32. Contingencies and commitments

The total liabilities for obligations entered into for construction contracts, rental and lease instalments stood at €47 million at year-end (2023: €195 million). Rental and lease instalment liabilities are accounted for under Lease liabilities. Vesteda has not provided security for these liabilities. The liabilities can be specified as follows:

Dutch court practices may impact the Fund’s ability to increase rent by ex officio review of contract clauses

in 2023, various district courts ruled that specific rent increase clauses (CPI plus a maximum top-up percentage) were not deemed fair and therefore null and void. Vesteda took note of a study commissioned by IVBN estimating that the potential damages for institutional real estate investors could reach €6.4 billion, with another €87.5 billion in lost revenue projected through 2040. In Q4 2024, the Supreme Court provided clarity in its verdict, limiting the risk for Vesteda significantly. Vesteda views it as a fair and positive outcome, enabling Vesteda to compensate for cost increases that are above inflation and to keep its rents in line with the value development of the property. The clarity provided by the ruling of the Supreme Court has reduced legal uncertainty in the Dutch residential housing market. This will help create a healthy investment climate, which supports long-term growth and stability. Vesteda closely monitored the outcome of court verdicts on rent increase clauses, the verdict of the Dutch Supreme Court on the prejudicial questions submitted to it and the potential impact on Vesteda.