Renting out a property with a diplomatic clause for the landlord
Renting out a property can be a profitable venture, but it also carries risks, especially with long-term leases. To mitigate these risks, more and more landlords are opting to include a diplomatic clause in their rental contracts. But what exactly is a diplomatic clause, and what benefits does it offer?
What is a diplomatic clause?
A diplomatic clause is a contractual provision that protects the landlord when they want to return to their own property. It has nothing to do with being a diplomat; you can use this clause even if you're planning to travel, for instance. However, there are specific requirements for this type of contract, which will be discussed further.
Definition and meaning of the diplomatic clause or interim lease
A diplomatic clause is a legal provision in a rental contract that allows both parties to extend the temporary agreement for an agreed-upon period. This type of contract is also known as an interim lease agreement. Unlike a temporary contract, this agreement can be extended without the tenant gaining rental protection.
Legal aspects of the diplomatic clause
The legal aspects of a diplomatic clause can vary depending on the applicable legislation and the specific clause included in the rental contract. It is important for landlords and tenants to understand the legal implications before committing to a diplomatic clause.
When entering into an interim lease agreement, a temporary contract is initially signed, which neither party can terminate in the meantime. If this period expires and the landlord has not yet returned to their property, a new period can be agreed upon with the tenant.
It is required that one of the following conditions is met:
The landlord is the owner of the property being rented out
The landlord always intends to return to the property after the rental period
So, as an owner, you do not need to live or work abroad to use this interim lease agreement.
Benefits of renting out with a diplomatic clause
Renting out with a diplomatic clause offers several benefits for both the landlord and the tenant. Here are some of the main benefits for landlords:
Protection for the landlord
A diplomatic clause provides protection for the landlord when they want to return to the property. You agree on a period with the tenant. After this period, the landlord can return to the property or choose to extend the rental agreement for a further period. As a landlord, you can always return to your property after this period.
However, it is not possible to terminate the tenant’s lease in the interim. As a landlord, you cannot simply return to the property during the agreed period set with the tenant.
You must also always give notice, even if an end date is specified in the contract. The agreement must be terminated 1 to 3 months before the end date.
Flexibility in rental periods
With a diplomatic clause, landlords have the option to be more flexible with the duration of rental periods. This form of lease can be extended in consultation with the tenant, unlike a type B contract, which cannot be extended after the agreed period without the tenant gaining rental protection.
How to include a diplomatic clause in the rental contract
Including a diplomatic clause in the rental contract requires some legal knowledge and careful attention to detail. Here are some legal considerations for drafting the contract:
Legal considerations when drafting a contract
When drafting the rental contract, it is important to consider the applicable legislation regarding rental agreements and diplomatic clauses. Consulting a lawyer is advisable.
Important points to include in the clause
Besides legal considerations, important points must be included in the diplomatic clause, such as the shortened notice period and the requirements to activate the clause.
Since this type of contract requires knowledge of the legislation, it is recommended to have it drafted by a recognized rental agent. If you still have a mortgage on your property, it is also required to discuss the rental and the type of contract with the mortgage lender. They must approve the rental agreement before you proceed.
Frequently asked questions about the diplomatic clause
Here are some frequently asked questions about the diplomatic clause:
Can I use a diplomatic clause for short-term rental?
Yes, a diplomatic clause can also be useful for short-term rental. It allows the landlord to rent out the property temporarily, with possible extensions.
Can the landlord return to the property during the agreed rental period?
No, this is not possible. When you set a term in the rental agreement, you, as the landlord, cannot return to the property during this period. In the initial agreement, both the landlord and the tenant agree on a maximum term, and often a minimum term that the tenant must adhere to. If the rental agreement is extended after this initial period, there is no longer a minimum period for the tenant. The tenant can then always give notice, but the landlord cannot. The landlord can only return once the rental period has ended.
Does the landlord have to give notice of termination?
Yes, this is always required. Like with a temporary contract, the landlord must give notice at least one month before the end of the rental agreement. If you do not do this, the rental agreement will automatically convert into an indefinite contract. Always give timely notice. This can be done up to three months before the end date.
Risks and disadvantages of the diplomatic clause
Although a diplomatic clause can offer many benefits to landlords, there are also some risks and disadvantages to consider:
Potential conflicts and disputes
A diplomatic clause can lead to disputes between the landlord and tenant, especially if the terms are not clearly defined in the rental contract. This can result in legal costs and time losses for both parties.
It is essential to understand the legal aspects and carefully draft the clause to prevent potential future disputes. By weighing the benefits and drawbacks and making an informed decision, landlords can benefit from a diplomatic clause while protecting themselves against possible risks.