Rent reduction after a government-ordered closure

If the government orders your business premises to close, you still owe rent in principle, but you can ask for a rent reduction on the ground of unforeseen circumstances under Article 6:258 of the Dutch Civil Code (BW). The Supreme Court (Hoge Raad) confirmed this on 24 December 2021 (ECLI:NL:HR:2021:1974) and set out a calculation method; it applies most clearly to leases concluded before 15 March 2020 and to businesses that depend on customers visiting the premises.

Under Article 6:258 BW a court can modify or dissolve a contract where circumstances arise that the parties did not price into their agreement and that are so serious that the other party cannot reasonably expect the contract to continue unchanged. The Supreme Court’s reasoning is not confined to the pandemic: it is the framework for any comparable drastic, external event that disrupts a lease.

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Do you have to keep paying rent if your premises are ordered closed?

Yes, in principle: a lease keeps running even during a crisis neither party foresaw. What follows depends on whether you were legally barred from operating, as hospitality and non-essential retail were in 2020 and 2021, or chose to close voluntarily while you were allowed to stay open.

If you close voluntarily, the drop in turnover sits closer to normal entrepreneurial risk, which Article 6:258(2) BW leaves for your own account. A claim for rent adjustment is then judged case by case and succeeds less often.

Can you rely on force majeure?

Rarely. Under Dutch law non-performance is excused as force majeure (overmacht) only if it cannot be attributed to the debtor, but rent is a money debt, and courts almost never excuse a payment obligation on that ground. Article 6:258 BW has proved to be the workable route instead.

Check your lease first. Most Dutch business leases use the standard model of the Real Estate Council (Raad voor Onroerende Zaken, ROZ), and its general provisions try to place certain risks, such as government measures, on the tenant. Those clauses can limit what you can claim, so read them before you stop paying.

How is the rent reduction calculated?

The Supreme Court introduced the fixed-costs method (vastelastenmethode). In short: the rent share of the government fixed-costs subsidy (TVL) is deducted from the rent, the remainder is reduced by the percentage of lost turnover, and the result is split 50/50 between landlord and tenant.

Step by step, the court expresses the rent as a percentage of your total fixed costs and deducts that percentage of the TVL you could claim. It then compares your turnover with a reference period before the pandemic to find the turnover loss. The reduction is (rent minus TVL share) × turnover loss × 50%, unless reasonableness and fairness require a different split.

The Supreme Court gave its own example: rent of €4,500, fixed costs of €25,000, TVL of €10,000 and turnover of €20,000 against a reference turnover of €100,000. The rent is 18% of the fixed costs, so €1,800 of TVL is deducted; €2,700 × 80% turnover loss × 50% gives a reduction of €1,080, or 24% of the rent.

Is a closure a defect in the rented property?

No. In the same ruling the Supreme Court held that a government-ordered closure is not a defect (gebrek) within the meaning of Article 7:204 BW, because it does not concern the property itself. The rent reduction for defects under Article 7:207 BW therefore does not apply.

A defect claim remains possible for a real problem with the property, such as a leaking roof, mould or an operating permit that cannot be obtained because the building lacks an emergency exit.

Do you have to keep the business running during a closure?

No, not where the government orders your type of business to close. Most ROZ leases contain an operating obligation to use the premises “effectively, completely, properly and personally”, but a tenant who complies with a closure order is not in breach of it.

As an employer you must also keep the workplace safe under the Working Conditions Act (Arbeidsomstandighedenwet), and a landlord cannot force you to operate against that duty. Where you close voluntarily out of concern for staff or customers, a landlord’s claim for a contractual penalty or damages will be tested against reasonableness and fairness (Article 6:248 BW).

Can you switch to takeaway or delivery?

Usually yes in practice, although the lease sets a permitted use and a delivery model is not always the same as running a restaurant. Strictly read, a different use can breach the lease and trigger a contractual penalty.

A landlord will find this hard to challenge. You must limit your own loss, and keeping some income coming in to pay the rent does exactly that; letting the business stand idle is more likely to be held against you.

What does the duty to limit your loss mean here?

Both parties must limit their own loss, including by using available government support before asking the other side to absorb it. The fixed-costs method builds this in: the TVL you could claim is deducted, whether or not you actually applied for it.

In practice landlord and tenant often agree a temporary arrangement: part of the rent is paid when due and the rest is caught up once turnover recovers. If you cannot agree, the subdistrict court (kantonrechter) decides, as it handles all rental cases regardless of the amount.

What should you check as a tenant?

Whether your lease was concluded before 15 March 2020 or later.
Whether the closure was ordered by the government or chosen by you.
What the lease and the ROZ general provisions say about force majeure and government measures.
Your turnover during the closure and in a comparable reference period.
Which TVL or other support you received or could have claimed.

What should you check as a landlord?

Whether the tenant’s business depends on customers visiting the premises.
The tenant’s turnover figures and TVL decisions, and whether they are complete.
Whether the tenant could have used the premises in another way, for example for delivery.
Your own fixed costs and financing, which can justify a split other than 50/50.
Whether any arrangement is recorded in writing as a temporary deferral or a final reduction.

What can we do for you with a rent reduction after a closure?

We advise both tenants and landlords of business premises; more about our work is on our tenancy lawyer page.

We review your lease and the ROZ general provisions for clauses that place the risk of government measures on you.
We calculate the rent reduction under the fixed-costs method from your figures.
We draft a proposal or a settlement agreement for a deferral or reduction.
We respond to a landlord’s claim for payment, a penalty or eviction.
We conduct proceedings before the subdistrict court if you cannot agree.

Summary

A lease keeps running during a closure; the question is whether the rent can be adjusted under Article 6:258 BW.
Force majeure rarely excuses the payment of rent, and a closure is not a defect in the property (Article 7:204 BW).
Under ECLI:NL:HR:2021:1974 the reduction is (rent minus TVL share) × turnover loss × 50%, for leases concluded before 15 March 2020.
Voluntary closure is judged more strictly than a closure you must comply with.
Both sides must limit their own loss, including by using government support.

Frequently asked questions

Does it matter when your lease was signed?

Yes. The Supreme Court applied the fixed-costs method to leases concluded before 15 March 2020. If you signed later, when the measures were known or foreseeable, the court assesses each case on its own facts and is less likely to accept that the closure was unforeseen.

Can the rent shortfall be repaid later instead of written off?

Often, yes. Landlord and tenant can agree that the shortfall is added to future instalments once turnover recovers. Record in writing whether it is a deferral or a final reduction.

Does this framework only apply to hospitality and retail?

No, but the Supreme Court focused on tenants whose business depends on customers visiting the premises. An office tenant who can keep working from elsewhere will find it harder to show that the closure seriously affected the use of the premises.