Amsterdam homeowners beware!

It may not be the most fun topic to spend your free time on, but you can (potentially) save a lot of money until the end of 2019! Well worth diving into here.

In fact, this year you can still take advantage of a scheme that allows you to buy out your ground lease on (usually) favorable terms. There’s not a whole lot of communication about this, which is why we’d like to take you through the possibilities.

What is ground rent?

If you bought a property, the property is yours, but the land probably is not. The land is owned by the municipality and you pay a fee for this every year: the “canon. The amount of the canon depends, among other things, on the WOZ value of your property. About 80% of homes in Amsterdam are on leasehold land.

Forms of ground lease

In Amsterdam, there are 3 forms of ground lease: temporary, perpetual and perpetual ground lease. Temporary ground rent is almost non-existent. In most cases, there is a perpetual ground lease, where the canon is fixed per period of 50 or 75 years. After that time period, the canon is usually increased and the increase is significant because the WOZ value has also increased. With perpetual ground leases, the canon is calculated once and is then fixed forever. Here, the property is not changed in such a way that the leasehold right must be adjusted. For example, if you want to turn your home into a store or if the home is split.

Applying for perpetual ground lease

If you have a property with temporary or perpetual ground lease, it is now possible to apply for perpetual ground lease. Watch a video here in which the alderman explains the switching scheme.

What is the benefit?

– The 2014 WOZ value is used (or 2015 if lower)
– You get 35% off the redemption fee.
– There are no more time periods. The canon is locked in place forever. So you no longer run the risk of sudden sharp increases in canon.

The possibilities

There are 2 options for paying the canon
1) Annual. With the transfer arrangement, the perpetual canon starts after the expiration of the current term. The amount is then still adjusted for inflation, after which you pay annually. The amount is then fixed forever, though.
2) One-time. You purchase the ground lease and pay a one-time redemption fee for it.

A 3rd option also exists, of course, and that is, “do nothing. Which is actually not an option. It is advisable to at least inquire whether the terms are favorable in your case as well, because you can assume that the cost will increase over the years anyway. That is simply a shame. We assume you’d rather keep that money in your pocket.

Requesting a quote

Through the municipality’s Switch Portal, you can request a quote and see if it is convenient in your situation to switch and/or buy off and what form fits best. The quote is without obligation.
The condition is that you do so this year. At least, you do if you want to take advantage of the favorable conditions. From Jan. 1, 2020, you can also still apply, but the advantageous conditions will no longer apply.

For more information, visit the municipality’s website at amsterdam.nl/erfpacht.