Skip to main content

Eversheds Global Estate Management

Netherlands

Real Estate Guide

Principles of ownership

Principles of ownership

Freehold/Ownership - in Dutch law, ownership is described as the most comprehensive right a person can have. The owner of a (movable or immovable) property has the right to claim this from anyone who keeps it (without having such right). Leasehold, the right of superficies, apartment rights and easements are all rights in rem that are all derived from freehold. Ownership is unlimited in time and without conditions.

Leasehold - leasehold is a right in rem that grants the leaseholder the power to hold and to use immovable property of another person. The owner of the immovable property may impose an obligation on the leaseholder to pay a sum of money – the ground rent (‘canon’) – payable at regular or irregular intervals.

Common hold/Usufruct - not applicable.

Condominium ownership - not applicable.

Utilisation right - not applicable.

Joint/Co-ownership - restrictions on foreign ownership. There are no restrictions on foreign individuals or corporations buying, holding or selling property in the Netherlands.

Registration - as mentioned above, the Dutch Land Registry registers true copies of various notarial deeds. Upon registration it is apparent who, for example, is the owner of the immovable property. Tenants and/or tenancy agreements do not have to be registered in the Land Registry. Purchase agreements may be registered. Under some circumstances the registration of a purchase agreement protects parties from bankruptcy risks and later registered mortgages and engagements such for a period of 6 months after registration.

The right of superficies - is a right in rem to own or to acquise buildings, works and vegetation in, on or above immovable property owned by an other. The owner of the immovable property may impose an obligation on the leaseholder to pay a sum of money ('retributie') payable at regular of irregular basis.

Apartment rights - an apartment right is a form of community (co-ownership). Both buildings and unbuilt property (such as a parking area) can be divided into apartment rights. An apartment right grants an owner the exclusive use of part of a property. An apartment right is considered as a right in rem. Parts of the property that has been divided into apartment rights but do not belong to a specific apartment right are co-owned by all owners of an apartment right.

Easements - is an encumbrance imposed upon immovable property, the servient property ('dienend erf') in favor of another immovable property, the dominant property ('heersend erf'), consisting of an obligation to suffer rights on, above or under the servient property in favor of the dominant property, for example the right of way. The owner of the servient property may impose an obligation on the owner of the dominant property to pay a sum of money, payable of regular or irregular basis.

Agricultural tenancy ('pacht') - the extent of land used for agricultural purposes in the Netherlands has been decreasing for years. Farmers hold the land and/or buildings they exploit in ownership, leasehold or tenancy. The name 'agricultural tenancy' is reserved for the rent of ground and/or buildings in agriculture. An agricultural tenancy agreement means any agreement - in whatever form or under whatever name - by which one party binds itself towards the other party, for a consideration, to grant the use of a farmhouse or separate land for the purpose of practicing agriculture. In the Netherlands, agricultural tenancy is governed by mandatory law. Leases must be entered into in writing. A tenancy agreement must be approved by the Agricultural Tenancies Section (a division of the court). The tenancy agreement must be entered into for a fixed term. As a rule, this term is at least twelve years for a farmhouse and at least six years for separate land.

 

Restrictions on foreign ownership

Restrictions on foreign ownership

There are no restrictions on foreign individuals or corporations buying, holding or selling property in the Netherlands.

 

Title to real estate

Title to real estate

Investigation of title - the nature of the pre-contractual phase depends on the transaction. In larger immovable property transactions, the purchaser usually has a due diligence investigation carried out, mostly by an estate agent and a lawyer. This investigation starts from basic information, provided by the seller, on the immovable property. It includes, for example, the proof of title (deed of transfer), an extract from the Land Registry, information on the quality of the soil, and current tenancy agreements with regard to the immovable property. The seller is usually subject to an obligation to disclose and the purchaser to an obligation to investigate. The extent of these duties differs from case to case.

Transfer of title - not applicable.

Information on register - not applicable.

Commercial leases - not applicable.

 

Structure of a real estate transaction

Structure of a real estate transaction

Negotiation of commercial terms - commercial terms are usually negotiated between the estate agents/surveyors representing the seller/landlord and purchaser/tenant and the agreed terms are then provided to the parties’ lawyers.

Heads of terms – not applicable, see “Contracts”.

Investigation of title - the nature of the pre-contractual phase depends on the transaction. In larger immovable property transactions, the purchaser usually has a due diligence investigation carried out, mostly by an estate agent and a lawyer. This investigation starts from basic information, provided by the seller, on the immovable property. It includes, for example, the proof of title (deed of transfer), an extract from the Land Registry, information on the quality of the soil, and current tenancy agreements with regard to the immovable property. The seller is usually subject to an obligation to disclose and the purchaser to an obligation to investigate. The extent of these duties differs from case to case.

Purchase deed - not applicable.

Contracts - in the event of agreements between professional parties, purchase agreements or leases are generally prepared by a lawyer. The pre-contractual phase is governed in the Netherlands by the rules of good faith and of reasonableness and fairness. The starting point is that the parties, in principle, have the option of breaking off the negotiations before the final contract is created. In some cases, however, good faith, reasonableness and fairness may lead to a situation where the parties cannot simply break off negotiations. The good faith issue might be avoided when parties explicitly agree (for example in a Letter of Intent or in Heads of Terms) that there will only be a binding agreement if all parties involved have signed the purchase agreement or the lease agreement.

Completion/closing - not applicable.

Post completion - at the end of the lease term, if the parties do not use the contractual option to renew the lease, the lease will expire at the end of the term agreed. A notice of termination will usually still be required for this purpose, with a notice period of, for example, one year, pursuant to the lease that has been concluded.

Leases - in the Netherlands, the acquisition/transfer/issue of ownership, leasehold, right of superficies, apartment rights and easements are all effectuated by virtue of the execution of a notarial deed and the registration thereof with the Land Registry. Because of the fact that leasehold, right of superficies and apartment rights are all derived from freehold, these rights are all considered as rights in rem. Under Dutch law rights in rem can be mortgaged for example.

Transfer of ownership of leased property - (alienation) - The standard model of the Real Estate Council of the Netherlands (the ‘ROZ Model’) is usually used for leases of business premises. This model does not allow the tenant to sublet the leased property without the landlord’s prior written consent. The assignment of rights under the lease is also not allowed without the landlord’s prior written consent.

Language requirement – not applicable.

Governance of lease signature/administration – not applicable.

 

Usual commercial lease terms

Usual commercial lease terms

Summary of available lease types - not applicable.

Alterations/modifications - most leases for business premises do not allow tenants to make alterations to the leased property without the landlord's prior written consent.

Assignment and sub/under letting - not applicable.

Destruction/reinstatement - it is common for a tenant to be obliged to reinstate any alterations at the end of the term and to deliver the premises back to the landlord in accordance with its repairing covenants.

Duration of lease - length of commercial lease term. There are various kinds of leases. Residential leases are mostly governed by mandatory law. Tenants of residential accommodation enjoy a great deal of security of tenure, and a temporary lease for residential accommodation is only possible in a small number of specific cases. There are two kinds of leases for business premises: leases for so-called small and medium-sized business premises ('middenstandsbedrijfsruimte') and leases for other business accommodation. Tenants of premises for small and medium-sized businesses have economic ties with a specific location and are partly protected under Dutch rent law. This protection consists, for example, of a term protection of two times five years, and a certain degree of rent price protection.

Forfeiture/irritancy - not applicable.

Insurance – a landlord usually insures the building and recovers a contribution of the cost of insurance from its tenants. It is normally the landlord's responsibility to reinstate following damage and often there may be rights to break if reinstatement is not carried out within a specified period.

Rent deposit/bank guarantee - in some cases, the tenant is asked to pay a rent deposit. However, in most cases where business premises are leased, a bank guarantee is used for this purpose.

Rent review - an annual indexation of rent is made under the lease on the basis of the ROZ Model. For small and medium-sized business premises, a regulation applies in which parties can apply to the court to have the rent fixed anew once in five years.

Repair/decoration/furnishing - for tenants of residential accommodation, mandatory law provisions apply to the maintenance of the leased property. In principle, small repairs are payable by the tenant and large works are payable by the landlord. With regard to business accommodation, the parties are mostly free to make their own arrangements about maintenance. The tenant is usually liable for internal repairs and decoration, while the landlord carries out structural repairs of the whole building.

Service Charges - not applicable.

Tenant’s duties - not applicable.

Termination/break clauses - it is possible to negotiate early termination rights.

 

Increasing covenant strength

Increasing covenant strength

Lease deposit - not applicable.

Surety - if possible, a landlord will request a parent guarantee for a tenant.

Warranty - not applicable.

 

Security of tenure

Security of tenure

Security of tenure - The Land Registry is public and provides evidence of title and shows a description of the identity of the ‘owner’ and any matters benefiting and burdening the immovable property and the quality of title, for example mortgages.

 

Taxes

Taxes

On sale/acquisition of real estate - transfer tax is due by the purchaser when an immovable property located in the Netherlands is acquired. This tax is a levy of six per cent. It is not relevant where the purchaser or the seller lives or has its offices. The civil law notary will, in most cases, ensure that the tax is paid, and will deduct the transfer tax from the gross purchase price to be paid by the purchaser. The civil law notary involved is together with the purchaser liable for the payment of the transfer tax within one month after execution of the relevant deed.

Immovable property tax - not applicable.

Income tax - not applicable.

Land tax - not applicable.

Lease tax - not applicable.

Local tax - not applicable.

Mortgage - not applicable.

Other taxes - not applicable.

Property lease tax - the use and ownership of real estate is also taxed by the municipalities on a yearly basis. In general, municipalities are free to determine the tax percentage.

Value added tax - in principle, the lease of immovable property is not taxed with value added tax (VAT) in the Netherlands. However, parties may choose to charge VAT on the rent, because this is beneficial to both parties. This is only allowed if the activities undertaken in the leased property are at least 90 per cent. The transfer of immovable property is free from VAT. However, a transfer of 'new' immovable property (generally not older than 2 years) is immovable property is taxed with VAT and parties may opt for a VAT transfer under certain circumstances.