31 August 2016

Can you buy off a leasehold in Amsterdam?

Category: Leasehold

In the ground lease system in Amsterdam the ground rent is the agreed annual usage fee and must be paid in advance every six months. The possibility to pay off or buy off the ground rent does not exist under all existing general conditions of ground lease. Therefore, you should check the applying general conditions. Under Amsterdam general conditions AB 1994 and AB 2000, the possibility exists to pay off the ground rent for a 50 year period. This pay off can be done from the beginning, but also when the ground lease already exists and you wish to buy off the ground rent for the remaining period.

Price for payoff Amsterdam groundlease

The rates for buying off the ground rent are published by the municipality of Amsterdam every quarter. Please check the website of the municipality on ground lease. Land valuation policy, ground rent percentages and information about lump sum buyouts of Amsterdam ground lease are established annually by the city council, and include the actual land price per square metre, the ground rent calculation, and the lump sum buyout options available to leaseholders.

Buy off under current leasehold conditions in Amsterdam

You can request an offer for the buy off. The municipal administration will prepare a calculation and make an unbinding offer. A premium is calculated on the basis of the buying off rate of the ground lease. The amount of the premium is calculated in relation to the so called ‘shadow land value’ (schaduw grondwaarde). This is a value at the time of buying off updated by means of an index.

Ground lease Legal Opinion

We can check your ground lease contract and check if you are entitled to a buy off of the ground rent. In case that is possible, we can request the municipality to make an offer. Please contact real estate attorney, who has written a book on leasehold in the Netherlands called “50 Vragen over Erfpacht” (“50 questions on Dutch leasehold”).

Perpetual leasehold Amsterdam in the making

The municipality is also preparing perpetual ground lease in Amsterdam for all ground lease contracts. This means that the financial obligation (ground rent) can be paid off in full with a lump sum. That means you will never have to pay any rent anymore. The proposed Amsterdam perpetual leasehold system provides two payment options for leaseholders: a ground rent that can only be indexed annually (adjusted for inflation), or the option to buy out the ground rent (with a lump sum payment). Existing ground lessees have the opportunity to voluntarily switch to the perpetual ground lease system before january 1, 2020.