Association of Business Tenants
We have the answers
Business rental contracts are becoming increasingly complex. However, imperative provisions of the law and the practice of the courts take precedence over the contract. There are many questions that can only be answered on an ad hoc basis by a specialist in tenancy law.
Does the argument of average neighbourhood rents entitle the landlord to demand
an increase in rent? >
an increase in rent? >
Answer:
If you object to the increase, the landlord must provide proof of the reason for the increase. This is not an easy undertaking, even if rents have obviously increased since the last adjustment. The landlord must provide the rents for five identical, comparable rental properties that on average equal the rent demanded by him. This is a hurdle that is almost impossible to overcome. You have an even better chance by arguing that the current rent already gives the landlord a sufficient return. Because of the historically low mortgage interest rates, this is true in 95% of all cases. The rent may then not be increased.
If you object to the increase, the landlord must provide proof of the reason for the increase. This is not an easy undertaking, even if rents have obviously increased since the last adjustment. The landlord must provide the rents for five identical, comparable rental properties that on average equal the rent demanded by him. This is a hurdle that is almost impossible to overcome. You have an even better chance by arguing that the current rent already gives the landlord a sufficient return. Because of the historically low mortgage interest rates, this is true in 95% of all cases. The rent may then not be increased.
To what extent may the landlord pass on the renovation costs to the business tenant? >
Answer:
Check your rental contract. Unfortunately most rental contracts state that the landlord can pass on the costs for additional services or comprehensive renovations during the term of the contract – also for fixed-term and minimum-term contracts. If there is no such clause in the contract, the rent cannot be increased during a fixed-term rental relationship if you object to the increase. Usually the extent of the increase is in dispute. Landlords mostly try to charge the tenants 60% to 70% of all renovation costs, but such a flat-rate formula is only permitted for comprehensive renovations. Even then the courts often reduce the rate at which the costs can be passed on. – Protect yourself against excessive claims and consult a specialist.
Check your rental contract. Unfortunately most rental contracts state that the landlord can pass on the costs for additional services or comprehensive renovations during the term of the contract – also for fixed-term and minimum-term contracts. If there is no such clause in the contract, the rent cannot be increased during a fixed-term rental relationship if you object to the increase. Usually the extent of the increase is in dispute. Landlords mostly try to charge the tenants 60% to 70% of all renovation costs, but such a flat-rate formula is only permitted for comprehensive renovations. Even then the courts often reduce the rate at which the costs can be passed on. – Protect yourself against excessive claims and consult a specialist.
What additional ancillary cost payments am I obliged to make if the advance payments
were far lower? >
were far lower? >
Answer:
Unfortunately almost all of them, even if you have already made all advance payments. In a much criticized judgement, the Federal Tribunal found that the term "advance" does not necessarily refer to actual ancillary costs for the amount of the advance payments. The widely accepted assumption that the amount of the advance payment may only be exceeded by a certain percentage, similar to a cost estimate, therefore no longer applies. You should therefore ask for the guarantees you need when you negotiate the contract. Our tip: to protect yourself against unpleasant surprises, ask the landlord for a copy of the last ancillary cost statement before you sign the lease. But be careful: only ancillary costs that are listed in detail in the rental contract (and not, for example, in the general terms and conditions) must be paid. You should therefore always compare the statement of ancillary costs with the rental contract.
Unfortunately almost all of them, even if you have already made all advance payments. In a much criticized judgement, the Federal Tribunal found that the term "advance" does not necessarily refer to actual ancillary costs for the amount of the advance payments. The widely accepted assumption that the amount of the advance payment may only be exceeded by a certain percentage, similar to a cost estimate, therefore no longer applies. You should therefore ask for the guarantees you need when you negotiate the contract. Our tip: to protect yourself against unpleasant surprises, ask the landlord for a copy of the last ancillary cost statement before you sign the lease. But be careful: only ancillary costs that are listed in detail in the rental contract (and not, for example, in the general terms and conditions) must be paid. You should therefore always compare the statement of ancillary costs with the rental contract.
Must I accept a tenant in the building if his business is in direct competition to mine? >
Answer:
Landlords make many promises to the tenant before the lease is signed. Like a high pedestrian traffic and being the only one in its sector in the building. Bad luck if these were only empty promises, because then the business tenant cannot do anything against a new competitor. Even a restraint of trade clause in the rental contract is not much protection. The Federal Tribunal decided that the rental contract with the second tenant is valid and cannot be terminated by the landlord. You can therefore not ask for the competitor to leave the building. You do, however, have the right to demand a reduction in rent or the payment of damages or you can also terminate your own contract. But you will have to prove your loss in detail, which is very difficult in practice. Therefore, you should add a contractual penalty to the restraint of trade clause. You can then at least claim the contractual penalty if the owner should break the rules and rent premises in the building to a competitor.
Landlords make many promises to the tenant before the lease is signed. Like a high pedestrian traffic and being the only one in its sector in the building. Bad luck if these were only empty promises, because then the business tenant cannot do anything against a new competitor. Even a restraint of trade clause in the rental contract is not much protection. The Federal Tribunal decided that the rental contract with the second tenant is valid and cannot be terminated by the landlord. You can therefore not ask for the competitor to leave the building. You do, however, have the right to demand a reduction in rent or the payment of damages or you can also terminate your own contract. But you will have to prove your loss in detail, which is very difficult in practice. Therefore, you should add a contractual penalty to the restraint of trade clause. You can then at least claim the contractual penalty if the owner should break the rules and rent premises in the building to a competitor.
May I assign the business rental contract to my business successor during its term? >
Answer:
As a rule, yes. The assignment of the rental contract for business premises can actually be compelled, except if the landlord refuses because the new tenant is unacceptable. If the current business activities are continued, the only real reason for the landlord to refuse the assignment of the contract is the inability of the successor tenant to pay the current rent. The same degree of solvency as the current tenant is not required.
As a rule, yes. The assignment of the rental contract for business premises can actually be compelled, except if the landlord refuses because the new tenant is unacceptable. If the current business activities are continued, the only real reason for the landlord to refuse the assignment of the contract is the inability of the successor tenant to pay the current rent. The same degree of solvency as the current tenant is not required.
Can a notice to quit be opposed if the landlord claims that he needs the property for
own use? >
own use? >
Answer:
The previous principle that "a purchase supersedes a rental contract" no longer applies. The buyer must continue the rental contract. The only exception is if the landlord urgently needs the premises for own use. In this case, the purchase supersedes the rental contract. This can have fatal consequences for a business tenant who is dependent on his current location or has invested a lot in the rented premises. To effectively protect yourself against this you can have the rental contract entered in the land register, preferably by having the land register form signed at the same time as the rental contract.
The previous principle that "a purchase supersedes a rental contract" no longer applies. The buyer must continue the rental contract. The only exception is if the landlord urgently needs the premises for own use. In this case, the purchase supersedes the rental contract. This can have fatal consequences for a business tenant who is dependent on his current location or has invested a lot in the rented premises. To effectively protect yourself against this you can have the rental contract entered in the land register, preferably by having the land register form signed at the same time as the rental contract.
Can the landlord determine the rent freely at his discretion if the option to extend the contract
is exercised? >
is exercised? >
Answer:
What is decisive is how the extension option is formulated in your rental contract. If it says that the landlord may increase the rent for the extension period on the basis of prevailing market conditions, the landlord has free rein until the end of the fixed contract term. If you refuse the new conditions, the extension will fail. To avoid this risk you should agree a "real option" under which your current rent should also apply during the extension period. Alternatively, the landlord and tenant can appoint an expert to determine the market rent for the extension period.
What is decisive is how the extension option is formulated in your rental contract. If it says that the landlord may increase the rent for the extension period on the basis of prevailing market conditions, the landlord has free rein until the end of the fixed contract term. If you refuse the new conditions, the extension will fail. To avoid this risk you should agree a "real option" under which your current rent should also apply during the extension period. Alternatively, the landlord and tenant can appoint an expert to determine the market rent for the extension period.
Members receive personal answers to these and other questions on 044 461 00 00