Indexing rent business premises by 14.5%: unreasonable or not?

Due to the unprecedented high inflation in 2022, there is much discussion between tenants and landlords about the indexation of the rent of business premises. Based on the widely used ROZ model rental agreement, many rents were increased by 14.5% effective Jan. 1, 2023. This is due to the calculation method used by CBS for inflation. Lawyer rental law Robert van Ewijk Discusses whether this can pass muster.

Interlocutory appeal over indexing rent of business premises

The first case, as far as is known, was before the district judge of the court in Gouda. It involved a summary proceedings which had been initiated by the landlord because the tenant refused to pay the rent indexed by 14.5%. However, the subdistrict court rejected the landlord's claims. In doing so, the Subdistrict Court found it important that CBS itself had determined that the methodology used at the time, due to increased energy prices, was no longer adequate. CBS has even announced a new calculation methodology. Under these circumstances, the tenant cannot be held to the indexation of 14.5%, the subdistrict court ruled. This ruling is dated May 4, 2023 and is a preliminary ruling in summary proceedings.

Bottom line: rent indexation of 14.5% unjustified

Meanwhile, there have also been a few rulings in proceedings on the merits. It was ruled that maintaining rent indexation based on the ‘old’ calculation method violates reasonableness and fairness. The first case was before the subdistrict court of the Rotterdam court. The court agreed with the tenant that an indexation over 2023 of 14.5% was unreasonable. The interesting part of the ruling, however, is that the court looked not only at the impact for the year 2023, but also for 2024.

New CBS calculation method for CPI (inflation).

In fact, CBS has been using a new calculation method since mid-2023. The new calculation method results in a rent price indexation as of January 1, 2024 of 0.21%. However, the old CPI index figures will not be adjusted retroactively. In fact, the new index assumes that in 2023 indexed at 14.5%. The tenant had claimed that the indexation be adjusted for the year 2023, but not for the following year. Although, according to the agreement, indexing in 2023 leads to a result unacceptable to the tenant, applying the agreed indexing in 2024 (and thus by 0.21%) unabatedly leads to a result unacceptable to the landlord. Therefore, the tenant's claim was still rejected. Admittedly with the judgment that for the year 2023 there is cause for adjustment of the rent indexation, but that was therefore of little use to the tenant.

Tenant and landlord in talks over rent indexation

To that same judgment came the Central Netherlands court in a dispute between a branch of Basic Fit and its landlord. The district judge in that case, however, resolved it a bit more practically. It indicated that the parties would probably not be helped by a ruling. Indeed, that would not solve the problem, the judge said. That is because lowering the indexation for 2023 would then lead to another dispute over indexation in 2024. Therefore, the judge ordered the parties to come to a hearing. There we can see if the tenant and landlord can mutually agree on a fair rent indexation.

Conclusion: 2023 rent indexation unreasonable only on its own?

The three rulings discussed lead to the conclusion that a rent indexation of 14.5% violates reasonableness and fairness. That much is clear. However, this is corrected by the new period used by CBS in 2024. The ruling of the Rotterdam District Court contains a calculation example on the progression of the rent if the old and the new calculation methods are followed. Both methods lead to the same rent in 2024. Only over the year 2023 it seems that there is a difference in the rent paid by the tenant. The question of whether that leads to the landlord's obligation to refund the ’overpayment’ has not yet been answered by a judge.