You have found a lovely apartment, the price looks reasonable, and then the brochure says: eigendom belast met erfpacht, property subject to ground lease. Many buyers skim over it. Yet that one line can make a difference of tens of thousands of euros. With erfpacht (leasehold), you buy the home but not the land it stands on. Here is how it works and what to look out for.
What is erfpacht?
With erfpacht, the land belongs to someone else, usually the municipality. You get the right to use the land and pay a fee for it: the canon (ground rent). You can pay it annually, or all at once in advance (buying it off). The terms are set out in the leasehold deed and in the municipality's general conditions. Those conditions differ per municipality and sometimes even per period in which the land was issued.
How common is it?
In our own listings of privately sold homes, the land is leasehold for just over 8 percent of the homes whose ownership situation we know. Nationally that is modest, but it is heavily concentrated in a few cities:
- Amsterdam: 63 percent of listings
- Vlaardingen: 39 percent
- The Hague: 38 percent
- Utrecht: 23 percent
- Rotterdam: 19 percent
The good news: for almost 6 in 10 leasehold homes in our listings, the ground rent has been bought off in perpetuity. You then never pay ground rent again and in practice hardly notice the leasehold.
The main variants
- Bought off in perpetuity: the ground rent is paid forever. The rules in the general conditions still apply, but there are no annual costs.
- Bought off until an end date: the ground rent is paid until the end of the current period. After that it is set again, often based on the land value at that time. This is where the biggest risk lies.
- Annual ground rent: you pay every year, usually indexed to inflation. At the end of the period there is a review.
- Perpetual leasehold with annual ground rent: the amount is fixed (apart from indexation) and there is no further review. In Amsterdam, leaseholders can switch to this system.
Why the end of the period matters
Suppose the ground rent is bought off until 2032. Until then you pay nothing. After that the municipality sets a new ground rent, and because land prices in cities have risen sharply in recent decades, it can turn out much higher than you expect. A few hundred euros a month is not unusual in the big cities. If you buy a home whose period ends in a few years, budget for the new ground rent, not for zero.
What does erfpacht mean for your mortgage?
The ground rent counts as a housing cost. Lenders include it when working out how much you can borrow, so a high annual ground rent lowers your maximum mortgage. On the other hand, ground rent for your own home is tax deductible, just like mortgage interest. Some banks also set requirements for the remaining length of the period or for the general conditions. Check this with your adviser in advance.
Ask these questions before you bid
- Has the ground rent been bought off, and if so: in perpetuity or until which date?
- How high is the ground rent now, and how is it indexed?
- When does the period end, and what is known about the new ground rent?
- Which general conditions apply (for example AB 2000 or AB 2016 in Amsterdam)?
- Does the deed specify a use that limits your plans, such as working from home or renovating?
- Has the seller already received a switch or buy-off offer from the municipality? You are allowed to ask for it.
Have the leasehold deed reviewed by the notary handling the transfer. The notary checks the deed anyway and can explain what the conditions mean for you.
What does it mean for your offer?
Erfpacht is no reason to walk away from a home, but it is a reason to do the maths. A home with an ongoing ground rent of €150 a month is worth less than the same home on freehold land. Ground rent bought off in perpetuity largely removes that difference. Factor it into your offer, just as you would the energy label or a critical building inspection report.
On Buurtje.nl you can see the ownership situation directly in a home's features. That way you know before the viewing whether erfpacht is involved.
Source: Buurtje.nl's own listings of privately sold homes, only homes whose ownership situation is known. Percentages per municipality based on current listings.
