The ground lease system in Amsterdam is changing, meaning that citizens of Amsterdam who own a house will be able to permanently pay off their lease. This is expected to tilt the house values to the benefit of some, and the misfortune of other homeowners.

"Rent" for the city’s land

Erfpacht, or ground lease, is a system in the Netherlands that means that certain houses, though bought by their owners, are still located on land that belongs to the municipality. People who live there have to pay a kind of rent to be allowed to keep their property there.

This system can be deceptive to new house buyers, as a house that seems quite cheap could come with a considerable ground lease attached.

From continuous to perpetual

There are various types of ground leases. The continuous ground lease means that the rent of the land is adjusted to the land’s value every 50 or 100 years.

The rent for a perpetual ground lease costs a set sum, and can be paid off permanently.

The new lease system in Amsterdam will mean that homeowners can voluntarily transfer to a perpetual ground lease, for which they can pay a set sum to forgo having to pay this rent for good.

Ground leases and house-buying

The concept of ground leases has been a prevalent and tricky aspect of house-buying in Amsterdam for a long time, and this latest change has been subject to much debate.

Many ground lease holders in the cheaper areas of Amsterdam will welcome this news with open arms, since the value of their houses will rise significantly without an obligatory lease pay.

However, the owners of more expensive houses have seen an explosive rise in the value of their land, and it will be much too expensive for them to pay off the lease.

It initially looked like protests tied to this problem would lead to a referendum on whether or not paying off perpetual ground leases in Amsterdam could be allowed, but the decision was recently pushed through without one.

Source: Volkskrant