18
Wednesday
October 2023
These are turbulent times for both tenants and landlords of real estate. Corona debts must be repaid, laws and regulations are becoming increasingly complex and the price of real estate is fluctuating. Meanwhile, inflation continues to work and, as an SME entrepreneur with a rental property, you can get a bizarre rent increase without pardon, based on the CBS price index figure. But is that actually allowed?
Higher gasoline prices due to inflation?
The standard ROZ models use the price index figure (CPI) of the CBS. This gave landlords the right to raise rent by 14.5% effective Jan. 1, 2023. Stand up to that as a retail or hospitality entrepreneur!
Fortunately, CBS concluded that the impact of increased energy prices on the index according to that method of calculation was incorrect. For example, I heard on the news the other day that we should expect higher gasoline prices due to inflation!?!? I think higher gas and oil prices are actually the drivers of this inflation? Nice flywheel effect we are creating here together then. A typical topic that you can bicker about over a pint.
Interest on interest and the tenant pays
CBS applied a new calculation method in June 2023, acknowledging that their previous calculation was not realistic thanks to the huge increase in gas and electricity prices. It is notable that no past correction was applied in this new calculation. This, of course, raises questions. In effect, this applied a kind of negative compounding (interest on interest).
Possibility of rent review
Therefore, with this knowledge in mind, I recommend including a cap on the index when concluding new leases. Or agree on a fixed percentage on future rent adjustments.
In addition, I would like to alert tenants of retail or hospitality facilities to the possibility of rent reviews. See Articles 7:303 and 7:304 of the Civil Code. However, this is only possible by the end of the agreed (initial or extended) term of the lease. Since rent is one of the largest expenses in the operation of a business, it is obviously important to keep a critical eye on it and negotiate so that you, as a business owner, can achieve a profitable operation. This shows good entrepreneurship and therefore is also in the interest of the landlord.
Buying as an alternative to renting
Finally, perhaps a somewhat unexpected tip, but also look closely at possibility of buying your rental location. It is difficult for many commercial real estate landlords to secure financing for such properties, but if you want to buy a property for your own use there are many financing options available to you.
Do you have a funding challenge?
For example for the (re)financing of your business premises or are you an investor and want to invest in loans to Dutch SME entrepreneurs or real estate investors? Stop by for a cup of coffee and we'll review the possibilities together. Feel free to call us at 06 57 26 38 44.
Or mail Maykel
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