Every year thousands of homeowners pay ground lease on city ground where there homes are located. Therefore, house buyers in Amsterdam always have to take the local ground lease rules and regulations into account. Also because the ground lease canon still has to be paid every year. The amount of ground lease can even be fixed at a certain price over half a century ago and never have changed since. The city of Amsterdam owns approximately 80 percent of all the ground within the city limits and has rolled out a transitional arrangement and formulation of new General Provisions for the total leasehold system.
“The switch from the expiring system to the perpetual system in all cases is voluntary. The discussion is more likely to focus on the level of settlement.”
Someday paying off your ground lease at once?
The provisions regarding the leasehold system will focus on a one time settlement of the ground lease canon, a value that can’t be changed later. With this settlement homeowners have the benefit of paying of the canon at once so they won’t have to pay it every year. The General Provisions of the leasehold system and the corresponding price policy are expected to be presented to the city council mid 2016.
From that moment on new ground allocations (for new developed houses for example) within the city limits can be done in perpetual ground lease. The canon won’t change unless the residential use of the house changes. It should also become possible that current homeowners can switch from expiring to perpetual ground lease. We have to see how it will turn out after multiple participation days. Currently changes are only generally formulated.
Our view on changes in the leasehold system
Although a lot is already clear on what’s going to change within Amsterdam’s leasehold system, the question remains if the given security communicated by the local government will in fact be reality for the future ground lease contributor. After all, how high will the payoff be and how is the yearly inflation adjustment calculated? Niels Bakker addresses this issue as following:
“For the moment it looks like those who can’t pay off the ground lease at once, can choose for a yearly indexed canon bases on the 2014 land prices. Those who won’t or can’t switch can always choose to continue in the current situation until the ground lease term expires.”
The change in Amsterdam’s leasehold system has consequences for almost every homeowner in Amsterdam. Therefore we will keep you posted with all relevant developments. You can read more about the changes regarding the leasehold system on the local government website.