Tenant variant of the ROZ model: food for thought

In the Netherlands, the leasing of hotel and hospitality spaces often involves the use of the standard agreement created by the Dutch Real Estate Council (Raad voor Onroerende Zaken, or ROZ) for so-called "290 business premises" (the ROZ model). Earlier this year, a tenant-friendly version of this ROZ model was published. In this article, I explain the reasons behind this development and share some initial practical experiences.

The ROZ association is a platform for professional parties in the real estate sector who represent property owners’ interests, develop and/or realize real estate, mediate in leasing property, or provide professional services to these parties. No organizations that represent tenant interests are members of the ROZ.

The ROZ model is known in the market as being landlord-friendly. Wherever possible, it deviates from the law in favor of landlords. Other provisions in the ROZ model are also generally written to benefit landlords.

ROZ has a Legal Committee on Tenancy Matters composed of legal experts from among its members. This committee’s primary role is to keep the ROZ models up to date. In doing so, it anticipates new legislation, case law, and societal developments (including changes in the rental market). On its website, the committee states that it strives to consider tenants’ perspectives as much as possible in the process of updating the ROZ models. To that end, it seeks input from tenant organizations. The ROZ views the models it publishes as a good starting point for negotiations between landlord and tenant.

In early 2023, ROZ published a new update to the ROZ model. Since the model was finalized on December 14, 2022, it is referred to in the market as the “ROZ model 2022.” For this update, the ROZ did request input from tenant organizations.

Tenant variant

After the publication of the 2022 ROZ model, tenant organizations felt that their input had not been sufficiently incorporated. To promote a more balanced negotiation between tenants and landlords, trade organizations such as Koninklijke Horeca Nederland, INretail, the Vakcentrum, and MKB-Nederland, with input from various business associations, developed a Tenant Variant of the ROZ 2022 model and its corresponding general terms and conditions. This version includes several adjustments that better reflect the interests of tenants. The initiators hope this Tenant Variant will become the new market standard.

The Tenant Variant was published earlier this year (2024) and is available on the website of Koninklijke Horeca Nederland. The website also provides an explanatory note, an overview of amended and added clauses, a tenant version of the ROZ turnover rent clause, and a tenant version of the ROZ delivery report.

According to the initiators, the key adjustments in the Tenant Variant of the ROZ 2022 model include:

•  A more detailed description of the leased premises to better protect the tenant. One consequence is that the landlord becomes responsible for obtaining and maintaining the permits, exemptions, and consents required to operate the premises as a hotel or hospitality business.
•  Introduction of a minimum energy label C requirement. While this requirement already exists for office spaces, it does not yet apply to retail and hospitality spaces. Much of the Dutch real estate market currently does not meet this standard.
•  Adjustments to rent indexation to prevent extreme rent increases, including the introduction of a maximum indexation or graduated scale.
•  An alternative arrangement for a fairer distribution of service costs between tenant and landlord. For example, the landlord may only change or cancel agreed-upon services with the tenant’s consent. Additionally, the deadline for providing service cost settlements to tenants has been shortened.
•  Responsibility for asbestos and contamination is shifted to the landlord rather than the tenant.
•  The pandemic clause has been revised to better protect tenants from the financial impact of pandemics and other unforeseen events.
•  A focus on collaboration between tenant and landlord when discussing and recording sustainability measures.
•  More nuanced rules for maintenance, repairs, and renovations by the landlord.
•  Clearer and more tenant-friendly rules regarding subletting situations.
•  A more nuanced approach to the tenant's obligation to operate the business.
•  Revised liability provisions to better align with statutory regulations.

Freedom of contract

The law contains several (semi-)mandatory provisions that protect tenants of hotel and hospitality spaces. These cannot be overridden to the tenant’s disadvantage without approval from the subdistrict court judge.

Parties to a lease agreement for hotel or hospitality space are not required to use the ROZ model or the newly available Tenant Variant. If they do choose to use one of these models, they are free to agree on deviations, provided these do not conflict with the (semi-)mandatory provisions of the law. In practice, such deviations are common. If parties wish to deviate from (semi-)mandatory law, court approval is required.

Initial practical experiences

Among landlords, the Tenant Variant has been met with some hesitation. I have not yet seen examples where the Tenant Variant has been adopted in full. One sticking point is the requirement that the property must have at least energy label C at the start of the lease, which many landlords consider too far-reaching. Nevertheless, the Tenant Variant—or parts of it—has become a useful discussion tool when negotiating new leases or renewing existing ones. As a result, the Tenant Variant appears to support the development of tailored agreements between landlords and tenants.