Inflation correction also pushes up liberalized rents

In 2013, the Central Government Real Estate Agency started offering vacant leased land through a public tender. These are plots in the IJsselmeerpolders. The motivation of RVB (formerly RVOB) for this method of issuance at the time was that it had to ensure publicity, transparency and market conformity. However, there was a lot of criticism, especially about the price-increasing effect. The lease prices are now no longer publicly communicated by RVB, after this previously caused a lot of discussion.

Indexing
The fact is that the bids are often significantly above the average price level for leased land. Amounts between €2.500 and €3.000 per hectare are common, especially in the Flevopolder. The RVB terms and conditions state, among other things, that indexation takes place annually on November 1 on the basis of the average consumer price index figure. This figure is calculated and published by Statistics Netherlands. The previous year is taken into account. There is therefore a one-year delay built into the indexation.

The same situation exists application on leaseholders at organizations such as ASR, Fagoed and RPC who are faced with a rapidly increasing rent for 2023. This is also linked to the inflation rate and interest.

For 2023, this means that the total lease sum for liberalized leased land will increase by a modest amount. In 2021, the CPI was still 2,7%. Things will be very different for 2022. For the time being, the average CPI stands at 10,04% for this year, with the CPI exceeding 2022% monthly, especially in the second half of 14. In concrete terms, this means that - for a lease price of €2.500 - an amount of €250 or more will soon be added to the lease sum. If the CPI is high again in 2023, this exponential growth will quickly increase to an amount of more than €3.000 for the same hectare of land.

Issue raised
Agricultural entrepreneurs have usually been awarded the liberalized lease plots for a period of three years. When awarding the contract, they were aware of the indexation, but the current increase in inflation was not taken into account. Tenants who have raised the issue with RVB have been told that no exception will be made. Indexation is a means by RVB to combat depreciation.

LTO Noord is aware of the issue, said Flevoland regional director Arnold Michielsen when asked. Michielsen was in the past a lease portfolio holder at LTO. "In 2010, a large group of leaseholders were given the option to extend their lease contract for a period of 40 years. We then agreed that there would be no indexation, but that existing leaseholders would pay 125% of the regular lease sum. 85 up to 90% use of it."

"A small group of leaseholders did not take advantage of this extension and now have to renew because their term is ending," he continues. “Since it Didam judgment In 2021, the government may not simply continue to work on previously concluded agreements. In theory, the land should be offered publicly, which could almost certainly result in significantly higher rents."

Tenant checked
"We also see that RVB is looking specifically at compliance with the rules on, among other things, liberalized leasehold plots," says the director. "For example, these plots are subject to rules regarding the construction plan used. It has recently become possible to check this with the help of satellite images." Several tenants have indeed received a letter about non-compliance with the rules for the building plan. RVB press spokesperson Loek Houtepen confirms this. RVB does not make any statements about the number of entrepreneurs who have received such a letter. The organization also does not comment on the consequences. Will leaseholders get a second chance or will the contract be terminated immediately? If it is up to Michielsen and LTO, there will be a second chance. “Discussions about this are still ongoing,” he says.

Will RVB also monitor more strictly the subletting of leased land, the so-called 'balcony leases'? According to Houtepen, there is currently no strategy in place on this, but the issue is a known one. Michielsen expects that controls on this will be further tightened in the near future. "It is very difficult to tackle legally because the rental is handled correctly on paper. If RVB suspects that there is a balcony lease, it has the option to request three years' worth of accounting."

New plots for lease
Since November 7, RVB has opted out Biedboek.nl eight plots offered for a liberalized lease. This concerns two plots in the Noordoostpolder, five in the Flevopolder and one in the Wieringermeerpolder, a total of 260 hectares of agricultural land.