There is a lot of talk about “erfpacht” (aka ground lease) in Amsterdam. You can learn about what a ground lease is in the underneath video.
If your house is located on municipally owned land, you must pay a canon (fee) to rent that piece of land; this rent can be paid in one lump sum, or annually. The terms of the standard ground lease are set to change in 2020, and you can read all about those expected changes here.
Perpetual (eeuwigdurende) ground lease and continuous (voortdurende) ground lease are quite similar. Both agreements are issued for an indefinite period of time, but with a continuous ground lease, the current land value is reviewed every 50 or 75 years and the ground lease fee is adjusted, accordingly.
With a perpetual ground lease, you enter into a definitive agreement for one set fee, instead of beginning a new 50-year leasehold agreement. The canon is only calculated once during the transfer and remains fixed from that time onward.
In 2020, the terms of the ground lease will change unfavourably for many ground leaseholders. If you are a homeowner or landlord with a continuous ground lease, it may behove you to convert your ground lease to a perpetual one before the close of 2019, to avoid any increases to your canon. To make the transition easier, a 35% discount is being offered for a limited time to those who submit their application to switch their ground lease agreement before 1 January 2020.
Which terms will apply if you decide to make the transition from continuous to perpetual ground lease before 2020? The lowest of the (WOZ, Wet Waardering Onroerende Zaken) valuations of your land in 2014 and/or 2015 will be the land value on which your perpetual ground rent will be based.
If you own a house located on leasehold ground, consider making the switch from continuous to a perpetual ground lease. Click here for more information about switching your ground lease agreement, from the Municipality of Amsterdam’s official website.
When it comes to ground lease payment options, you can:
1. Annual: This annual payment of the perpetual canon only starts after the end of the current term. It is adjusted annually to reflect inflation.
2. One advance payment/payout: The balance of the canon is paid in one go at the start of the agreement. You pay one lump sum, at the moment your transfer is arranged with the notary, and are not obligated to pay any additional fees for the canon from that point onward.
Favourable conditions apply to those who choose to convert to a perpetual lease only if the application for conversion is made to the municipality of Amsterdam before 1 January 2020. Don’t miss out on this uniquely discounted opportunity to reduce your ground lease fees! Application submission carries no obligation, but if you fail to apply before the deadline, you can be assured that, given the current spike in market values, canon fees will be much more expensive after 1-1-2020.
Do you need some help? Send an email via email@example.com and we will connect you to a trusted ground lease expert.
Barry Burgemeester is a certified real estate agent and founder of Burgemeester Vastgoed. Burgemeester Vastgoed has been helping expats buy their own homes for over 17 years.