Watch your (service) costs!

If you rent retail space as a retailer, you will often encounter costs charged by your landlord for supplies and services provided by or on behalf of them. Think, for example, of utility costs for individual consumption or for common areas, and services such as maintenance and periodic inspections of communal installations, cleaning, waste disposal, security, etc.

The law does not impose mandatory rules for such supplies and services, or for the costs a landlord may charge for them, in commercial lease agreements for retail spaces. Landlord and tenant are free to make whatever arrangements they wish when entering into the lease agreement. This is referred to as contractual freedom.

Despite this contractual freedom, tenants and landlords rarely negotiate the (package of) supplies and services. In most cases, landlords use the standard lease agreement model from the Dutch Real Estate Council (ROZ). This means—according to the 2022 ROZ model—that Article 5.1 of the lease outlines which supplies and services the landlord will provide, Article 4.8 specifies the advance payment owed by the tenant, and Article 21 of the general terms and conditions describes how those costs will be allocated and settled. Still, if negotiations allow, it can be very worthwhile to negotiate these points. Below are a few tips:

Tip 1

Some landlords use Article 5.1 to list a page-long overview of all conceivable supplies and services, many of which are not actually provided at the start of the lease. Instead, agree with your landlord that only the services actually being provided are listed. This not only provides clarity but also ensures that, based on Article 5.2, the landlord must consult the tenants’ association—or you personally—before changing the package of supplies and services.

Tip 2

While discussing Article 5.2, consider agreeing that consultation alone is not enough—changes to the supply and service package may only be made with consent. For example, in a shopping center, only with the majority approval of tenants; or in the case of a stand-alone shop, only with your personal approval.

Tip 3

It often happens that landlords set an advance payment amount without explaining how it was calculated. This can lead to unpleasant surprises at the final settlement, especially if the actual costs turn out to be much higher. In one court case, the real costs were more than double the tenants’ advance payments. Therefore, agree that the actual costs may never exceed the total advance payments by more than a certain percentage. This forces the landlord to make a solid estimate of expected actual costs.

Tip 4

If you are renting in a shopping center and costs are shared among tenants, ensure there is a clear explanation of how your share will be calculated—ideally via an example calculation attached as an appendix to the lease. Of course, the example should show a fair allocation, either based on rented floor space or another reasonable method.

Tip 5

To verify the landlord’s final settlement, you need insight into the actual costs incurred. While Article 21.4 of the general terms states that the landlord must provide a specified service cost overview, it does not define what this includes. Therefore, it’s wise to include in the lease that you have the right to inspect the underlying documents, such as supply contracts, service orders, invoices, and work orders.

Tip 6

The final sentence of Article 21.7 of the general terms states that you must pay the billed amount—even if you disagree with it. This means you must go to court to reclaim any excess service charges. It may therefore be useful to agree with the landlord to delete the final sentence of Article 21.7.

For more information, please contact Helma Sengers, specialist in property law and tenancy law.