small business premises using a calculation method laid down by law. They also compare the property with other premises.

Check the demarcation list

If you rent business premises, you will want to know what costs you are responsible for as a tenant. You can find this information in the demarcation list. This is a document that states who pays what costs. For example, you as the tenant are often responsible for painting the walls, while the landlord repairs large cracks. Or you pay for new lamps, but the landlord replaces defective wiring. So check this list carefully before you sign the lease. That way you know exactly where you stand.

Check the environment plan 

Check the municipal environment plan before you sign the lease to make sure you are actually allowed to run your business at that location. Ask whether the municipality has plans to redevelop or redesign the area in the future, as this could have a major effect on your turnover. 

Taking over a lease: subrogation 

If you are taking over a business based in a commercial space for medium-sized businesses, you are usually able to take over the existing lease from the seller. This is called subrogation and is regulated by law. The advantage is that you do not have to renegotiate the rent or terms, preventing a sudden rent increase from putting a spanner in the works. 

Is rent subject to VAT? 

Renting commercial space is usually exempt from VAT. This exemption can be disadvantageous for the lessor, because they will be unable to recover VAT paid on maintenance costs from the tax administration. You can agree to pay VAT on the rent after all. If you are registered as an entrepreneur for VAT, this is not a disadvantage. Because you can claim back the VAT on the rent yourself. But if you make use of the small businesses scheme (KOR), you will not be allowed to claim back the VAT. Talk to the lessor and ask them whether you can rent without VAT. 

The costs you incur for renting your commercial space are business expenses, which means you can deduct them from your income when filing your income tax return.