What is erfpacht (ground lease) — and what to watch out for?

Short answer: with erfpacht (ground lease) you own the building but not the land it stands on — you lease the land long-term from the landowner, usually the municipality. For that you pay an annual fee (canon), or you buy off the fee for a period in one go. It's most common in big cities such as Amsterdam and parts of The Hague, Rotterdam and Utrecht.

Canon, buy-off and the types of erfpacht

You either pay an ongoing canon (yearly or per period), or the canon has been bought off for a term. Mind the difference between continuous erfpacht (the canon is reviewed periodically, often sharply) and perpetual erfpacht (the terms are fixed). What applies to your home is in the erfpacht deed (akte) — always request it.

Why it affects your mortgage and value

Many lenders take erfpacht into account and may grant a lower mortgage amount, because on top of the mortgage you also pay canon (or a future buy-off). A home with a bought-off or perpetual ground lease is usually easier to sell than one with an expiring buy-off period or a review moment in sight.

What to check before buying

• Until when is the canon bought off, and what happens after that?
• Is it continuous or perpetual erfpacht?
• How high is the canon now, and when is the next review?
• What is the indicative buy-off sum (often available from the municipality)?

This is general information, not legal or financial advice. Always have the erfpacht deed and the consequences for your situation checked by your estate agent, notary or mortgage adviser.

Sources: Amsterdam.nl — erfpacht