Source: https://www.juridicainternational.eu/index.php?id=15640
Timestamp: 2019-04-23 10:46:14+00:00

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The article addresses the core question of striking balance between landlords’ and tenants’ interests in connection with the creation of security in tenancy relations. Secure tenancy relations are analysed in consideration of the need for stability. The piece elaborates on one aspect of secure tenancy, asking on what conditions the landlord has the right to terminate a tenancy contract for reasons other than factors stemming from the tenant’s sphere of risk, in the case of lease contracts concluded for both an unspecified and a specified term. This core question is addressed for the purpose of finding a position for Estonian regulation on a relative scale in comparison with Latvian, Lithuanian, German, Swiss, Finnish, and Swedish law. The authors provide an overview of legal regulation of tenancy relations in the countries compared, consider the most important policy questions involved, and develop a relative scale suitable for the various regulatory regimes compared in the article.
In the context of secure tenancy*7 , the element of stability covers the presumption that the landlord has no arbitrary control over the tenant’s rights to occupy the dwelling, that the tenant can make a home and stay in the dwelling as long as he wishes.*8 This article addresses the core question of the stability issue in tenancy relations: on what conditions the landlord has a right to terminate a tenancy contract for reasons other than factors stemming from the tenant’s sphere of risk. In consideration of the fact that, as has been underscored in recent comparative studies on tenancy law, security of tenure differs between countries and over time and can best be seen as a continuum rather than a dichotomy *9 , the purpose of the research is to find a position for Estonian regulation on a relative scale in comparison with Latvian, Lithuanian, German, Swiss, Finnish, and Swedish law *10 .
The authors firstly provide a general overview of legal regulation of tenancy relations in the countries compared (in Section 2), in order to lay the groundwork for a presentation of the various policy questions involved (in Section 3). For the purpose of structural clarity in the following analysis of regulatory regimes, lease contracts concluded for an unspecified and a specified term are differentiated (these are covered in Sections 4 and 5, respectively).
The legislation of all three Baltic States includes special rules on residential lease contracts. In Estonia, residential lease contracts as a special kind of lease contract are regulated in §§ 271–338 of the Law of Obligations Act *14 (LOA). In Latvia, a special law, the Law on Residential Tenancy (LRT) *15 , governs residential tenancy agreements. As lex generalis, the Latvian Civil Law *16 applies to those matters not governed by the special law. Lack of consistency between the lex specialis and lex generalis norms has been pointed to as a reason for contradictory case law and legal commentaries.*17 In Lithuania, residential lease contracts are regulated by the Civil Code (CC)*18 , in its special Chapter XXXI (‘Lease of dwellings’) as lex specialis in ­relation to Chapter XXVIII (‘Lease’) and the General Part of the Civil Code.
Germany and Switzerland were selected for comparison in this paper on the basis of the choices made in Estonia during the transition period. Namely, the rules on tenancy relations found in the Estonian LOA are strongly influenced by the German civil code (BGB) and the Swiss Code of Obligations (CO). *19 Germany and Switzerland differ from the rest of the countries under comparison in the high proportion of the population there who occupy a dwelling as a tenant at market rates.*20 The central norms of German tenancy law can be found in BGB §§ 535–548 (on general questions related to lease contracts) and §§ 549–577 (on leasing of a dwelling). Major reforms took place in 2001 (regulation of contract length, reasons for termination, rent levels) and in 2013 (energy-efficient maintenance and modernization measures, simplified enforcement of an eviction title).*21 In Switzerland, general questions of tenancy relations are regulated in Articles 253–304 of the CO *22 . Swiss tenancy law was substantially reformed in July 1990.
Finnish and Swedish law deserve attention firstly because of Estonia’s close socio‑economic ties with those countries, which, in a way, influence the social perceptions of tenancy also in Estonia. Moreover, as the regulation in those countries is positioned at opposite ends of the spectrum of tenancy protection – the Finnish system, after the reforms in the mid-1990s, being one of the most liberal systems in Europe*23 and the Swedish system among the most protective – comparison with those countries aids in ascertaining the scale of that spectrum. Rental housing accounts for about 30% of the housing stock in Finland, where it is fairly evenly divided between private rental housing (about 16%) *24 and ‘social housing’ (14%) *25 , and about 40% of the housing stock in Sweden. *26 In both countries, residential lease contracts in the private rental market are regulated with special legislation: the Act on Residential Leases (ARL)*27 in Finland and the Land Code *28 and Rent Negotiation Act*29 in Sweden. As lex generalis, the Contracts Act *30 applies.
In the analysis that follows, the focus is on the question: on what conditions could a tenancy contract be terminated by the landlord when the tenant fulfils the contractual obligations and the dwelling itself is in sound condition? The fundamental elements of this question involve 1) suitable grounds for notice, 2) the term for advance notice, and 3) possible damage claims. With respect to suitable grounds, the need for the landlord to accommodate himself or a family member and the landlord’s interest in increasing the rent or intention to sell the property such that it is free from the tenant’s possession are more particularly under scrutiny. Questions of the duration and extension of the contract, along with the issue of expectations of continuation of the contractual relationship in the event of transfer of ownership, as other important aspects of tenancy stability, are dealt with only to the extent necessary for providing context.
As for contracts for an unspecified term, it is argued *33 that the ‘good-cause eviction’ condition already keeps the harm to the landlord’s property rights to a minimum. Analogously the employer should not terminate a contract (even one for an unspecified term) without good cause, while the employee has no obligation to supply reasoning for giving notice.*34 The landlord’s property interests are protected on account of the existing right to evict the tenant for breach of contract or to improve the property or substantially alter the nature of the property. As is elegantly stated by Salzberg and Zibelman*35 , the only property interest the landlord is losing is the ability to assert control over another individual’s right to live where that individual desires.
As to contracts for a specified term, in principle, once the term has been agreed upon, there should be very limited options for terminating the contract before its term has elapsed. A further question is this: if there are circumstances within the terminating party’s sphere of risk that render the contract unreasonably burdensome or expensive for the obligor *36 (e.g., urgent personal need on the side of the landlord or the necessity of moving for personal or professional reasons from the side of the tenant), would it then be possible to substitute performance in kind for the right to claim damages? This would, however, be an option only in cases in which the damages would compensate for the loss adequately.
The question of stability of tenancy relations cannot be assessed in isolation. The regulation dealing with termination of a contract for an unspecified term directly addresses the question of the right to increase the rent periodically. Strict rules to protect the stability of a contract for the tenant may be in place, but if rent regulation is prohibitive – i.e., if the landlord may not increase the rent even in a contractual relationship that extends for an indefinite period – incentive would be created for the landlord to get rid of the tenant in an abusive manner. This question will be addressed further in the following parts of the article.
It is, nonetheless, important to note that the requirement to present a justified interest does not apply if the landlord terminates a lease for a dwelling in a building inhabited by himself when said landlord has up to two dwellings *48 (i.e., in cases in which the landlord has physical closeness to the lessee). To compensate for the easier termination, the notice period is extended by three months in this situation.
According to BGB §573 (I) 2, notice of termination for the purpose of increasing the rent is explicitly excluded. At the same time, BGB §558 (I) does give a landlord the right to increase the rent to the market level after a certain interval. This rule guarantees the sitting tenant a right to choose (as he may terminate the contract at any time) while offering an option of reasonable return for the landlord.
In sum, there are, in essence, three types of regulation that address ‘ordinary termination’ of a contract for an unspecified term by the landlord. The majority of the regulatory regimes examined here acknowledge a landlord’s right to give notice without stating any reason or to state ‘any old reason’, though this is subject to some form of control under the good-faith principle on the initiative of the tenant (as in Lithuania, Finland, and Switzerland), while in Germany, the landlord should prove justified interest if the notice is to be considered valid, and, furthermore, in Sweden and Latvia, the landlord principally does not have a right to give notice insofar as the tenant fulfils his obligations. If the right to terminate exists, the terms for advance notice range from one to nine months. It can be concluded that, except in Sweden and Latvia, it is possible for a landlord to terminate a tenancy contract concluded for an unspecified term for reason of needing to accommodate himself or his family. Except in those two countries and Germany, it is possible for the landlord to terminate the contract with the (hidden) motivation of freeing the property before sale.
As to the landlord’s dilemma surrounding a rent increase for the sitting tenant v. termination of the contract with the aim of concluding a new contract, with higher rent, it should be asked, firstly, whether there is a possibility of increasing the rent up to market level within the framework of the existing contract and, secondly, whether the tenant has the last word in the decision on continuation of the contract.
A unilateral rent increase is out of the question for Swedish as well as for Latvian, Lithuanian and Finnish landlords. In Sweden, the rent increase is often subject to negotiations between associations representing tenants, on one side, and landlords, on the other*69 , while in Latvian, Lithuanian and Finnish law, rent increases are possible only in accordance with the initial agreement. *70 In simple terms, Swedish and Latvian landlords have neither statutory right to neither increase the rent nor terminate the contract freely, while landlords in Lithuania and Finland may not increase the rent but may freely terminate a contract that has an unspecified term. *71 Under Swiss law, increasing the rent to market levels is difficult; it is only possible if based on a relative rent calculation method, i.e., change of costs factors, or an absolute rent calculation method based on the market level of the locality or district as long as it does not provide for an excessive benefit for the landlord (see above section 4.1.). A termination motivated by an intention to increase the rent may be contested if it consists of pressure on the tenant to accept the rent increase *72 . However, the case law indicates that it is still possible to terminate a tenancy contract for the purpose of obtaining higher rent from another tenant if that higher rent level is fair according to the absolute rent calculation method.*73 A clear-cut solution can be found in German law: the right to increase rent levels to the market level, as foreseen by the German legislator (BGB §558), should compensate for the prohibition of termination of a contract with the intention of raising the rent (BGB §573 (I) 2). While §561 of BGB prescribes a special right of termination for the lessee after a rent increase, the tenant also has the last word in deciding on continuation of the contract.
In Estonian law, it is presumed that the lessor may raise the rent after each six months as of entry into the contract for an unspecified term.*77 A lessee may contest an excessive increase in the amount of the rent.*78 The rent for a dwelling is excessive if unreasonable benefit is received from the lease of the dwelling. *79 It is further specified that the amount of the rent for a dwelling is not excessive if it does not exceed the usual market rent, or an increase in the rent is not excessive if it is based on an increase in the expenses. *80 Thus, while there is no direct rule similar to BGB’s §558, explicitly allowing rent increases to the market level, and there are rules similar to the Swiss one regarding challenging a rent increase as unreasonable, Estonian case law*81 , however, does confirm the landlord’s right to raise the rent to market levels.
Further, there are two protective provisions to ensure that the tenant is not placed under pressure in the event that the landlord has increased the rent or intends to do so. Firstly, the increase in rent is void if the lessor warns the lessee that the lessor will terminate the lease contract if the rent increase is contested. *82 Secondly, in a parallel to the Swiss law, the tenant has a right to challenge the termination through being heard by a lease committee or court if the termination runs counter to the principle of good faith: inter alia, the landlord gives notice of reasons for wishing to amend the contract (inclusive of increasing the rent) that are to the detriment of the tenant and the latter does not consent thereto. *83 Thus, in the case of the rent increase being valid in its own right (in substance, if no illegal warning about termination is involved, its validity is dependent only on formal requirements, since there is no limit to the increases possible; see above) and the landlord terminating the contract (e.g., for non-payment of the higher rent), termination may still be contested as conflicting the principle of good faith.*84 However, in that case, the tenant should have first formally contested the rent increase in due time (by application to the court). *85 If the rent increase remains valid, the tenant’s only option is to terminate the contract ordinarily, with three month’ notice, since Estonian law lacks a provision similar to BGB §561 that confers a special right for the tenant to terminate the contract in the case of raising of the rent to market rates (§284 (2) and (3) of the LOA associate the special right to termination only with an increase in rent that is due to improvements and alterations).
In sum, Estonian landlord has a right to increase the rent up to market rent after certain intervals (as in Germany) as well as terminate the contract without stating any (real) reason. The latter means that termination is also possible for the purpose of concluding another contract for market rent (this matches Swiss, Finnish and Lithuanian law but diverges from German law). Yet it is possible to argue, following the line of argumentation in Finnish law, that termination without offering the intended new (higher, but still reasonable) rent level first to the sitting tenant would be against the good-faith principle. However, exactly this practice, ‘offering’ a rent increase while threating with termination after refusal would contravene the principle of good faith under Estonian and Swiss law and render termination invalid in Germany.
This part of the paper elaborates on the matter of how to determine the conditions under which a landlord may terminate a contract for a specified term for reasons originating within his sphere of risk.
In summary, where contracts for an unspecified term are involved, the regulatory systems under scrutiny can be divided into three groups. Firstly, in one group of countries (Latvia, Lithuania, and Sweden, for example), the tenant’s protection is relatively strong: it is practically impossible for the landlord to terminate a contract for a specified term for reasons other than fundamental breach of contract by the tenant or the condition of the dwelling posing a hazard.
The second group consists of those countries that acknowledge a general clause on ‘compelling reason’ (of the countries considered here, Germany and Switzerland), which should be related to an unforeseeable circumstance and should not be caused by the terminating party. If the reason originates from the landlord’s own sphere of risk, termination by the landlord would be valid but subject to a damage claim by the tenant, so long as the circumstances still satisfy the condition, necessary for application of the general clause, that the landlord cannot reasonably be expected to continue performing the contract due to unforeseeable circumstance.
Adopting a third type of approach, Finland has developed special regulation that differs from the above-mentioned systems in a procedure – application to the court instead of notice to the tenant (the latter is still the procedure employed if the termination is related to breach of contract by the tenant) – that puts emphasis on the landlord’s point of view (thereby deviating from German and Swiss law) and that involves the possibility of a damage claim (comparable with the terms of Swiss law).
According to the guidance given by the Supreme Court, *102 application of §313 (1) of the LOA requires the court’s application of discretionary authority whereby the court is required to consider whether the interest of the party wishing to terminate the contract is more significant and would be more severely damaged if the contractual relationship were to continue. In any case, the reason is ‘compelling’ only if it is unexpected by the parties. If those conditions are fulfilled, the terminating party has no duty to cover any damages claimed by the other party. However, a compelling reason for terminating the contract under the article referred to above may be attributable to the party applying for termination, in which case the termination is considered a breach of contract that entitles the other party to demand compensation for damage under §115 (1) of the LOA. *103 But even in the cases encompassed by the latter terms, the interests of both parties must be considered. For example, the landlord returning from abroad a year earlier than expected most probably would not justify extraordinary termination before the end of the specified term but may, subject to conditions of the ‘unexpected change of circumstances’ and ‘more severly damaged interests’, still be qualified as termination by breach of contract if the damages provide adequate compensation to the tenant. However, the courts in practice seldom consider this approach.
That said, a residential lease contract may be entered into with a resolutive condition – in case, for example, the landlord should return from abroad early. Upon fulfilment of such a condition, the lease contract is deemed to have been entered into for an unspecified term and the landlord may terminate the contract ‘ordinarily’ by giving at least three months’ notice (under the LOA’s §309 (4)). In addition, it should be noted that the parties are free to agree on special grounds for termination if the object of the lease is a dwelling used by the lessor and the greater part of it is furnished by the lessor (see the LOA’s §272 (4) 3)).
As a protective measures in contracts both for specified and unspecified terms, the tenant may contest valid termination if that termination runs counter to the principle of good faith (see also section 4.2. above) *104 or may demand the extension of the lease contract for up to three years if termination of the contract would result in serious negative consequences for the lessee or his family (hardship clause) *105 .
The aim with this article was to develop a relative scale for the various regulatory regimes and finally evaluate how well Estonian law, in comparison to Latvian, Lithuanian, German, Swiss, Finnish, and Swedish law, has managed to strike a balance between landlords’ and tenants’ interests in placing limits on the landlord’s right to terminate a tenancy contract for reasons other than factors stemming from the tenant’s sphere of risk.
It is clear from the foregoing analysis that the most protective regime is to be found in Sweden. In essence, a Swedish landlord offers a lifetime product of secure tenure whereby the decision to terminate the contract (i.e., in the case of a contract for a specified term, not to prolong it or, in the case of a contract for an unspecified term, to give notice) is in the hands of the tenant. Latvia too belongs to the group of countries where tenants can feel secure with contracts for a specified and an unspecified term alike, because the right to terminate the contract is non-existent or strongly limited.
In Germany also, the level of tenancy protection is relatively high. *106 The large proportion of private rental housing, however, shows that it supports stable demand for a long-term relationship as almost all rental agreements in Germany are concluded for an unspecified term, keeping tenants flexible, yet protected from arbitrary unilateral termination by the landlord. Termination of a contract for a specified term is limited to rare cases of unforeseeable compelling reason.
Less protection is provided by Estonian, Finnish, and Swiss law, under which a tenant who is party to a contract for an unspecified term is not protected from notice of termination, except in a few cases wherein the notice proves to contravene the good‑faith principle or good practice. In cases of contracts for a specified term, Finnish and Swiss law provide a degree of protection higher than that under Estonian law, by placing the burden of initiating court review on the landlord and guaranteeing compensation for damage in the event of termination for reasons originating within landlords’ sphere of risk.
It is worth noting in the case of Lithuania that the distinction between contracts for a specified and an unspecified term is set forth in black and white: a landlord has no right to terminate the first (i.e., there is strong protection) but has an unlimited right to terminate the latter (here, protection is weak). Hence, it is difficult to position Lithuania on the general continuum outlined in this paper.
Admittedly, only one aspect of secure tenancy has been analysed here. There are several other factors – among them automatic renewal of a contract for a specified term, faithfulness to the contract in the case of sale of the property, and a statutory pre‑emption right – that have an influence on perceptions of the security of the tenure. Additionally, a certain degree of flexibility is important for guaranteeing the tenant’s right to free movement and facilitating mobility in the labour market; i.e., the tenant enjoys a right to terminate the tenancy relationship (at least for good cause) without extensive adverse consequences. Analysis of these questions, however, is a subject best left for another article.
*1 * The authors are very grateful to the good colleagues Prof. Pascal Pichonnaz, Marta Santos Silva, Per Norberg and Julija Kolomijceva for valuable comments, suggestions and references.
See, e.g., C. Schmid, J.R. Dinse. Towards a common core of residential tenancy law in Europe? The impact of the European Court of Human Rights on tenancy law. – L. Nogler, U. Reifner (eds). Life Time Contracts: Social Long-term Contracts in Labour, Tenancy and Consumer Credit Law. The Hague: Eleven International 2014, p. 606.
*2 ‘Asymmetry in relations between landlords and tenants’ stems from ‘inelastic supply of rented housing due to geographical constraints, planning restrictions, financial system etc., and [the] landlord’s monopoly in relations with sitting tenants as it is’, according to C. Whitehead et al. See The Private Rented Sector in the New Century: A Comparative Approach (med dansk sammenfatning). Cambridge 2012, p. 93.
*3 There are several aspects that make security in housing much more important than the property-rights perspective alone. Among others, Hulse and Milligan refer to human well-being, families’ functioning, childhood development, economic and social participation, and physical and mental health. For more information, see K. Hulse, V. Milligan. Secure occupancy: A new framework for analysing security in rental housing. – Housing Studies 29 (2014)/5, p. 639. – DOI: http://dx.doi.org/10.1080/02673037.2013.873116 (31.3.2016).
*4 See, e.g., D. Andrews et al. Housing markets and structural policies in OECD countries. OECD Economics Department Working Papers, No. 836. OECD Publishing 2011, p. 65. – DOI: http://dx.doi.org/10.1787/5kgk8t2k9vf3-en (31.3.2016).
*5 R. de Boer, R. Bitetti. A revival of the private rental sector of the housing market? Lessons from Germany, Finland, the Czech Republic and the Netherlands. OECD Economic Department Working Papers, No 1170, 2014, p. 54. – DOI: http://dx.doi.org/10.1787/5jxv9f32j0zp-en.
*6 See, e.g., D. Andrews et al. (Note 4), p. 52.
*7 Or ‘secure occupancy’ as a broader concept. See K. Hulse, V. Milligan (Note 3), pp. 638–656. See also S. Nasarre. Leases as an alternative to homeownership in Europe: Some key legal aspects. – European Review of Private Law 6 (2014), p. 820; K. Hulse et al. Secure occupancy in rental housing: Conceptual foundations and comparative perspectives. AHURI Final Report No. 170. Melbourne: Australian Housing and Urban Research Institute 2011, p. 30. Available at https://www.be.unsw.edu.au/sites/default/files/upload/research/centres/cf/publications/ahuriprojectreports/AHURI_Final_Report_No170.pdf (31.3.2016).
*8 A similar approach is applied by S. Nasarre (Note 7).
*9 See K. Hulse, V. Milligan (Note 3), p. 22.
*10 This article is based largely on country-level reports and comparative studies of housing policy and legal frameworks for residential rental markets in European countries prepared under a grant from the European 7 Framework Programme for research into tenancy law and housing policy in a multilevel Europe (TENLAW: Tenancy Law and Housing Policy in Multi-level Europe), with grant agreement 290694. Reports are available at http://www.tenlaw.uni-bremen.de/reports.html (31.3.2016). The terminology used by the authors here is based on that applied by the national reporters, and the term ‘tenancy’ has the same meaning as the term ‘residential lease’.
*11 For general discussion, see A. Hussar. National report for Estonia. Available at http://www.tenlaw.uni‑bremen.de/reports/EstoniaReport_18062014.pdf; J. Kolomijceva. National report for Latvia. Available at http://www.tenlaw.uni‑bremen.de/reports/LatviaReport_09052014.pdf; A. Mikelėnaitė. ‘National report for Lithuania.’ Available at http://www.tenlaw.uni‑bremen.de/reports/LithuaniaReport_09052014.pdf (31.3.2016).
*12 In Estonia, 81.5%; in Latvia, 80.9%; and in Lithuania, 89.9% of the population, with the EU average being 70.1%. Data, for 2014, are available in ‘Living conditions and social protection’. Eurostat, Housing Statistics, published in 2015, online data code: ilc_lvho02 (31.3.2016).
*13 In Estonia, 63.8%; in Lithuania, 58.4%. The EU average is 46.2%. Data are available in ‘Living conditions and social protection’. Eurostat, Housing Statistics, published in 2013, online data code: ilc_lvho01 (31.3.2016).
*14 Võlaõigusseadus. 1.7.2002. Available in English at https://www.riigiteataja.ee/en/eli/ee/Riigikogu/act/516092014001/consolide (31.3.2016).
*15 Likums Par dzīvojamo telpu īri (the Law on Residential Tenancy), 16.2.1993. Available in English at http://likumi.lv/doc.php?id=56863 (31.3.2016).
*16 Civillikums [‘Civil Law of the Republic of Latvia’], 28.1.1937. Available in English at http://unpan1.un.org/intradoc/groups/public/documents/UNTC/UNPAN018388.pdf (31.3.2016).
*17 More details about the inconsistency of the court practice can be found in I. Kull et al. Comparative remarks on residential tenancy law in Latvia and Estonia. – Law Journal of the University of Latvia 8, pp. 5–21. See also J. Kolomijceva (Note 11), p. 175.
*18 Lietuvos Respublikos civilinis kodeksas [‘Lithuanian Civil Code’], 18.7.2000, No. VIII-1864. Available in English at http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc_l?p_id=245495 (31.3.2016).
*19 For more information, see V. Kõve. Applicable Law in the Light of Modern Law of Obligations and Bases for the Preparation of the Law of Obligations Act. – Juridical International 6 (2001), pp. 30–36. Available at http://www.juridicainternational.eu/?id=12551 (31.3.2016); P. Varul. Legal Policy Decisions and Choices in the Creation of New Private Law in Estonia.’ – Juridica International 2000/5, pp. 104−118. Available at http://www.juridicainternational.eu/index/2000/vol‑v/legal‑policy‑decisions‑and‑choices-in-the-creation-of-new-private-law-in-estonia/ (31.3.2016); the Swiss Code of obligations is said to be “Part Five” of the Swiss Civil Code, but is indeed a separate code in the Systematic Collection (SC 220), an English “unofficial” translation might be found on the official site of the “Confederation” (Federal State): https://www.admin.ch/opc/en/classified-compilation/19110009/index.html (17.7.2016). Since 1 January 2016, the electronic version prevails over the paper version.
*20 In Germany, 39.6% (in 2014) and in Switzerland, 51.8% (in 2013), according to Eurostat, online data code: ilc_lvho02 (current as of 31.3.2016). For further details, see Santos Silva, ‘Intra-team Comparison Report for Austria, Germany, Luxembourg and Switzerland.’ Available at http://www.tenlaw.uni-bremen.de/intrateamcom/AT-DE-LU-CH%20comparison%20report%2020151218.pdf (31.3.2016), p. 3.
*21 Gesetz zur Neugliederung, Vereinfachung und Reform des Mietrechts vom 19. Juni 2001. BGBl. I 1149. Gesetz über die energetische Modernisierung von vermietetem Wohnraum und über die vereinfachte Durchsetzung von Räumungstiteln vom 18.03.2013. BGB I 434.
*22 Cf. special regulations such as an Ordinance on adaptation of rent exist, see (no English version available, but German, French or Italian official versions), Verordnung vom 9. Mai 1990 über die Miete und Pacht von Wohn- und Geschäfts­räumen (VMWG, SC 221.213.11). Available at https://www.admin.ch/opc/de/classified-compilation/19900092/index.html (17.7.2016).
*23 C. Whitehead (Note 2), p. 122.
*24 T. Ralli. National report for Finland, 2014, p. 31. Available at http://www.tenlaw.uni‑bremen.de/reports/FinlandReport_09052014.pdf (31.3.2016); R. de Boer, R. Bitetti (Note 5), p. 11.
*25 State-subsidised rental dwellings (in the so-called ARAVA system).
*26 O. Bååth. National report for Sweden, 2014, p. 22. Available at http://www.tenlaw.uni‑bremen.de/reports/SwedenReport_18052015.pdf (31.3.2016).
*27 Laki asuinhuoneiston vuokrauksesta, 31.3.1995/481. Unofficial translation into English available at http://www.finlex.fi/en/laki/kaannokset/1995/en19950481.pdf (31.3.2016).
*28 Tenancy contracts are regulated in Chapter 12 of the Swedish Land Code of 1970, SFS 1970:994. Available at https://www.kth.se/polopoly_fs/1.476821!/Land_Code.pdf (31.3.2016).
*29 Hyresförhandlingslagen [‘Rent Negotiation Act’], of 6.1.1978, SFS 1978:304. Available in Swedish at http://www.riksdagen.se/sv/Dokument‑Lagar/Lagar/Svenskforfattningssamling/Hyresforhandlingslag‑1978304_sfs-1978-304/?bet=1978:304 (31.3.2016).
*30 Lag (SFS 1915:218.) om avtal och andra rättshandlingar på förmögenhetsrättens område [‘Contract Act’], SFS 1994:1513, of 6.11.1915.
*31 For comparison: In Spain, open-ended lease contracts are not allowed, as lease contracts require a time limit, with the minimum duration being three years. Greece too requires a three-year minimum duration, for first-residence leases. In Malta, while open-ended contracts are not permitted, there is no minimum duration set by law. For more information, see S. Nasarre (Note 7), p. 852.
*33 K. Salzberg, A. Zibelman. ‘Good cause eviction.’ – Willamette Law Review 21 (1985), p. 71. Electronic copy available at http://ssrn.com/abstract=1973710 ( 31.3.2016).
*34 More details surrounding the concept of a ‘lifetime contract’ can be found in the collection of articles edited by L. Nogler and U. Reifner. Life Time Contracts: Social Long-term Contracts in Labour, Tenancy and Consumer Credit Law (see Note 1).
*36 Compare with §108 (2) 2) of the LOA.
*37 K. Hulse, V. Milligan (Note 3), p. 22.
*39 A landlord may terminate the contract only under Section 42 or 46 of the Tenancy Act. O. Bååth (Note 26) provides details, on pp. 95–99.
*40 See J. Kolomijceva (Note 11), p. 156.
*41 A practically non-existent right to terminate an open-ended contract could lead to law evasion. That is also a reason that landlords in Latvia prefer to conclude time-limited contracts. Ibid., pp. 157, 174.
*42 Article 2166 of the Civil Law stipulates that a lease or rental contract pertaining to immovable property, when entered into for an indefinite time, shall be terminated, unless agreement is made otherwise, only after six months’ prior notice, which may be given by either party of its own volition.
*43 J. Bieber. Münchener Kommentar zum BGB. 6th ed., 2012, §573, para. 3.
*45 BGB’s §573, 2 (2).
*46 J. Cornelius, J. Rzeznik. National report for Germany, p. 166. Available at http://www.tenlaw.uni‑bremen.de/reports/GermanyReport_09052014.pdf (31.3.2016).
*47 BGB’s §573c. J. Cornelius, J. Rzeznik (Note 46), pp. 93, 164.
*50 J. Cornelius, J. Rzeznik (Note 46), p. 170.
*52 CO’s Articles 271, item 1 and 271a. See A. Wehrmüller. National report for Switzerland, p. 132. Available at http://www.tenlaw.uni-bremen.de/reports/SwitzerlandReport_24072014.pdf (31.3.2016).
*53 CO’s Article 271, item 2.
*54 CO’s Article 271a, item 1 (b).
*55 R. Weber. Basler Kommentar. 5th ed., 2011, on Article 271/271a, para. 15.
*56 Ibid., para. 16; DSFT 120/1994 II 105/110, nr 3b/bb, confirmed later in DSFT 136/2010 III 74/75 nr 2.1; for other economic reasons also DSFT 136 III 190/194, nr 3.
*57 Ibid. With the absolute calculation method (absolute Berechnungsmethode), a rent is assessed independently from previous contractual terms. It is applied to assess the fairness of rent which are agreed on using net return (CO’s Article 269), gross return (CO’s Article 269a c)) and the range of rents customary in the locality or district (CO’s Article 269a a)) as criteria.
*60 CO’s Article 269. Tenant may legitimately expect that the previously agreed rent gives the landlord a sufficient income. A further rent increase can therefore only be based on changes which have occurred after the previous one; the new rent increase will be assessed according to the relative method compared to the situation after the previous rent increase. In other words, a rent increase which is unfair according to the ‘relative method’ cannot be justified by invoking that according to the ‘absolute method’ the new rent was not unfair. On the other hand, where a rent increase would not be unfair according to the relative method, the tenant can still invoke that the increased rent is unfair according to the absolute method. BGE 121 III 163 E. 2c; R. Weber (Note 55), Article 269d, para. 4; A. Wehrmüller (Note 52), pp. 87, 93 ff; See also DSFT 140/2014 III 433/435 nr 3.1.
*61 CO’s Articles 272, item 1 and 272b.
*62 Under Article 54, paras 1 and 5 of the Finnish Act on Residential Leases.
*63 R. de Boer and R. Bitetti (Note 5), p. 20.
*64 Mutually agreed upon by the organisations for tenants and for landlords in 2003. Available at http://www.vuokranantajat.fi/attachements/2008-09-22T17-05-1515.pdf (31.3.2016).
*66 Specific circumstances might be, for example, difficulties in finding a comparable flat in the region. If the notice is not in conformity with good leasing practice, the tenant may, alternatively, claim damages, including compensation for the costs of removal and, at most, three months’ rent for the inconvenience. See Article 56 of the Finnish Act on Residential Leases.
*67 T. Ralli (Note 24), p .132.
*68 Article 6.614 of the Lithuanian CC. More details are provided by A. Mikelėnaitė (Note 11), p. 156.
*69 If the landlord has a principal bargaining agreement (förhandlingsordning) in place with the Swedish Union of Tenants, the increase in rent has to be negotiated with that union. If there is no such agreement between the landlord and the union, the rent must be negotiated with each tenant individually. If agreement cannot be reached, the landlord is entitled to apply to the regional rent tribunal. More details are provided by O. Bååth (Note 26), pp. 55–56.
*70 See J. Kolomijceva (Note 11), p. 128; also, see A. Mikelėnaitė (Note 11), p. 124.
*71 Schmid and Dinse rightly argue that such restrictions to the landlord’s property rights manifestly disturb the economic balance of the contractual exchange and, accordingly, may possibly be challenged before the European Court of Human Rights. See C. Schmid, J.R. Dinse (Note 1), p. 622.
*72 See DSFT 4A_547/2015 (14 April 2016), nr 2.1.1.
*73 See A. Wehrmüller (Note 52), pp. 85 ff.; DSFT 136/2010 III 74/76 nr 2.1.
*74 LOA’s §§ 311, 312 (1).
*75 K. Paal. Commentary to §312, p. 3. In: P. Varul et al.Võlaõigusseadus II. Kommenteeritudväljaanne [‘Law of Obligations Act II. Commented Edition’]. Tallinn: Juura 2007 (in Estonian).
*79 LOA’s §301 (1). This disposition is comparable to Article 269 of CO.
*80 LOA’s §301 (2). Should be noted that non-excessiveness of the market rent is formulated in affirmative and not as a rebuttable presumption as in Article 269a a) of CO: ‘rents are not generally held to be unfair if… ‘(see section 4.2.).
*81 For example, in CCSCd 19.9.2005, 3-2-1-76-05, para. 16.
*83 LOA’s §§ 326 (1) and 327.
*84 As is explained in a number of judgements of the Estonian Supreme Court. See CCSCd 22.10.2008, 3-2-1-81-08, para. 10 and CCSCd 29.10.2004, 3-2-1-100-04, para. 17.
*85 There are several judgements from district courts of Estonia on this subject. See the judgements of the Tallinn District Court of 12.5.2006, No. 2-03-824, 24.3.2010, No. 2-04-2168, and 28.2.2007, No. 2-03-219.
*86 The landlord may terminate the rental contract only in the cases specified in Section 28 of the LRT – breach of contract by the tenant, the necessity of capital repairs, and demolition of the building. See J. Kolomijceva (Note 11), p. 158.
*87 Grounds for termination of a lease contract in general can be found in Article 6.497 of the CC and those for lease contracts for dwellings specifically in Article 6.611 of the CC. See A. Mikelėnaitė (Note 11), pp. 83, 156.
*88 Section 4 of the Swedish Tenancy Act. See O. Bååth (Note 26), pp. 77, 96.
*91 J. Bieber (Note 45), §543, para. 10.
*92 For details, see J. Cornelius, J. Rzeznik (Note 46), p. 166. Relevant case law can be found in Beck'scher Online-Kommentar Mietrecht, Schach/Schultz. 3rd ed., §543 paras 1–9.1.
*93 In German, Sozialklausel. See BGB’s §§ 574 and 574a. J. Cornelius, J. Rzeznik (Note 46), p. 95.
*94 CO’s Article 266g, item 1.
*95 See R. Weber (Note 55), Article 266g, para. 5.
*96 More details are provided by A. Wehrmüller (Note 52), p. 127. The report refers to the case law cited by M . Blumer. Gebrauchsüberlassungsverträge (Miete/Pacht). Vol. VII/3. Basel, Switzerland: Helbing Lichtenhahn Verlag 2012, p. 911 and U. Hulliger. Kündigung aus wichtigen Gründen, Überblick über Lehre und Rechtsprechung (Termination for compelling reason. Overview of the doctrine and case law). – MRA 2011/1, p. 1 ff.
*97 CO’s Article 266g, item 2.
*98 R. Weber (Note 55), on the CO’s Article 266g, paras 8–9.
*99 CO’s Articles 271, item 1 and 271a.
*101 For the landlord, the following is a non-exhaustive list of admissible grounds: 1) the object of the lease being used for non-stipulated purposes (see the LOA’s §315), 2) payment of rent having been delayed (see the LOA’s §316), 3) the property being a health hazard (see the LOA’s §317), and 4) the lessee is declared bankrupt (see the LOA’s §319).
*102 E.g., CCSCd 21.5.2004, 3-2-1-62-04, para. 14; CCSCd 29.10.2004, 3-2-1-100-04, para. 13; CCSCd 9.11.2010, 3-2-1-84-10, paras 10.
*103 E.g., CCSCd 29.5.2004, 3-2-1-100-04, para. 13, CCSCd 21.5.2004, 3-2-1-62-04, para. 18; CCSCd 9.11.2010, 3-2-1-84-10, paras 12–13.
*106 For general information, see also S. Nasarre (Note 7); C. Schmid. Tenancy law and procedure in the EU. General Report, 2003. Available at http://www.eui.eu/DepartmentsAndCentres/Law/ResearchAndTeaching/ResearchThemes/ProjectTenancyLaw.aspx (31.3.2016); see also R. de Boer and R. Bitetti (Note 5) and C. Whitehead (Note 2).

References: §573
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