Erfpacht is a unique system of land ownership in the Netherlands, where homeowners purchase the right to use the land for a specific period of time, typically 30 to 99 years.
What is a leasehold?
When you buy a house, it is usually situated on 'private land.' However, sometimes the land with the house on it remains the owner's property. Leasehold is the right to use a piece of land and its accommodation. For this user right, the leaseholder pays an annual fee to the owner. This fee is called a canon. If a seller wants to sell a leasehold property, they must clearly state it is a leasehold. Agreements on the leasehold, the canon, and the period are recorded at the notary in a 'deed of establishment'.
What are the advantages of leaseholds?
When you buy a house on leasehold, you are the new leaseholder. You have the right to use the land for the specified period, but you must also pay an annual fee to the owner. Leasehold can be an advantage if you buy a house in a popular location because you can consider the fee you have to pay as a type of rent.
What are the disadvantages of leasehold?
The disadvantage of a leasehold is that your expenses for the future often need to be made clearer. The land lease rent is usually fixed for a certain period, often 49 or 99 years, but it can also be shorter. So for that period, you know what you need to pay each month or year in rent for the land. After that, the situation is uncertain.
Several rules are drawn up by the leaseholder when there is a leasehold. These are the leasehold conditions. The leasehold conditions are stated in the deed of issuance. Among other things, the leasehold conditions state:
- Who is the leaseholder is
- The duration of the leasehold
- The options for termination
- If you require permission to transfer the ground lease rights
- Which charges and maintenance are for the leaseholder's account
- If there are special rules that the leaseholder must comply with
- The destination of the land and property
Leasehold and the bank
You can also take out a loan from the bank to purchase leasehold property. This allows you to finance the purchase price of the leasehold property. The bank will then require a mortgage on your leasehold property as collateral for the loan.
What is the difference between municipal and private leaseholds?
A leasehold can be either municipal or private. With municipal leasehold, the land on which the house is located is owned by the municipality. In the case of a private leasehold, the owner may be a real estate developer, church, or Association of Owners (VvE), for instance.
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