Land Lease of land ownership?
Buying a house without ground lease (erfpacht) in Amsterdam is tough; 80% of the city’s land is owned van the municipality. The municipality of Amsterdam has used land lease (erfpacht) since 1896. More than 200.000 land lease contracts are outstanding in Amsterdam. The origin of ground lease is agricultural though and was introduced centuries ago in the Netherlands.
Dutch Land Lease as planning tool
Land lease or ground lease is an urban planning tool which may give good return on investment. In the Netherlands however due to the banking crisis land lease as an instrument has come under attack. Banks are not so willing anymore to finance house on private landlease. Especially private landlease conditions applying to the lease are criticized. The City of Amsterdam is force to modify their ground lease system. For any legal issues on real estate in the Netherlands don’t hesitate to contact me.
Legal aspects of Ground Lease
Land lease (erfpacht) is a right “in rem” or a “material right” and therefore exists independently of the person that owns the ground lease right. The owner of the land retains the legal ownership of the land and at the same time – under certain lease conditions – transfers the use of the land to someone else. The ground lease transactions in the Netherlands are materialized through a notary. The notarial deed is registered in the Dutch Register (Kadaster) in order to valid. The lessee can sell or assign his ground lease. He is not always entirely free in choosing the person he will sell the lease. The landowner has to give permission for any transfer.
Issues in Dutch book on Ground Lease
In my book on land lease in the Netherlands – 50 Vragen over Erfpacht – (50 Questions on Ground Lease) all issues ground lessees in the Netherlands encounter are dealt with. The book on land lease is published by Kluwer (July 2014) The tricks landowners use to obtain financial gain are listed in the book so lessees can check their ground lease conditions. The book does not only deal with the legal aspects of ground lease but also tackles, amongst others:
– the financial aspect of ground lease
– taxation of the lease in the Netherlands
– valuation of the land used for ground lease
– ground rent
– renewal of the ground lease
– pricing issues of land lease on renewal
– unfair practices of landowners
– compensation of lease upon ending of the ground lease