Landlords beware: new obligations as of July 1, 2023!

Written and public policy on housing discrimination and harassment

First of all, a landlord has to draw up a written and public policy against housing discrimination that elaborates on how the rental process is organized as well as the objective, non-discriminatory selection criteria that are applied. This is in line with the obligation to provide a clear and transparent rental process. The policy should also describe the landlord's complaint procedure. The landlord's employees will have to be demonstrably informed about the procedure and other measures in the policy. In addition, the Act explicitly states that a landlord must refrain from any form of harassment.

New obligations when entering into lease agreement

Although it is very common for leases to be in writing, the Law explicitly prohibits oral entry. In addition to the written requirement, there are additional points that must either be included in the lease or that the landlord must take into account. Below we list them briefly.  

Rental Permit

Municipalities are given the authority to impose additional requirements on landlords in vulnerable neighborhoods, if necessary to maintain livability, in relation to maintenance and, in the case of regulated independent rental housing, the maximum rental price of a property. As such, the landlord must ascertain whether a rental permit requirement applies in the area in question and, if so, what requirements the municipalities set for the rental permit.

Security deposit, service and commission fees

The Law describes the maximum amount of the security deposit. The amount of the deposit may include a maximum of twice the bare rent and may only be set off against an outstanding rent debt, unpaid service charges or damage to the property caused by the tenant. In addition, the law stipulates a repayment period of 14 days, which is extended to 30 days if set-off takes place. In addition, in the case of set-off, the landlord is obliged to provide a detailed written statement of the amounts set off. In the case of mediation, the law additionally includes a prohibition on double commission fees.

Add information sheet

A new obligation that will lead to action by all landlords is to provide written information to the tenant on specific points of the rental relationship. This can be included as an information sheet attached to the lease. The specific points to be included in the information sheet follow from the law and the ministerial regulation that is currently under consultation.

It follows from the Act that the following topics must be included in the fact sheet:

• the tenant's rights and obligations should be included to the extent they do not already follow from the lease;
• The amount of the security deposit and how the amount is determined upon termination of the lease;
• tenant's contact information and the newly established municipal hotline for undesirable landlord behavior, which tenant can address;
• if service charges are also charged, in addition, the tenant's payment obligation must also be worked out and a full cost breakdown provided annually.

The ministerial regulation now up for consultation shows that an additional five sections will be added. Based on this, the fact sheet will also need to state:

• the permitted use (zoning), and the consequences if tenant does not comply;
• That the landlord may only enter the living or residence space with the tenant's approval, except for five statutory exceptions. These exceptions are - briefly - the urgent emergency, urgent work, permitted renovation, neighboring property and viewing;
• a reference to a website where an overview is provided of (i) the different types of rental agreements with the relevant rent and rent protection and the possibilities of annual rent increases, (ii) the possibility for the tenant to turn to the landlord in case of defects, and a what is meant by minor repairs, and (iii) the reasons for which the tenant can turn to the Rent Commission or the Subdistrict Court.

Unwanted rental behavior hotline and enforcement

For the implementation of the Act, municipalities will establish a hotline where tenants can report undesirable rental behavior anonymously and free of charge. This contact information should be included in the information sheet.

To enforce the Act, municipalities are given far-reaching powers. Violation of the rules of good landlord practices may lead to revocation of the landlord license, an order under penalty to undo the violation and/or a fine of up to EUR 90,000 for a repeated violation. For repeated violations, which is the case if an administrative fine is imposed twice within four years, the municipality may also decide to take the property into management or have it taken into management by a designated manager such as a housing corporation. The landlord then temporarily has no control over the rental of his premises, but does bear the costs of management. A particularly far-reaching measure that violates the right of ownership to a great extent.

In principle, the penalty decision or occupancy shall be disclosed to promote compliance and to inform house seekers and tenants. Only if it is determined that disclosure does not outweigh these interests will disclosure not occur.

Relevance to current leases?

Most of the rules will only apply to leases entered into after the introduction of the Act (July 1, 2023). On the other hand, however, the disclosure requirement will still apply to existing leases. Within one year of enactment, landlords must provide tenants with the aforementioned information sheet. For rentals to labor migrants, the information sheet should already be provided within three months after the effective date. For current rental agreements, the rental permit requirement may also still be relevant if the municipality institutes a rental ordinance. The landlord will then have to comply with the (new) conditions of the permit within six months.

Conclusion

The new Law not only imposes obligations on "rogue landlords," but affects all landlords. In preparation for the new law on July 1, 2023, a policy against discrimination and an information sheet will have to be drawn up. In addition, the new rental agreements will have to be drafted in accordance with the new requirements and take into account the possibility of a rental permit obligation with further requirements. So the Good Landlord Act certainly puts landlords to work!

Should there be any questions about the Good Landlord Act or need assistance in preparing the fact sheet, we are happy to help.

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