What is the most suitable rental contract for renting out my property? That is one of most frequently asked questions from clients. Maybe you are aware of the fact that in the Netherlands tenants (in cases) can build up tenancy rights, and thus the right to stay in your property. Even if you need that property, for example for your own use. To prevent this, it is very important to choose the right contract when renting out your home.
If you are a homeowner, you are probably aware of the fact that 2024 has brought a lot of changes in the field of tenancy law. In particular with respect to temporary rental contracts (contract type B below). The new Fixed Rental Contracts Act severely restricts temporary rental and only allows it under a number of conditions. This law came into effect on July 1, 2024.
At Expat Housing we distinguish three different rental contracts; type A, B & C, which we will discuss below. Choosing the most suitable option depends entirely on our specific situation.
Contract Type A – Rental agreement for an indefinite period
Rental agreements for an indefinite period will be the standard again as of July 1, 2024. In principle, this contract cannot be canceled by the lessor. We include an initial period in our contracts. During this period (for example 1 or 2 years) the tenant cannot terminate the contract. This can be an important advantage of contract type A. It means that as a landlord, you have the certainty of rental income during that period and you know for sure that you do not have to look for a new tenant until this period expires.
A diplomatic clause for the tenant is often included in the contract. This clause entitles the tenant to cancel the rent during the initial period if he or she starts working more than 50 kilometers away from the property. After the initial period, the tenant can cancel the rent with a calendar months’ notice.
Contract type A does not give you the option to cancel the rent as a landlord. This can be a problem if you need the property again for your own use, or if you want to sell it. You don’t want to be stuck with a tenant for too long? Then we recommend renting to expats. They generally stay in the Netherlands for a maximum number of years. This way you can be reasonably certain that your home will be available again in the foreseeable future.
What is the best rental contract for you?
Contract Type B – Rental agreement for a definite period
As of July 1, 2024, renting out properties for a limited period has been severely restricted. Only in specific cases (explained below) renting out through a fixed-term rental agreement is permitted. If you still want to use contract type B, the following is good to know.
Contract type B is concluded for a minimum period of 6 and a maximum of 24 months. The lessor cannot cancel the agreement during this rental period. The tenant, on the other hand, always has the option of leaving the property early (with due observance of a notice period). As a landlord you do have to remind the tenant of the end date of the contract between 1 and 3 months before this end date. If you don’t do this, the contract automatically changes into a contract type A, which means the tenant now accrued tenancy rights.
Also good to know is that a type B contract cannot be extended as type B. When extended, the agreement automatically changes into a contract type A (indefinite period). This also applies if a first and second contract combined do not exceed the duration of 24 months. Do you not want your tenant to accrue rights? In that case your only option is to look for a new tenant for your property.
Contract Type B – when is it still allowed?
In a number of cases, offering a temporary rental contract is permitted. It concernes the following specific groups of tenants:
- Students who temporarily rent for their studies in a place other than where they live;
Those who
- temporarily live elsewhere due to work on or renovation of their home;
- can demonstrate that they come from a social shelter or are in a social emergency;
- get a 2nd or last chance after a previous rental contract has been terminated, for example due to nuisance;
- are between 16 and 27 years old and take over the rental agreement from their deceased parent/guardian who rented the property;
- get divorced, demonstrably no longer live together with their partner and temporarily rent a property to live close to their child(ren);
- work temporarily on one of the Wadden Islands, but normally live in a place on the mainland;
- are status holders who come directly from a COA shelter and are waiting for permanent housing.
Contract Type C – Rental agreement for a definite period – Intermediate rental
Are you going abroad for a specific period for work, study or travel and thus want to rent out your property? Are you also sure you want to move back into your property when you return? If so, an intermediate rental contract could be a very good option for you. A major advantage is that the maximum rental period of 24 months does not apply to this contract. In addition the contract can be extended with the same tenant (without building up tenancy rights). During the initial contract, neither the tenant nor the landlord can terminate the contract prematurely. As an exception, a diplomatic clause could be included here for the tenant. This is in case the tenant is forced to leave the property before the end date due to work.
After a possible extension of the contract, the tenant has a notice period of 1 calendar month. As a landlord, you can return to your home after the agreed period by means of the included diplomatic clause. In the event of an extension, you as a landlord have a notice period of at least 3 and a maximum of 6 months (depending on the number of years that the tenant has lived in the property). In all cases, you must inform the tenant in time if you want to return to the property at the end of the (extended) contract.
Contract Type C – Advantages & disadvantages
The major advantages of the intermediate rental contract are flexibility in duration and the option to extend the contract (several times). Of course this is great if you are not yet sure how long your stay abroad will last. With this contract it is very important that you really have the intention to return to your property. If you do not return to live there, the diplomatic clause does not apply and the tenants could in theory protest against the termination of the contract.
So… what is the best rental contract for you?
Which contract is best for renting out your property depends entirely on your unique situation.
Many landlords prefer contract type B if possible. Unfortunately, this contract is now only allowed for very specific groups.
- If you do not want to be tied to a tenant for a very long time, often our advice is to consider renting to expats (with contract type A).
- Are you going abroad temporarily? Then contract type C is certainly a good option.
- Are you not planning to use your home again in the future? And are you not planning to sell the house? Then contract type A could also be something for you.
Based on the above information you might already have a good idea of the best contract for you. Part of our service is providing rental contract advice tailored to your property, wishes and situation.
Do you want to know more about what is involved in renting out your property? You can read about this in the blog ‘How do I rent out my property to expats in Amsterdam?’. In addition you can take a look at our rental packages, or you can contact us!