New Flemish rental decree on the cards

On 14 July 2017 the Flemish Government approved the draft bill for the Rental Decree (the Huurdecreet), which aims to provide greater legal certainty in the contractual relationship between lessees and landlords. In anticipation of the Rental Decree coming before the Flemish Parliament, we are highlighting the new aspects of the draft bill.

Towards a broader scope: ‘a property or a part thereof intended for occupancy’
A significant difference between the federal Residential Rent Act (the Woninghuurwet) and the Flemish counterpart is that the latter will not only apply to the rental of accommodation as a principal residence but also to the rental of student accommodation, non-permanent forms of rental such as a second home and holiday homes and even to the rental of certain moveable property, such as caravans and houseboats. This means that the lessee – who is traditionally the protected party – of a caravan can invoke the relevant provisions of the Rental Decree even if they are not set out in the lease.

New required details in the lease
Aside from the traditional details such as the identities of all contracting parties, the start date of the agreement, the description of all rooms and parts of the building that constitutes the object of the rental and the sum of the rent (imposed by article 1bis of the Residential Rent Act), the Flemish Rental Decree aims to introduce a number of new elements that must be included. These are (i) the National Register numbers of the natural persons involved, (ii) the registered offices of the legal entities involved, (iii) the exact duration of the agreement and (iv) the arrangement with respect to costs and charges. The authorities shall refuse to register the lease if these items are not stated.

Insurance
When it comes to insurance the liability of the lessee is extended to include fire and water damage. The lessee is also legally obliged to take out fire insurance for the rented accommodation that covers both fire and water damage.

A ‘statutory annexe’ is no longer required
A standard annexe is required for each lease in all three Belgian regions, which sets out for the lessee and the landlord a number of important aspects of the rented accommodation laws. This is no longer required in Flanders, and the Flemish Government will create a new explanatory memorandum for the new Rental Decree. In practice, we believe it is advisable to still provide this annexe to the lessee, so that that party is sufficiently informed of his or her rights and obligations.

The rent guarantee scheme
The maximum rent guarantee is once again raised from two to three months, with the exception of student accommodation. The rent guarantee in the form of a bank guarantee is to be scrapped. Aside from the traditional transfer to a ‘blocked account’ in the lessee’s name, two new forms of rent guarantee have been introduced: a personal guarantee by a third party for the entire duration of the lease and a commercial security deposit with a financial institution in the name of the lessee.

Option to terminate short-term leases
An innovative aspect of the draft bill is that also short-term leases – such as a two-year lease – can be terminated by the lessee. There is a period of notice of three months and a cancellation fee shall be payable, the upper limit of which is to be determined in the Decree. The Flemish Government hopes that this will eliminate the legal uncertainty that presently exists in this respect as, while the Residential Rent Act does not permit lessees to prematurely terminate short-term leases, certain legal precedents are more malleable, with rulings that the lessee can exercise this right.We will naturally follow further developments closely and adapt to the new legislation. If you have any further questions and/or require information, please don’t hesitate to contact our Business Legal colleagues.

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