If you own a property in Amsterdam, you have (hopefully) received information about ground lease and the opportunity it gives you, the owner, to claim to buy off perpetual ground lease. If not? Then you are not the first and certainly not the last.
Leasehold, simply put, is rent (i.e., no interest) of the land on which your home stands. You pay the so-called canon for that every year. For people who have bought out the ground lease until a certain year are often unaware of the arrangement, as they are not confronted with it every year. You may have bought a house in one of the most beautiful cities in the Netherlands, but the land on which your dream house stands will never be yours. In over 80% of built-up land, anyway.
First, I like to explain the difference between perpetual and perpetual ground leases. Perpetual ground rent is determined every 50-75 years based on the ground rent land value. Of course, that could increase substantially in 50-75 years. So the market value does affect the canon you pay.
With a perpetual ground lease, instead of 50-75 years, you take out a ground lease forever at the end of the current ground lease term. This will give homeowners and business owners on leasehold land more certainty about their leasehold costs. The market value then no longer affects the cost, except for indexation when paying annually.
Do you have a property on leasehold land in Amsterdam? Since October 2017, you can apply for a switch to perpetual ground lease. To switch is to choose certainty: no more unpredictable canon jumps. I will limit myself to housing in this blog. Here the WOZ value is taken as the starting point for the leasehold land value. The canon amount is calculated with a very complicated formula, but that aside.
So incredibly important for a homeowner to find out what benefits there are to switching to perpetual ground lease. Why hasn’t everyone taken steps to investigate this yet? First, the City of Amsterdam provided the initial notice in Dutch only. However, 10% of residents in Amsterdam are expats. Another part has a non-Western background, is low-literate, digital illiterate or has reached retirement age and thinks it is not interesting for them. Error!
Should you die and your heirs may take over the property, they can no longer claim this arrangement either. Bad luck! So also for these people, make elders, friends, family aware of what is going on now. Use social media to spread the word and most importantly: engage in the conversation!
It is also advantageous for any future sale of the home to have this
arranged.
I did not request this, now what?
Via
this link
you can make an application. As a tip, I hereby give the Municipality
Amsterdam on the run. Call weekly with status updates. There will be on this
currently receiving so many applications that the municipality is no longer overseeing this and owners
who are not on top of it risk ending up at the bottom of the pile.
The City of Amsterdam has realized that the provision of information is anything but
was optimal and has established a regrets regime.
The regrets scheme was established for leaseholders who did not use in time
made of the possibility of switching to perpetual ground rent. That could
before Jan. 8, 2020 on favorable financial terms.
Leaseholders who failed to do so for whatever reason now have an opportunity
to apply on those same favorable terms.
So good news!
This regrets scheme is in effect until July 31, 2023, so make sure in each
case the application was made before that date.
Finally: You want to sell your property which is on a long lease and you do not want to pay the
buy off leasehold canon or latch on, but allow the new buyer this opportunity? (which
again can be beneficial to the value of your home) The application must be submitted by
leaseholder/seller to be submitted before 01-08-2023 and buyer must then submit within 6
months after transfer to let the municipality know they want to take over.
You then don’t have to pay anything yourself, but the application is already done for the buyer, which is nice
neat!
They then have the chance to go through with this themselves. The notary public, will provide the buyer and
vendor also be sure to point this out. (provided you have a good notary in the Amsterdam area
chosen)
As it turned out, ground rent is a very complicated issue. Therefore, look especially for questions
contact a financial advisor and/or broker who can explain more to you about
the ups and downs of this.
Make use of this arrangement? Always! Whether you pay it annually or you buy off the ground rent in its entirety, that is unique to everyone and so I cannot comment on it. Well that it is very beneficial financially to explore this.
For completeness, the text below can also be read in English, to reach a larger group of people. Something the City of Amsterdam should have done in the first place.
Kim van Straten, ARMT, VK Makelaars & Taxateurs (office in Haarlem and Amsterdam)
“What exactly is the situation with perpetual leasehold and how can I still claim this?
If you are the owner of a home in Amsterdam, you have (hopefully) received information about leasehold and the opportunity it gives you, as the owner, to claim perpetual leasehold to buy off. If not? Then you are not the first and certainly not the last.
Leasehold is simply put rent (so no interest) of the land on which your home stands. You pay the so-called canon for this every year. You may have bought a house in one of the most beautiful cities in the Netherlands, but the land on which your dream house stands will never be yours. In more than 80% of the cultivated land in any case.
First of all, I would like to explain the difference between continuous and perpetual leasehold. Continuous leasehold is determined every 50-75 years on the basis of the leasehold land value. This can of course increase considerably in 50-75 years. The market value therefore does have an influence on the canon that you pay.
With perpetual leasehold, instead of 50-75 years, you take out a leasehold forever. In this way, homeowners and entrepreneurs on leasehold land get more certainty about their leasehold costs. The market value then no longer has any influence on the costs, except for indexation after annual payment.
Do you have a house on leasehold land in Amsterdam? Since October 2017, you can apply for a switch to perpetual leasehold. Switching is choosing certainty: no more unpredictable canon jumps.
I will limit myself in this blog to homes. The WOZ value is taken as the starting point for the leasehold land value. The canon percentage is calculated with a very complicated formula, but that aside.
So it is extremely important for a homeowner to find out what advantages it offers to switch to perpetual leasehold. Why hasn’t everyone taken steps to investigate this yet?
Firstly, the Municipality of Amsterdam has provided the first reports only in Dutch. However, 10% of the inhabitants in Amsterdam are expats. Another part has a non-Western background or has reached retirement age and thinks it is not interesting for them. Mistake!
If you die and your heirs are allowed to take over the house, they can no longer claim this arrangement. Bad luck! So also for these people applies: Make the elderly, friends, family aware of what is going on now. Use social media to bring this to the attention and in particular: start the conversation!
Also for a possible sale of the house in the future it is advantageous to have this arranged.
I didn’t ask this, and now?
The municipality of Amsterdam has recognized that the provision of information was anything but optimal and has set up a regret optant scheme.
The regret optants scheme has been drawn up for leaseholders who have not made use of the possibility to switch to perpetual leasehold in time. This was possible before January 8, 2020 on favorable financial terms.
Leaseholders who have not succeeded for whatever reason will now still have an opportunity to apply under the same favorable conditions.
Good news!
You can make a request via the link below. As a tip, I hereby give to the Municipality of Amsterdam to sit on the skin. Call weekly with the state of affairs. There are currently so many applications coming in that the municipality no longer oversees this and owners who are not on top of it end up at the bottom of the pile.
Click here for more information.
This regret optant scheme is in force until July 31, 2023, so make sure that at least the application is made before that date.
Finally: You want to sell your home on which leasehold is taxed and you do not want to buy off the ground rent, but do want to give the new buyer this opportunity? (which can also be advantageous for the value of your home) Then you can fill in the application and let the new buyer arrange this himself before 1-08-2023. You do not have to pay anything yourself, but the application is already made for the buyer, so neat!
They then have the chance to continue with this themselves. The notary will certainly point this out to the buyer and seller. (provided you have chosen a good notary)
As it turned out, leasehold is a very complicated issue. Therefore, especially if you have any questions, contact a financial advisor and / or a broker who can explain more about the ups and downs of this.
Do you want to make use of this scheme? All the time! Whether you pay it annually or you buy off the ground rent in its entirety, that is unique for everyone and I can therefore not make any statements about it. However, it is financially very beneficial to investigate this.
For the sake of completeness, the text below can also be read in English, in order to reach a larger group of people. Something the Municipality of Amsterdam should have done in the first instance.
Kim van Straten, ARMT, VK Makelaars & Taxateurs (offices in Haarlem and Amsterdam)