Rent Reduction for Business Premises

When circumstances change dramatically after a lease has been signed, Dutch law offers one route: unforeseen circumstances. Under Article 6:258 of the Civil Code a court can modify or dissolve a contract where circumstances have arisen that the parties did not incorporate into their agreement and that are of such a nature that the other party cannot reasonably expect the contract to be maintained unchanged.

The coronavirus pandemic produced the leading application of that rule for business premises. In its ruling of 24 December 2021 (ECLI:NL:HR:2021:1974), the Supreme Court held that a government-ordered closure of hospitality and retail premises was an unforeseen circumstance justifying a rent reduction, and it set out a method for sharing the resulting loss between landlord and tenant rather than placing it on one of them. That reasoning is not confined to the pandemic: it remains the framework for any drastic external event that disrupts a lease.

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

Yes, in principle: a lease keeps running even during a crisis that neither party foresaw. Two situations matter for what happens next. The first is a business that is legally barred from operating, such as hospitality or non-essential retail. The second is a business that may stay open but chooses to close voluntarily. The consequences for the rent differ between the two.

Can a tenant rely on force majeure?

Not automatically. Your lease may already regulate this in its force majeure clause, and most business leases in the Netherlands use the standard ROZ (Raad voor Onroerende Zaken) model, whose general provisions rule out a claim for rent reduction on this ground. Outside that clause, the statutory definition of force majeure applies: non-compliance is excused only if it cannot be attributed to the tenant.

A closure ordered by the government is not, on its own, the tenant’s fault. Even so, courts have been reluctant to accept a straightforward force majeure defence against the rent obligation itself, because the tenant’s payment duty is a money debt and money debts are rarely excused this way. The more workable route has turned out to be Article 6:258 BW, discussed below, rather than force majeure.

If a tenant closes voluntarily, without a government order, the position is weaker still: the reduction in turnover then sits closer to normal entrepreneurial risk, and any claim for a rent adjustment has to be judged case by case.

Can you claim a rent reduction for unforeseen circumstances?

Yes, and this is the route the Supreme Court confirmed. Both tenant and landlord can invoke Article 6:258 BW where a crisis makes continuing the lease unchanged unreasonable. An ordinary economic downturn is usually for the entrepreneur’s own account, but a government-ordered closure is different: it is an external, unforeseeable event that neither party priced into the contract.

Courts apply this route with restraint, in line with its legislative history, and only step in once the effect on the tenant is significant. For leases entered into before the relevant government measures took effect, the Supreme Court’s fixed-costs method (vastelastenmethode) gives a concrete calculation: the rent due is reduced in proportion to the tenant’s loss of turnover during the closure, with any government support (such as TVL) deducted first, and the resulting disadvantage is then split, in principle 50/50, between landlord and tenant.

An illustrative example: a hospitality tenant paying a fixed monthly rent sees turnover fall sharply during a government-ordered closure, compared with the same period a year earlier. Government support already covers part of the tenant’s fixed costs, including a slice of the rent. The fixed-costs method first deducts that support from the contractual rent, then applies the turnover-loss percentage to what remains, and finally splits the outcome, typically half each, between landlord and tenant. The precise figures always depend on your own turnover and the support you actually received, so we would need those numbers to calculate a reduction for your situation.

Can you claim a defect in the rented property?

A separate route is a claim for reduction or compensation because the property has a defect: a condition that deprives you of the enjoyment you were entitled to expect, such as a construction fault, a leaking roof, mould, or the inability to obtain an operating permit because of a missing emergency exit.

A government-ordered closure is not treated as a defect in the property itself. Poor trading because customers cannot come in falls within the tenant’s own entrepreneurial risk, particularly where the premises can still be used in another way, for example for delivery or collection.

Do you still have to keep your business running (the exploitation obligation)?

Most business leases, again typically through the ROZ general provisions, include an obligation to use the premises “effectively, completely, properly and personally”. This operating obligation can also follow from the law itself in specific circumstances.

Where a measure specifically orders premises such as hospitality venues, sports and fitness clubs, saunas or similar businesses to close, a tenant who complies is not in breach of this obligation.

You remain obliged to follow government instructions, and as an employer you must keep the workplace safe; that duty can itself require you not to expose staff to a health risk. A landlord cannot force you to keep operating against either obligation.

Even where a tenant closes voluntarily, out of concern for staff or customers, a landlord is unlikely to succeed with a claim for performance, a penalty, or damages: reasonableness and the tenant’s own duty to limit damage work against such a claim.

Can you switch to takeaway or delivery instead of closing entirely?

A lease usually sets a specific permitted use, and collection or delivery is not always the same thing as running a restaurant. Strictly read, switching to that model could be a breach of the agreed purpose, with a penalty at stake.

In practice this is hard for a landlord to challenge. A tenant who moves to collection or delivery is doing what the duty to limit damage requires; a landlord is more likely to have a complaint if a tenant does the opposite and lets the business stand idle instead of keeping some income coming in to pay the rent.

What does the duty to limit your own damage mean here?

Both parties must limit their own loss as far as possible. That includes using available government support schemes before asking the other side to absorb the loss: a tenant who ignores that support will find it harder to pass the shortfall on to the landlord, and the same applies in reverse if a landlord ignores reasonable relief measures.

A lease remains a binding agreement, but in a crisis of this kind we recommend talking to the other party before going to court. Tenant and landlord usually have a shared interest: the tenant has less income while the landlord’s own costs continue, and neither benefits if the business fails.

A common outcome is a temporary arrangement: part of the rent is paid as it falls due, and the remainder is caught up once the business reopens or turnover recovers. Do not let a dispute escalate into a hasty decision; we are happy to advise on the options that fit your situation.

Frequently asked questions

Does it matter when your lease was signed?

Yes. The fixed-costs method was developed for leases that were already running before the relevant closure measures took effect. If you signed your lease after those measures were known, a court is less likely to accept that the closure was genuinely unforeseen for you, and the outcome then depends more on the specific wording of your contract.

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

Often, yes. Rather than an outright reduction, landlord and tenant can agree that the shortfall is added to future instalments once turnover recovers. That keeps the lease and the relationship intact, and it avoids either side carrying the loss until the business reopens.

Does this framework only apply to hospitality and retail?

No. The reasoning of the Supreme Court applies to any lease of business premises hit by a government-ordered closure or a comparably drastic, unforeseen event. Offices and other commercial premises can rely on the same route, though the outcome still depends on how each business was affected.

In summary

A lease keeps running during a crisis; the question is whether the rent, or the obligation to operate, can be adjusted.
Force majeure rarely excuses the payment of rent itself; Article 6:258 BW (unforeseen circumstances) is the route that has worked in practice.
Following the Supreme Court’s ruling of 24 December 2021 (ECLI:NL:HR:2021:1974), a government-ordered closure can justify a rent reduction under the fixed-costs method, generally splitting the disadvantage 50/50.
A government-ordered closure is not a defect in the property, and voluntary closure is judged more strictly than an order you must comply with.
Both sides must limit their own loss, including by using available government support, before shifting it to the other party.