Shop or office · tenant risk · environment
Financing commercial property as a private individual
A shop or business unit held privately falls outside the rules that apply to your own home. From that point on, your tenant's activity determines your premium, your acceptance and your risk.
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Deze pagina in het Nederlands: Commercieel vastgoed financieren als particulier.
The calculator and the quote form below are in Dutch. Prefer to do this in English? Email info@finassverzekert. nl or call 072 - 509 24 56 and we will take it from there.
- We compare the offerings of several insurers
- An adviser checks whether the cover suits your activities
- We arrange the switch, including cancellation
A premium indication, not personal advice. Prefer to talk it through? Call 072 - 509 24 56.
In brief
If you finance a shop, office or business unit in your own name, that finance falls outside the residential mortgage regime: no national mortgage guarantee, no interest relief, and a lender that looks mainly at the rental income and the quality of the tenant. We do not arrange the finance itself; for that we refer you elsewhere. See financing commercial property and mortgage.
For the insurance, the the tenant's activity is the decisive fact. An office with computer workstations is a different risk from a snack bar with a deep fryer, a motor business with a spray booth or a store holding plastics. Insurers accept on the basis of that use and set it out literally on the policy schedule. If the tenant changes trade or a subtenant moves in, that must be reported. See also buildings insurance for commercial property.
Besides the buildings cover, commercial property almost always raises the question of who owns which part. The shell is yours, the fit-out is the tenant's. Alterations the tenant has had installed, known as tenant's improvements, fall between two stools without a separate agreement. Record in the tenancy agreement who insures what and make sure the policies fit together. See contents and tenant's improvements.
This page deals with one situation. The full overview is on Mortgages: we refer you on.
Where commercial property differs
Four subjects that weigh more heavily for a shop or business unit than for a let home.
Soil contamination is excluded
Clean-up costs after a leaking tank, spilled chemicals or contamination by a previous occupier are excluded under buildings insurance. There is a separate environmental damage policy for that, which distinguishes between contamination at your own site and at third-party sites. As owner you can be held liable under Article 6:174 of the Dutch Civil Code for damage arising from the defective building, even where the tenant caused it.
Asbestos and structural defects
In buildings dating from before the asbestos ban, removal after a fire is a separate cost item which many policies limit or exclude. The same applies to damage arising from a construction or design fault: that is an inherent defect and not an unforeseen event. On purchase, have it established what the building contains, because acceptance depends directly on that.
Loss of rent is not automatically included
After a fire the property lies idle for months while interest and repayments continue. Loss of rent is a separate section with its own indemnity period. Without that section the buildings policy pays only for repairing the building. Look at the length of the period, because rebuilding with a permit process takes longer in practice than the standard period.
Vacancy and interim letting
Commercial space stands empty more often and for longer than a home. Beyond a period stated in the policy, cover falls back to a limited set of perils, and temporary occupation by a property guardian organisation or a pop-up is a change of use. Both must be disclosed; failure to do so falls under Articles 7:928 and 7:930 of the Dutch Civil Code and can cause the payout to lapse entirely.
What does your premium depend on?
- Tenant's trade: catering and metalworking count more heavily than office use
- Construction type and compartmentation: fire-resistant separations limit the maximum loss
- Rebuild value of the shell: excluding land, including foundations if covered
- Installations present: refrigeration, deep fryers, a spray booth or solar panels on the roof
- Level of security and fire prevention: sprinklers, fire detection system and burglary resistance class
- Vacancy rate: structural vacancy increases the premium and the excess
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | Basic | Extended |
|---|---|---|
| Fire starting in your tenant's deep fryer | Yes | Yes |
| Storm lifting the roof covering of the business premises | Yes | Yes |
| A burst pipe on the upper floor that floods the shop floor | Provided that | Yes |
| A smashed shop window and graffiti after a night of unrest in the street | No | Provided that |
| Solar panels your tenant had installed on your roof, after a lightning strike | No | Provided that |
| A tenant who has moved from office to workshop use without disclosing it | No | No |
The use stated on the policy schedule determines the cover. If the use of the property changes, the policy changes with it or it covers nothing.
Frequently asked questions
This is what people ask us most.
Can I hold commercial property in my own name?
You can, but it changes your position compared with buying through a company: you are personally liable as possessor of the building and your private assets are exposed to claims. Discuss the structure with your tax adviser and your lender. For the insurance the legal form matters less than the use, but the name on the policy must match the ownership.
Who insures the tenant's fit-out?
In principle the tenant, through contents and tenant's improvements cover. As landlord you insure the shell. The misunderstanding arises with alterations that have become permanently attached: legally they form part of the building, but the tenant paid for them. Arrange that expressly in the tenancy agreement, otherwise no party feels responsible when there is a claim.
Am I liable if a customer of my tenant falls?
That depends on the cause. If it is due to a defect in the building, such as a loose stair tread or an unstable facade, the strict liability of Article 6:174 of the Dutch Civil Code rests on you as possessor. If it is due to a slippery spill or to the fit-out, it is the tenant who is held liable under Article 6:162 DCC. Liability cover for the property takes care of your part.
Do I have to report a change of tenant?
Yes, always. Acceptance is based on the use declared at the outset. If a workshop or a catering business replaces an office, the fire risk changes materially. If you fail to report it, the insurer may reduce or refuse the payout. A short notification when each new tenancy agreement is signed prevents that problem.