Property Management
The consequences of buying a house with groung lease (erfpacht)
Have you been seeing houses with a leasehold (erfpacht), but not sure what its implications are?
This article will explain what erfpacht is and how it may affect your new home.
Buying a house in the Netherlands could be like a roller coaster! You always have to be alert while viewing homes, knowing the state and local rules, and understanding the implications of each of the details you read on the listings.
One of the things you need to know while house hunting is what it means when you buy a house with a ground lease.
In a nutshell, what's a ground lease (erfpacht)?
Leasehold is governed by Book 5, Title 7, Articles 85 to 100. A long-term ground lease compared to a rental. The leaseholder (erfpachter) may be required to pay for the right: the canon (de canon), Article 85(2). Extended terms are standard. Periods of 100 years are no exception.
Since the establishment of the leasehold right must follow the rules for the transfer of immovable property, a professional real estate agent could find the leasehold note, as the deed of establishment and registration lie in the public registers.
Now, how does a leasehold affect a buyer?
Do you want to know? Scroll down!
Do I become the owner of the ground-leased property?
When you are buying a house or apartment with a leasehold you are not buying the ground on which it stands, but more accurately, you purchase the property and the right to use the ground it lays on for a certain period.
The house owner pays the municipality a fee to do so: the ground rent or erfpachtcanon.
Could I buy the right of usage for good?
Yes! The city of Amsterdam launched the option to buy the ground lease perpetually. The owner could buy off the leasehold in 2 ways:
1. Annually;
2. Lump sum.
Both ways enable the buyer to hold the grounds for good once buying off the canon. The payment is calculated based on the house's value. The amount will be indexed to calculate the inflation correction.
The perpetual deed has to occur at the civil notary office, which the owner pays.
If so, is it wise to buy a house in Amsterdam with a ground lease?
The majority of properties in Amsterdam are built on the municipality's land. Despite the relatively high volume of leasehold houses in the Netherlands, buyers are less enthusiastic about buying homes with leasehold. Yet, an exception is Amsterdam and Amstelveen, which are still places with high demand for houses with a ground lease.
How can I find the data on the leasehold before buying a house?
If you decided to hire Buying agent to represent you, they should take care of retrieving the information beforehand and ensure you are aware of whether the house has a ground lease, terms, and canon you need to pay.
If you didn't, you could ask to check it yourself, as the selling agent (most of the time) indicates it, and you could also find details on the deed of transfer.
Not being aware of the implications of the leasehold before buying the apartment, may come up as an unpleasant surprise in the future that you'd want to avoid.
Want to speak with a professional Buying Agent?