What erfpacht actually is
Erfpacht is leasehold: you own the building, but you lease the land it stands on. In most cases the landowner is the municipality, and in some cases it is a private party, a housing association, or an institutional investor.
You pay an annual ground rent called canon, unless it has been bought off in advance. Leasehold is common in Amsterdam and appears in other cities too, but it is far from universal, so the first question on any Dutch property is simply which of the two you are dealing with.
A listing may not mention leasehold at all, and an agent may describe it in one reassuring sentence. The deed is what counts. This is one of the first things a buying agent or notary checks, and it should be settled before you bid rather than after.
The two systems, and why the difference is expensive
| Continuing leasehold | Perpetual leasehold | |
|---|---|---|
| Dutch term | Voortdurende erfpacht | Eeuwigdurende erfpacht |
| How long | Runs in fixed periods, often 50 or 75 years | Runs indefinitely |
| What happens at the end of a period | The ground rent is recalculated on current land value, and can rise very substantially | Nothing is recalculated; the basis is fixed permanently |
| Predictability | Low, until the next revision is known | High, with indexation only |
| Effect on buyers | Buyers discount for the uncertainty | Generally viewed as cleaner and easier to finance |
The practical consequence: a cheap-looking apartment on continuing leasehold nearing the end of its period can cost far more over ten years than a more expensive one with the ground rent bought off. The asking price does not tell you which you are looking at.
Buying off the ground rent
Ground rent can be paid annually, or bought off (afkoop) for a period or permanently. Where it has been bought off, you pay nothing annually until that period ends.
Three things to establish:
- Is the ground rent currently bought off, and until exactly when? "Bought off" without an end date is not an answer.
- Is the buy-off permanent or for a fixed term? A term buy-off expiring in six years is a cost arriving on your watch.
- What are the general conditions that apply? Dutch municipalities have issued several generations of standard terms over the decades, and they differ materially in how revisions are calculated.
How leasehold affects your mortgage
Lenders treat leasehold with care, and this catches international buyers out more than anything else on this page.
- Remaining term matters. Lenders commonly require the leasehold to run well beyond the mortgage term, and a short remaining term can make a property difficult or impossible to finance.
- Annual ground rent reduces borrowing capacity, because it counts as a recurring housing cost alongside the mortgage.
- Private leasehold is scrutinised harder than municipal leasehold, since conditions set by a private landowner can be less predictable.
- Ground rent may be deductible for a main residence, but the buy-off sum generally is not treated the same way. Ask a tax advisor rather than assuming.
Which system, which general conditions, current annual ground rent, whether it is bought off and until when, and the date of the next revision. Five questions. A selling agent should be able to answer all five immediately, and hesitation on any of them is itself information.
The Amsterdam situation
Amsterdam is where leasehold matters most, because a large share of the city's housing sits on municipal land. The municipality operates both the older continuing system and a newer perpetual system, and it has offered arrangements allowing owners to convert from one to the other.
Conversion terms, deadlines, and calculation methods are set by the municipality and have changed more than once. Verify the current position for the specific address with the municipality rather than relying on any general article, including this one, and treat older blog posts with real suspicion.
For the wider picture on buying in the city, see our Amsterdam guide.
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Compare free quotesFrequently asked questions
Erfpacht is leasehold: the buyer owns the building but leases the land beneath it, usually from the municipality and sometimes from a private landowner. An annual ground rent called canon is payable unless it has been bought off in advance.
Continuing leasehold runs in fixed periods, and at the end of each period the ground rent is recalculated on current land value, which can produce very large increases. Perpetual leasehold runs indefinitely on a permanently fixed basis, with indexation only, and is generally regarded as more predictable and easier to finance.
It can. Lenders commonly require the leasehold to run well beyond the mortgage term, so a short remaining term can make financing difficult. Annual ground rent also counts as a recurring housing cost and therefore reduces borrowing capacity, and private leasehold is usually assessed more strictly than municipal leasehold.
Which system applies, which set of general conditions governs it, the current annual ground rent, whether the ground rent has been bought off and until exactly when, and the date of the next revision. A selling agent should be able to answer all five immediately.
Ground rent on a main residence may be deductible, but a lump-sum buy-off is generally treated differently. Because this depends on personal circumstances and the specific arrangement, confirm your position with a tax advisor rather than assuming.
No, though Amsterdam is where it is most widespread and most consequential, since a large share of the city's housing sits on municipal land. Leasehold occurs elsewhere in the Netherlands too, which is why the deed should be checked for any property rather than assumed to be freehold.
Written and maintained by Robbert Winnemuller, founder of DutchKey. He works in Dutch residential property in Flevoland and built DutchKey after seeing how often international buyers signed Dutch contracts nobody had explained to them. He is not the agent you are matched with: DutchKey introduces you to independent, buyer-only agents, and these pages exist to make you a harder client to mislead.