Change in sanction policy for sale of Dutch residential properties without valid energy label: immediately due and payable penalty
A sanction is imposed on any seller failing to provide the purchaser with a valid energy label when selling a property.
The Human Environment and Transport Inspectorate (Inspectie Leefomgeving en Transport, 'ILT') amended its sanction policy for residential properties with effect from July 3, 2019. The two main changes:
- the ILT will no longer first send a warning notice if a property was sold without an accompanying energy label.
- the order subject to a penalty for non-compliance (last onder dwangsom) is replaced by an immediately due and payable administrative penalty (direct opeisbare boete). The penalty for natural persons is set at EUR 170 per sold property without a valid energy label. For legal entities, the penalty is EUR 340 per sold property.
Why replace the order subject to a penalty for non-compliance (last onder dwangsom)?
The change in the ILT's sanction policy is prompted by the ruling of the Council of State of October 17, 2018. In the ruling, the Administrative Jurisdiction Division of the Council of State declared that an order subject to a penalty for non-compliance cannot be imposed once a property has been sold since the obligation to provide an energy label applies at the moment of sale. Once that moment has passed, the seller is no longer able to remedy the breach. An order subject to a penalty for non-compliance, which is imposed as a remedial sanction, is therefore unenforceable.
Directive 2010/31/EU on the energy performance of buildings continues to require the ILT to take enforcement action in case of non-compliance with the obligation to provide an energy label. In view of the wording of Section 120b (1) of the Housing Act, there remains one option only for penalising such non-compliance with a sanction, namely in the form of an administrative penalty. This option has been endorsed for residential properties by the Minister and laid down in Policy Rule no. ILT-2019/31227, which took effect on July 3, 2019.
What about non-residential properties?
It is expected that, instead of an order subject to a penalty for non-compliance, an administrative penalty will now immediately be imposed also in case of the sale of other buildings without a valid energy label. The legally prescribed maximum amounts will apply, however, as the new Policy Rule only concerns the penalty on the sale of residential properties. The amount of the penalty will be determined on a case-by-case basis. The maximum amount that may be imposed by law for a breach of Section 120b of the Housing Act, including failure to provide an energy label on the lease, sale or delivery of a building, is EUR 415 for natural persons and EUR 20,750 for legal entities.
Immediately due and payable versus warning notice
A key consequence of the decision to impose an administrative penalty is that it is immediately due and payable. Previously, a party receiving a warning notice (in administrative terms: a compliance period) was given the option of remedying the non-compliance by providing an energy label within six weeks. As retrospective remedy is no longer possible, a warning notice no longer serves any purpose.
Penalty per property/apartment
The penalty for selling a property without an energy label is levied on each property sold. Where multiple properties are sold, the penalty comprises the sum total of penalties for each property sold without an energy label. The same applies to a building with multiple apartments: each apartment counts as a separate property subject to an individual energy label obligation. A sizeable penalty can therefore be amassed on the sale of a large residential portfolio.
If you have any questions about this newsletter, please contact Timo Huisman, Margot Dadi-Tailleur or your usual adviser at Loyens & Loeff's Real Estate team.