Each year, thousands of homeowners in Amsterdam pay ground lease fees on municipal land where their homes are located. In practice, this means that anyone buying property in Amsterdam must take the city’s leasehold conditions into account. These fees, known as canon, still need to be paid annually. In some cases, the lease terms were set by the municipality as long as fifty years ago and have never been updated. As the owner of around 80 percent of all land within the city, the municipality of Amsterdam is now working on a transition plan and drafting the new General Provisions 2016 to revise the leasehold system. Public consultation meetings are scheduled for the summer of 2016, after which the first new lease agreements under the so-called “perpetual leasehold” will be issued.
The transition from the current continuous lease system to the new perpetual model will be entirely voluntary. In the coming months, much of the discussion will likely focus on the buyout price.
One-time ground lease buyout soon possible?
The new leasehold system will be based on setting the canon (annual ground rent) once, after which it cannot be changed. This would allow homeowners to buy out the lease in full, so they no longer have to make yearly payments. By mid-2016, the city council is expected to review the new General Provisions and the related land valuation policy.
From that point forward, new land leases—such as those for new-build homes—can be issued as perpetual leaseholds. The canon will remain unchanged, provided the property’s zoning does not change. Existing homeowners will also be given the option to switch to the new leasehold model. The details of how this transition will work are still being finalized and will depend in part on the public consultation process. For now, the plan has only been outlined in broad terms.
Our view on the changes to the leasehold system
While much is already known about the upcoming changes to Amsterdam’s leasehold system, it remains to be seen whether the certainty promised by the city will materialize for the average homeowner. Key questions remain, such as how high the buyout price will be and how the annual inflation adjustment will be calculated. Niels Bakker summarizes it as follows:
“For now, it appears that those who cannot afford to buy out the lease will be able to opt for an annually indexed canon based on 2014 land values. Those who do not wish to switch—or cannot—can continue under the current arrangement until the existing lease period expires.”
The changes to the leasehold system will affect nearly every homeowner in Amsterdam. We will continue to keep you informed. For more information about the proposed changes, visit the City of Amsterdam’s official website.
