When you buy a property in the Netherlands, you may have to deal with different forms of ownership. The most well-known is full ownership, but especially in cities like Amsterdam, perpetual ground lease is also common. Although the differences seem small on paper, they are legally and practically relevant. In this article we explain what both forms mean and where exactly the differences lie.
What is full ownership?
With full ownership (also called “own land”), you own both the home and the land on which it stands. You have complete control over the plot, within the limits of laws and regulations. You do not have to pay ground rent or ground lease rent to anyone, and you have no additional obligations to a landowner such as the municipality.
Characteristics of full ownership:
- You own the property as well as the land.
- No canon or ground rent payments.
- No conditions from a landowner.
- The value of the home is often estimated higher by buyers or banks.
What is perpetually redeemed ground rent?
With ground lease, the land remains in the ownership of another party (often the municipality), and you, the ground leaseholder, get the right to use the land and property. With perpetual leasehold, you have secured the rights to use the land forever, without having to pay periodically.
Features of perpetual redeemed ground lease:
- You own the property, but not the land.
- You have the right to use the land indefinitely.
- The canon (ground rent) is fully redeemed once.
- Leasehold terms still apply, as contained in the leasehold deed and general provisions of the municipality.
- The municipality (or other landowner) remains the formal owner of the land.
What are the main differences?
| Aspect | Full ownership | Leasehold purchased in perpetuity |
|---|---|---|
| Property | You own | The municipality owns |
| Canon Payment | No | Redeemed, so no more payment either |
| Control of land | Fully, within the law | Bound by ground lease terms |
| Restriction on changes (construction/use). | Only permit requirement | Sometimes additional permission needed from landowner |
| Value development | Positive effect | Slightly lower than own land, but almost the same when surrendered |
| Mortgage lending | Fully possible | Also completely possible, provided canon is redeemed |
| Sellability | Very good | With bought off ground lease also very good |