Flemish decree on short-term renting of commercial premises in preparation

Spotlight
15 September 2015

A recent draft Flemish decree envisages regulating the rental of commercial premises for short periods.

In March 2015, Lorin Parys and Jos Lantmeeters, two members of the Flemish Parliament, introduced a draft decree in the Flemish Parliament regarding the renting of commercial properties for periods of less than one year. This initiative comes in response to an economic reality: many (young) entrepreneurs are keen to make use of empty buildings to test the viability of a retail concept before making large investments.

However, entrepreneurs who intend to run a pop-up store often find that owners of vacant commercial properties are unwilling to rent their premises for a short period. This reluctance is mainly due to their fear that short-term rent agreements concluded with the entrepreneurs will be reclassified as commercial rentals, and thus the rigorous provisions of the Act of 30 April 1951 on commercial rental agreements ("Commercial Rent Act") will apply. The Commercial Rent Act contains a series of strict rules, such as:

  • a mandatory minimum duration of nine years,
  • the right of the tenant to three renewals of nine years each,
  • the possibility to transfer the rental or sub-rent the commercial premises despite written prohibition,
  • the right of the tenant to terminate the commercial rental agreement at the end of each three-year period, provided the tenant gives notice of termination at least six months prior to the end of the rental agreement by means of a writ or by registered letter,
  • the right of the tenant to carry out works on commercial premises if (i) such works are "useful" (not "required") for the company, and (ii) the costs of the works are not higher than three years of rent, and (iii) the tenant informs the landlord by registered letter or by means of a writ prior to commencing the works.

To address this situation, articles 2 and 3 of the draft decree stipulate that the decree only applies to (i) the rental of real property, (ii) which is rented for the operation of a retail or artisanal activity by the tenant, (iii) with direct contact between the tenant and the public, and (iv) which, due to the nature or the designated use of the property or what is customary in the trade, are concluded for less than one year. Hence, the duration of the rental must be less than one year. Since Article 2, 1° of the Commercial Rent Act excludes rental agreements of less than one year from its scope, it is clear that the Commercial Rent Act does not apply to rentals covered by the draft decree applies.

Furthermore, the draft decree also contains the following stipulations, among others:

  • the rental agreements to which the draft decree applies terminate automatically upon their expiry; the tenant is not entitled renew the agreement,
  • transfer of the rental and sub-renting are prohibited,
  • the tenant is entitled to terminate the rental agreement at any time, by giving one month’s notice by means of a writ or by registered letter,
  • the tenant has the right to carry out works provided that (i) the cost of the works does not exceed the annual rent, and (ii) the tenant informs the landlord before the start of the works, unless otherwise agreed by the parties.

The draft decree is currently being discussed within the Flemish Parliament's Commission for Economics, Work, Social Economy, Innovation and Research Policy.