Home owner in Amsterdam? You may get a second chance to buy off your erfpacht

If you are a home owner in Amsterdam, you may be aware that the city is working on plans to give some people a second chance to buy off their ground rent, or erfpacht, in one go. 

It was in 2017 that the city offered home owners the chance to switch from a 50-year reassessment of their ground rent to a fixed amount or to make a lump-sum payment to buy it off altogether.

While 85% of people affected had done so by the cut off date at the end of December 2019, around 35,000 did not – and they are now being offered another opportunity – thanks to a massive lobbying effort from home owners who realized too late that it might have been a good move financially.

So what is erfpacht and how does it work?

Some 200,000 homes in private hands in Amsterdam are built on land owned by the city itself, rather than the home owner. This system, known as erfpacht, operates in other countries as well. In Britain, for example, they are known as leasehold properties.

Homeowners with a leasehold property pay ground rent, or canon, to the city – which comes on top of all the other costs associated with home ownership. And it can mount up considerably, especially now house prices have gone up so much. This is because the amount you pay in ground rent is based on the on the value of the land.

Many people decided not to take advantage of the council’s offer when it was open, most often because of the expense of coming up with a lump sum or because they did not see the point when their payments would only be reassessed after 50 years.

But now with house prices soaring, a large number of them have realized that not only are they facing higher ground rent bills, but that an erfpacht property is less popular with buyers. 

Council decision about erfpacht in this summer

The city council is set to take a final decision after the summer, and the plans are currently out to consultation. 

If the full council votes in favour – and it is likely to – people who owned a given property on January 8, 2020, and still own it today, will be eligible to make the switch after all. If you bought a place since then which falls under erfpacht, as things currently stand, you will not be able to benefit.

If you are affected in some way, you can still make your voice heard in the consultation process which runs until late September. 

When the new period to make the switch starts, it really is worth thinking about – and finding the money is something we can help you with through re-mortgaging. Make sure you get expert help to decide what to do – erfpacht is a complicated issue!

You might think it is nothing to worry about personally, but erfpacht will have play a role when you come to sell your property. Without taking any action at all, your ground rent will continue to go up in line with house prices – and we all know how they have shot up in recent years.