Renting a commercial property: ensure a proper lease agreement

Anyone renting commercial premises must first determine under which tenancy regime the property falls: tenancy of retail business premises (Article 7:290 of the Dutch Civil Code) or tenancy of “other” business premises (Article 7:230a of the Dutch Civil Code). This classification determines the level of tenancy protection you enjoy, how easily the lease can be terminated, and which notice periods apply. An incorrect classification or a carelessly drafted lease agreement can saddle you as an entrepreneur with unfavorable conditions for years. Below, you can read what to look out for before signing.

What are the two tenancy regimes for commercial premises?

Dutch tenancy law makes an important distinction regarding commercial premises. Which regime applies depends on the type of use the parties have in mind – not on what happens to be on the sign on the facade. The court considers the factual agreement and the intended use, as evidenced by the lease agreement and the circumstances at the time of entering into it.

Retail business premises (Article 7:290 of the Dutch Civil Code)

This includes premises where the public directly purchases products or services and which require a fixed location for that purpose. Examples include a shop, a restaurant, a café, a hotel, a takeaway business, or a craft business with a point of sale. Broader protection rules apply to the tenant for this type, including regarding the duration and termination of the agreement. The rationale behind this is that such businesses are location-bound: a restaurant builds up a clientele and goodwill at a specific location and cannot simply relocate.

Other business premises (Article 7:230a of the Dutch Civil Code)

This is the residual category: business premises that do not fall under Section 7:290 of the Dutch Civil Code. Examples include offices, a law firm or administrative office, practice space, a storage warehouse, or a factory hall without a public counter. Here, statutory tenancy protection is more limited. The tenant primarily enjoys a form of eviction protection, but their position is clearly weaker than with retail business premises. Much of what applies between the parties is determined by the contract itself in this case.

Mixed use: what if both functions come together?

Sometimes a property has both a public function and an office or storage section, for example a workshop with a small counter or a showroom with a warehouse. The question of which regime applies in such cases is not always easy to answer. What the parties had in mind as the primary use and how the components relate to one another are usually decisive. In the case of mixed use, it pays to have the classification assessed in advance, precisely because so much depends on it.

Article 7:290 of the Dutch Civil Code versus Article 7:230a of the Dutch Civil Code: the most important differences

The distinction is not a formality. In practice, it determines how long you are assured of your location and how easily the landlord can make you leave. The key differences at a glance:

• Duration. For retail business premises (Article 7:290 of the Dutch Civil Code), a statutory starting point of five years generally applies, with a subsequent extension to a total of ten years. For other business premises (Article 7:230a of the Dutch Civil Code), the parties are in principle free to agree on a duration themselves.
• Termination and notice periods. For the scope under Section 7:290, strict termination rules apply and a generous notice period is customary; moreover, termination is only permitted on grounds specified in the law. Under Section 7:230a, termination is in principle simpler and shorter.
• Grounds for termination. A landlord of a 7:290 space cannot simply terminate the lease: he requires a legal ground for doing so, such as urgent personal use. The situation is different for a 7:230a space.
• Protection after termination. For other commercial premises, the tenant primarily has eviction protection: after termination, you can ask the court for a stay of eviction under certain conditions. This is different from retaining the lease agreement itself.

The precise time limits and conditions may vary depending on the situation and are partly subject to mandatory law. In case of doubt, have it assessed which regime applies to your property and what that means for your position.

Why is the right qualification so important?

The classification directly affects your legal position. If you mistakenly assume that you fall under the protective 7:290 regime, you may be in for an unpleasant surprise when the landlord wishes to terminate the lease. In the case of “other business premises” (7:230a BW), a landlord can in principle terminate the lease more easily than in the case of retail business premises, where stricter conditions and time limits apply.

Important to know: the rules regarding commercial premises are partly mandatory. Therefore, parties cannot simply deviate from them in the contract, even if this is stated in the contract. A clause that protects the tenant may be legally valid, whereas a clause that undermines that protection will not hold up. Sometimes, a deviation to the detriment of the tenant is only valid after approval by the court. Therefore, whether an agreement counts cannot always be determined from the literal text. In case of doubt, have this assessed by a legal expert.

What else should you look out for in the rental agreement?

In addition to the correct type of lease agreement, the specific provisions determine whether the contract aligns with practice. A few points that often lead to disputes in practice:

• Purpose and use. The contract states the purpose for which you may use the property. If you use the property contrary to that purpose, you risk a breach of contract (non-performance) which, in the worst-case scenario, can lead to termination of the lease. If you rent a space as an administrative office, you cannot simply place a production machine there.
• Shell or turnkey. With a shell rental, you are essentially renting the “bare” space and are responsible for facilities, finishing, and installations yourself. The situation is different for a more fully completed (turnkey) space. Clearly agree in advance on who is responsible for what, including maintenance and repairs.
• Term, renewal, and termination. Check the duration, the renewal and notice periods, and the method of termination. These differ significantly depending on the tenancy regime.
• Maintenance and defects. Specify which maintenance obligations lie with the tenant and which with the landlord, and what happens in the event of defects in the property.
• Indexation and additional costs. Review the agreements regarding rent changes, service charges, and VAT. Also, check whether the landlord is permitted to charge VAT on the rent and what that means for you.
• Security deposit or bank guarantee. Many landlords require security. Pay attention to the amount and the conditions under which the landlord may invoke the guarantee or offset the security deposit.
• Subletting, substitution, and business transfer. If you wish to sublet (part of) the premises later or sell your business, it is important to determine whether the contract permits this. Under a space governed by Section 7:290, substitution is possible under certain conditions, allowing a successor to continue the lease.
• General terms and conditions. Standard general terms and conditions are included with many commercial leases. These often contain clauses unfavorable to the tenant. Read these just as carefully as the main contract.

Do you want to know which agreements are sensible in your situation? Our legal experts review and draft lease agreements for commercial properties .

What are the risks of an incorrect or careless lease agreement?

The consequences of an incorrect classification or a careless contract are not theoretical. A few real risks:

• You count on tenant protection that turns out not to exist, and find yourself on the street sooner than expected.
• You are stuck with a contract duration or notice period that does not fit your plans.
• A deviation from the agreed purpose constitutes a breach, with termination or liability for damages as a possible consequence.
• Unclear maintenance or hull provisions lead to unexpected costs.
• An unfavorable warranty or set-off clause will cost you an unexpectedly large amount of liquidity in the event of a dispute.

New entrepreneurs, in particular, make this mistake, precisely because a lease is entered into for years. Having it thoroughly checked far outweighs the costs of a dispute afterwards.

Step-by-step plan: this is what you do before you sign

1. Determine which tenancy regime applies based on the intended use (Article 7:290 or Article 7:230a of the Dutch Civil Code).
2. Check whether the destination in the contract matches what you are actually going to do.
3. Read the term, renewal, and termination provisions carefully.
4. Determine who is responsible for maintenance, facilities, and repairs (shell or turnkey).
5. Check the agreements regarding the security deposit, bank guarantee, indexation, and additional costs.
6. Review the general terms and conditions and any appendices just as critically as the main contract.
7. If in doubt, have the contract legally reviewed before you sign.

Would you like to have the contract properly reviewed or drafted first? Then read more about our tenancy law for entrepreneurs.

Frequently asked questions about renting commercial property

What is the difference between Article 7:290 of the Dutch Civil Code and Article 7:230a of the Dutch Civil Code?

Article 7:290 of the Dutch Civil Code concerns commercial premises for small and medium-sized enterprises with a public function, such as shops and hospitality establishments, with broader tenancy protection. Article 7:230a of the Dutch Civil Code concerns “other” business premises, such as offices and warehouses, with more limited protection. Which regime applies depends on the intended use and not on the designation in the contract.

How long does a lease agreement for a retail or hospitality property last?

For business premises for small and medium-sized enterprises (Article 7:290 of the Dutch Civil Code), the law generally provides for an initial period of five years, with a subsequent extension to a total of ten years. For other business premises (Article 7:230a of the Dutch Civil Code), the parties in principle determine the duration themselves. The exact terms may vary depending on the situation; have them checked in case of doubt.

May the landlord determine the intended use of the property?

In the lease agreement, the parties jointly determine the intended use of the property. You may not use the property in violation of that agreed purpose. If you do, this may constitute a breach of contract, potentially resulting in the termination of the lease.

What does shell rental mean?

With a shell rental, you rent the space in a “bare” state and are responsible for the fitting out, finishing, and facilities yourself. It is important to establish in advance who is responsible for what, so that you do not face unexpected costs.

Can I terminate the lease early as a business owner?

That depends on the tenancy regime and what has been agreed in the contract. For retail business premises, you are generally bound by longer, legally determined terms. For other business premises, there is more room for your own agreements, but what the parties have stipulated applies there as well. Terminating the contract early without cause or outside the agreed times is usually not possible; therefore, have your position checked beforehand.

Can I negotiate the rental terms myself?

Yes. Many provisions in a commercial lease agreement are negotiable, especially for other commercial premises. At the same time, some protection rules are mandatory, meaning that not every deviation is valid. A legal review helps determine what is feasible and sensible.

Is it wise to have the rental agreement checked?

Yes. Because you often sign for several years, an incorrect classification or an unfavorable clause can have major consequences. A check beforehand prevents many problems and is generally cheaper than a dispute afterwards.

Have your lease agreement reviewed by MKB Juristen

A lease agreement for commercial property often binds you for years. Proper classification and clear agreements prevent unnecessary risks and costs. We review your lease agreement, explain the risks in plain language, and ensure you are legally secure – at clear, transparent rates and with a tailored approach. If you do not have a rental issue but another question, you can also turn to our general legal assistance for entrepreneurs.

Do you want to have your contract reviewed or do you have a rental issue? Schedule a no-obligation intake and we will help you further. Would you prefer to read more about our services first? Then check out our page on tenancy law.