10 January 2022, by Mie Lan Kok
The city of Amsterdam owns a vast majority of land on which properties are built on. In return for the use of the land on which your home is built, the municipality charges a fee – this fee is called the ground lease or leasehold. Mie-Lan Kok explains.
How does ground lease work in Amsterdam and what has changed?Of the 440.000 homes in Amsterdam, about 329.000 are on municipal leasehold land. Therefore, it is exceptional to have a property on free ground. This means that a vast majority of owners of properties have to pay an annual ground lease. Sometimes the ground lease has been paid off up until a specified date. Until this period comes to an end you don’t have to pay anything, so often people don’t plan ahead beyond this point and think it will be fine.
However, you do need to think of the consequences, even if it has been paid off for many years to come. When the new lease period starts, the municipality will determine the lease amount. There is a chance that the lease amount will be significantly higher. Many owners do not realise that this will have a major impact on the value of their house and their selling chances.
In 2016, the general conditions for (everlasting) leasehold were changed by the municipality of Amsterdam. The cost of switching to an everlasting leasehold was based on the property value decided by the municipality (WOZ) in 2014 or 2015 (the lower of these was used). When the value was determined, you also received a 25 percent discount on the amount. This was a very attractive proposal.
The deadline for application for this new everlasting leasehold was January 2020.
Extension of application periodUnfortunately, not everyone made use of this because there was insufficient information available about the consequences if they did not take advantage of this attractive proposal. Due to the fact that there was so little information available, the Consumer and Market authority pressured the city of Amsterdam into extending the application period.
Leaseholders who did not switch to the everlasting leasehold system will still have the opportunity to do so under the favourable old conditions again. You may choose one of three options that are available: You can pay a (one-off) fixed amount and then never have to pay leasehold again, you can secure the annual payment (which will fluctuate with inflation) in the new period, or you can choose to do nothing. The latter is however not advisable – at the very least opt to secure the annual payment, as that will only cost you around 1.000 euros in notarial fees and will make the sale of your property a lot easier in the future.
Homeowners that still want to opt for the everlasting ground lease with the aforementioned favourable conditions need to do so within six months from when the municipality of Amsterdam extends the application period. The date of when the extension starts is not yet known. However, the municipality of Amsterdam will notify all leaseholders concerned.
The best way to let the municipality of Amsterdam know that you would like to apply for this attractive proposal is by sending them an email. We strongly advise making use of this possibility.
Mie-Lan Kok Estate Agency has the right tools and knowledge to help you out when it comes to buying or selling your house; they can guide you through the entire process.