What's the difference between my own land and leasehold (erfpacht) in the Netherlands?

When the plot is a leasehold, you don't get the ownership of the land (because it's the leasehold you get).

What you get instead is the right to use the land and the building. You'll have to pay e certain fee and you'll have the right for a certain period. 

The leasehold doesn't end when you die, but passes to your heirs.

It's even possible to get a mortgage on the leasehold in the Netherlands (not every leasehold qualifies for this).  

What's the difference between leasehold and full ownership?
When you obtain leasehold, you'll have to pay the owner of the land a fee (canon in Dutch). This may be a one time payment, or it could be monthly, once a year or anything else. 

The fee is paid for using of the ground and having the right to have a house there. In many cases the fee is fixed for a certain period. In the next period a new (most often higher) fee will be calculated. 

In other cases, the leasehold may end after a certain period of time. In that case you'll have to return the house to the owner of the land when that moment has come.

This may not be very attractive. So read the leasehold agreement carefully!

Advantage of owning the land over leasehold
The advantage of having the onerwship of the land over a leasehold is: you'll not have to pay another person for use of the land and you'll not lose the house after a certain period of time. 

So never buy a leasehold plot ?
The way in which the leasehold has been arranged, differs per case.

When you come across a leasehold plot, you'll have to research the kind of leasehold involved.

Things like the height of the fee, the future payments, the duration of the leasehold and what happens after the initial period has ended are all very important.

You'll find all this in the leasehold agreement.

Based on your own preferences, you'll have to decide whether or not the leasehold is okay for you. 

Leasehold in the Netherlands exists for a long time and is used regularly.

When you buy an everlasting leasehold, with no more fee to pay, it's almost equal to owning the land.

Does leasehold influences the price of a property?
This depends on the conditions of the leasehold. Until which date is the leasehold valid? Is there a yearly or monthly payment applicable? Will this fee be changed, when and with how many percent? Are there any other special clauses? 

All of this has its consequences regarding saleability and price of the leasehold. In the conditions of the contract almost anything can be arranged. So it's always sensible to read and understand the terms and conditions of a specific leasehold. 

What are the advantages of leasehold?
For you, as a buyer, probably none. When you pay a fee (canon) every year or month, the house may be a little more affordable than the same property on owned land. At least it should be in theory. But in practice that's not always the case. 

And every time you'll have to pay the fee, so the total for land and house are at least the same amount.

For the same amount of money you're spending on the leasehold fee, you could have bought a plot of your own land. 

In practice, it turns out that a buyer of a leasehold plot pays more than the buyer of his own plot of land. The payments of the fees are not fully included in the price of a property.

And the fee may rise a lot over time as well. 

Tax and leasehold
The fee (canon) is often tax deductible in the Netherlands. This may make the leasehold more affordable for you. Be sure to check if this applies to your situation, before buying a leasehold! 

Seek advice
Leasehold properties may have a difficult nature. And you may encounter many different models of leasehold in the Netherlands.

So when you want to buy a leashold plot, it may be best to seek professional advice on the topic. 

Return to Buying A House in the Netherlands from Leasehold

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