On Friday 19 July 2024, two opinions of deputy procurator general Prof. M.H. Wissink (hereinafter: 'Wissink') were published. Wissink issued his opinions in preliminary ruling proceedings on rent increase provisions that are commonly used in liberalised tenancy agreements. In essence, the questions referred for a preliminary ruling focus on whether a provision under which rent is increased annually based on CPI indexation plus a surcharge of up to 3% is unfair within the meaning of the Unfair Terms Directive (Directive 93/13/EEC). In addition, they enquire into the implications this may have. In principle, Wissink answered this question of unfairness in the negative and set out what the possible consequences would be if a provision were in fact unfair.

Splitting the indexation clause and surcharge clause

According to Wissink, in view of various perspectives – which are relevant under case law of the Court of Justice of the European Union – the rent increase provision at issue here should first of all be split into an indexation clause and a surcharge clause. The reason for doing so is, briefly put, the differences in the effect and rationale of the two clauses. The clauses can then be separately assessed for any unfairness. The indexation clause is acceptable and therefore requires no further discussion, in Wissink's view.

Surcharge clause of up to 3% is not unfair

Based on various perspectives and, in this context, a review of Dutch tenancy law and rent law, Wissink subsequently assessed the surcharge clause at issue.

He concluded that – leaving aside any additional circumstances that might be relevant in individual cases – a tenancy agreement provision that provides for the annual application of a rent surcharge of up to 3% above CPI indexation generally cannot be considered an unfair term. It may be assumed that landlords of residential properties in the liberalised market have a legitimate interest in being able to adjust the initial rent. Further, the surcharge clause is transparent as to the timing and frequency of rent increases and the maximum surcharge percentage. The fact that the surcharge clause does not state any grounds for the increase carries less weight, says Wissink. This is because it is sufficiently plausible that there are reasonable grounds for the surcharge clause, specifically to absorb above-inflation cost increases and to keep pace with the property's value development.

Implications of any unfairness

Should the rent review clause or surcharge clause be held unfair, it must, in principle, be considered never to have existed. This would then entail the cancellation of every rent increase applied based on the unfair term since the beginning of the tenancy agreement. If a tenant has paid these rent increases, they were paid unduly. In rent arrears proceedings, the court will have to disregard any rent increases based on an unfair term, and the fact that the tenant has paid too much in the past based on the unfair term may carry weight in an assessment of whether any rent arrears justify terminating the tenancy agreement. However, the court cannot make a set-off of its own motion, according to Wissink. 

Wissink's opinions are available at ECLI:NL:PHR:2024:770 and ECLI:NL:PHR:2024:771 (in Dutch only).