Inspection of some business leases in other cities allowed

Date 21 sep. 2010

 

In ØLK 21 April 2010, No. B-908-10, the Eastern High Court upheld a decision by the Housing Tribunal in which the tribunal decided that it may not be excluded in advance that a survey of comparative leases in other cities may be relevant to the determination of market rent, see Section 13 of the Business Rent Act.

 

The case in brief

In the case, the lessor had made a notice of rent increase to the lessee of a business lease in Roskilde, see Secion 13 of the Business Rent Act.

 

In connection with proceedings at the Housing Tribunal, the lessee requested that four non-local leases in Helsingør, Hillerød, Herlev and Køge, respectively, should be inspected when determining the market rent. The Housing Tribunal complied with this request. Lessor appealed the decision from the Housing Tribunal.

 

In addition, the parties agreed that a number of local leases in Roskilde should be visited.

 

The legal foundation

Until 1 January 2000, the Act on Rent Regulation in Commercial Premises etc. applied. According to Section 3 of the act, rent increases implied that the current rent was significantly lower than the value of the premises, which should be documented through a representative part of the leases in the neighborhood or district which were comparable in terms of location, type, size, quality, equipment and maintenance.

 

In case law from Section 3 of the Act on Rent Regulation, it has been determined that comparative leases may be situated in other cities despite the wording of Section 3 of the Act on Rent Regulation in Commercial Premises etc. stating that comparitive leases should be situated in the neighborhood or district.

 

On 1 January 2000, Act on Rent Regulation in Commercial Premises etc. was replaced by the Business Rent Act. The market rent is now defined in Section 13(2) of the Business Rent Act, as the rent which a competent lessee and an competent lessor would agree on for the tenancy at the time of notice of rent increase, taking into account the premises’ location, use, size, quality, equipment and maintenance. Section 13 of the Business Rent Act does not state that comparitive leases must be situated in the neighborhood or in the district.

 

The court’s verdict

It appears from Section 13 of the Business Rent Act that in disputes concerning future rent, Section 344 of the Code of Civil Procedure concerning the courts free evaluation of evidence applies.

 

The Eastern High Court found that it may not be excluded in advance that the inspection of non-local comparative leases is likely to affect the valuation and determination of market rent.

 

Consequences

The judgment indicates that the High Court does not aim at changing the former legal situation concerning comparative leases located outside the neighborhood or district at determination of market rent.

 

Thus, inspection of business leases located in other cities may continue to take placewhen the market rent is to be determined if the Housing Tribunal assesses that it may not automatically be exclude in advance that inspection may be of importance to determination of the market rent, see Section 13 Business Rent Act.

 

 

If you have questions regarding the above or require additional information about business leases or the regulation of market rents, please contact attorney Thomas Weitemeyer (twe@mwblaw.dk) or trainee Jesper Reitz (jre@mwblaw.dk).

 

The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions of considerations.