New lease regime for pop-ups in Flanders

The new decree regarding short-term lease for business and commerce, already called the "Pop-up decree", has been approved by the Flemish Parliament on 8 June 2016.

1. The success of pop-ups explained

First and foremost the pop-up concept allows entrepreneurs to investigate the viability of a given initiative before commencing a long-term investment.

Furthermore, it constitutes a good opportunity to open a store, connected to a temporary event or for implementing a publicity stunt.

Pop-ups can also offer a solution to owners of vacant commercial premises which prove to be difficult to lease, since their premises serve, for a limited period of time, a concrete purpose.

2. Why the need for a legal framework for pop-ups?

The initiators of pop-ups often encounter some reluctance from the owners of the commercial premises up for lease. Due to the lack of a clear-cut legal framework, the aforementioned owners fear a requalification of the temporary lease agreement to a commercial lease agreement, which needs to be in compliance with the mandatory provisions of the law on commercial lease of 30 April 1951, like, among others, the mandatory duration of 9 years.

These circumstances caused a whole lot of barriers and lamentations, both for entrepreneurs and landlords.

3. To what extent does the new decree offer a solution?

The legislator has tried to remedy these issues.

The decree regarding short-term lease for business and commerce introduces a new lease regime for pop-ups in Flanders.

Article 2 of the decree stipulates that a lease agreement is covered by the decree, in case of:
(i) lease of immovable goods or parts thereof that, pursuant to an express agreement of the parties during the term of the agreement,
(ii) is used by the tenant mainly for exploiting a retail store or an enterprise of a craftsman,
(iii) whereby there is direct contact between the tenant and the public and
(iv) which is expressly concluded  for a term equal to or shorter than one year.

The maximum term of one year is therefore essential as it will act as a cut-off value.

Other characteristics of the new regime are:

• The short-term lease automatically ends on the end date of the lease agreement, without the need of giving prior notice;
• Parties can agree in writing to extend the lease agreement – even several times – under the same conditions, provided that the overall duration of the lease does not exceed a one year period;
• In case the overall duration of the lease agreement exceeds one year, the law on commercial lease will still become applicable;
• Only the tenant has the option to prematurely terminate the agreement. In this case a one month's notice period applies, which needs to be notified by registered letter or by bailiff's writ. No unilateral termination option exists for the landlord;
• Parties can at all time, by mutual agreement and in writing, terminate the existing lease;
• The tenant is allowed to make changes to the premises which serve a purpose for the business, provided that:
  (i) the costs do not exceed the amount of one year's rent and
  (ii) he informs the landlord, in writing, prior to the start of the works (and the works does not compromise the safety, the good condition or aesthetic value of the premises concerned).
  Upon termination of the lease agreement, the landlord can demand the removal of the works done. If he wishes to maintain the alternations made, no compensation is due;
• Transfer of lease and sub-lease are prohibited by decree.

Besides, the decree contains some procedural rules and it specifies that taxes on the leased estate (like property tax) are included in the rent to be paid, unless otherwise stipulated.

The decree enters into force on the first day of the second month after publication thereof in the Belgian Gazette.