Secretary of State for the Economy, Francine Closener, today presented the outline of a draft law on commercial lease, originally adopted by the Government Council on 31 July 2015.
The provisions on commercial lease form part of the Civil Code section that the legislator had already previously reserved for the matter. The scope of the bill includes all commercial, industrial and artisanal leases and differs from current legislation in the following respects:
- The commercial lease agreement is always concluded for a fixed term. In the absence of such stipulation from the parties involved, the contract period will be three years;
- The parties may agree a rental deposit which shall not exceed three months' rent;
- A formal ban on the practice of 'doorstep' payments and other commissions that were sometimes imposed on payment takers on the one hand, and which encouraged lease givers to end the contract with previous tenants;
- The tenant may at any time request termination of the lease in the event of financial difficulties;
- During a period of nine years, the tenant has an absolute right to renewal of contract. This means that during the period stated, the tenant will not have to compete and bid with another potential tenant;
- After the nine year lease period is over, the lessor may retain the right to refuse renewal, without justification, by setting an eviction compensation equivalent to at least nine months' rent, or by accepting the offer of a third party who agrees to pay the eviction compensation of the evicted tenant;
- As the sublease may be cause an unwanted inflation in rents in the event of a full or partial sublease of the leased component in question, the lessor retains the right to replace the main policyholder in the relationship with the secondary policyholder and draw therefrom all financial benefits.
- In the event of contract renewal, the request must be formulated at the earliest during the year preceding the expiration of the lease contract and, at the latest, 9 months before the stated expiration date.
"When drafting the bill, we have taken into account the majority of comments submitted by consulted bodies and have paid particular attention to maintaining a balance of power between the lessor and tenant," explained Secretary of State for the Economy, Francine Closener, at a press conference held earlier today. "We did not opt for a rent cap mechanism as such a system has been introduced, for example, in France and has proved, through unanimous opinion, to have been a known failure."
Photo by Ministry of the Economy (L-R: Ralph Deischter, Minister of the Economy ; Francine Closener, Secretary of State for the Economy ; Gilles Scholtus, Minister of the Economy)
