THE BOTTOM LINE
- Zoning Restrictions are Robust: Companies providing housing services, such as for migrant workers, cannot assume EU law will override specific local zoning plans. A Dutch court confirmed that a ban on “commercial room rental” in a residential zone is enforceable, even if it impacts a business model.
- EU Services Directive Has Limits: To successfully challenge a local rule under the EU Services Directive, a business must show the rule specifically targets its service activity. General spatial planning rules that apply to everyone—both businesses and private individuals—are unlikely to fall under the Directive’s scope.
- Due Diligence is Crucial: This case serves as a critical reminder for real estate investors and CEOs. Before purchasing or leasing property for commercial use, a thorough review of local zoning regulations is essential. Relying on broad EU principles to bypass local restrictions is a high-risk legal strategy.
THE DETAILS
A housing provider, Mployment Housing B.V., was fined by the Dutch municipality of Lisse for housing multiple EU migrant workers in a property designated for single-family residential use. The local zoning plan (bestemmingsplan) explicitly prohibits the use of a dwelling by more than one household and defines “commercial room rental” as falling outside the scope of a single household. The company did not dispute the facts but argued that the zoning rule itself was illegal, putting it on a collision course with the municipality’s enforcement action.
The company’s primary defense rested on the EU Services Directive, claiming the zoning rule was an illegal barrier to its cross-border service of providing accommodation. The District Court of The Hague firmly rejected this argument. It clarified that for the Services Directive to apply, a regulation must specifically target or regulate a service activity. The court found that the ban on commercial room rental was a general rule of spatial planning that applied to everyone equally. Whether a large corporation or a private homeowner wanted to rent out rooms commercially, the prohibition was the same. Because the rule was not specifically aimed at service providers, the court concluded it fell outside the scope of the Directive.
The company also tried a second line of attack, arguing the rule indirectly discriminated against migrant workers and therefore violated the EU’s principle of free movement of workers. This too was unsuccessful. The court found the rule was neutral on its face, making no distinction based on the nationality of tenants. Critically, the court determined that the rule was not evidently in conflict with EU law. The company failed to prove that this specific local zoning ordinance actually prevented migrant workers from seeking employment in the region. The court noted that the municipality was pursuing other avenues for housing workers, such as converting empty offices, reinforcing the non-discriminatory nature of its planning policy. The ruling upholds the municipality’s right to enforce its zoning plan.
SOURCE
Source: Rechtbank Den Haag (District Court of The Hague)
