Dutch Landlords fear rent Refund after court rulings
May 15th, 2024
A large number of Dutch landlords of private sector rental properties are concerned about potentially having to refund billions of euros due to recent court rulings that have questioned their rent increases over the past few years. This has been confirmed by the industry association IVBN following reports from the FD newspaper.
These landlords have so-called rent increase clauses in their contracts, which specify by how much they can increase the rent annually, usually the inflation rate plus a few additional percentage points. However, in various court cases, magistrates have ruled that such rent increase clauses violate a European directive on unfair terms in consumer contracts. This directive states that rent increases must not be excessively disadvantageous to tenants.
Potential Refunds Up to 6.4 Billion Euros
Judges have ruled that the rent increases were unfair, which could ultimately mean that landlords may need to roll back rent increases from the past years and refund tenants for overpaid rent. Landlords have appealed these rulings, and a final decision is pending from the Supreme Court.
If the Supreme Court rules against the landlords, they may have to refund up to 6.4 billion euros over the past 15 years. This estimate was calculated by real estate advisory firm CBRE on behalf of IVBN. If the inflation adjustment is upheld but the additional increases are not, the damage could be as much as 1.7 billion euros.
According to IVBN, such refunds would lead to financial problems for landlords and a significant impact on pension fund participants, as pension funds invest heavily in rental properties.