Erfpacht: what is Dutch leasehold and what should buyers check?

If the particulars for a Dutch home say it is op erfpacht, you are not buying the land under it. You are buying a registered right to hold and use someone else’s land, on conditions that owner wrote, sometimes a century ago. Those conditions decide what you pay, for how long, and whether a bank will lend at all.

What is erfpacht?

Erfpacht is a limited real right (beperkt recht) under article 5:85 of the Dutch Civil Code (BW). It gives its holder, the erfpachter, the right to hold and use land owned by someone else. The landowner keeps the title. Because the erfpachter’s right is registered at the Land Registry (Kadaster), buying a home on erfpacht still gives you something you can sell, mortgage and pass on, and it survives a later sale of the land itself.

Under Article 5:85(2) BW, the deed may require the erfpachter to pay a periodic sum, the canon or ground rent. A canon is not compulsory by law, but almost every residential erfpacht carries one. Beyond that payment, the erfpachter broadly has the use the owner would have had, including letting the property, while repairs are his responsibility. He may not change the destination of the property or carry out works the conditions reserve to the owner.

A flat on erfpacht with a running canon is usually worth less than the same flat in full ownership, and that gap is not always visible in the asking price.

How erfpacht differs from opstal and from renting

• Erfpacht gives the right to hold and use another’s land. Buildings on the plot generally form part of that right.
• Opstal (the right of superficies) lets someone own or acquire a building, installation or planting on land that belongs to someone else, for example a cable or a set of solar panels. It may carry its own payment, and often runs alongside erfpacht or a lease rather than alone.
• Huur (renting a building or dwelling) is a contract, not a registered right: no Land Registry entry, no mortgage. A tenant pays rent for occupation; an erfpachter pays a canon for a property right he owns and can sell.

Why the deed’s general conditions matter more than the law

An erfpacht right is created by notarial deed and registered in the public registers. The deed sets the individual terms – plot, term, starting canon, permitted use – and then declares a set of general conditions (algemene bepalingen) applicable. Those conditions, not the statute, set the revision mechanism, the buy-off rules, the consent requirements and the termination powers.

Which conditions apply to your plot?

A municipality does not have one set of conditions; it has a series, issued in different years, and each plot is bound by the series in force when it was granted. Amsterdam alone has issued several such series since the early twentieth century, and older sets can give the owner wide discretion on revision and narrow compensation rights.

The question is never “what are the erfpacht conditions in this city?” but “which set applies to this plot?” The deed of establishment, and any later deed of amendment, names the conditions by year. Ask your notary to obtain that deed and the full text of the conditions it names, and to read them – not a summary, not the estate agent’s paragraph.

How is the ground rent (canon) set?

The canon is the periodic payment for use of the land. It is usually a percentage applied to an assessed land value, calculated from a proportion of the property’s value or from a published schedule; in Amsterdam that proportion is called the buurtstraatquote.

Between revisions, most modern conditions index the canon each year against a consumer price index. Indexation is not revision: it tracks inflation and is predictable, while revision resets the underlying land value and can multiply the canon. Leaving the canon unpaid can ultimately cost the erfpachter the right itself.

What are the three types of erfpacht?

English particulars usually translate both voortdurend and eeuwigdurend as “perpetual”. They are not the same, and the difference can be worth a great deal of money. A right that is perpetual in duration can still have a canon that is bought off for one period only, so treat duration and buy-off as separate questions.

Why does revision matter so much financially?

For continuing erfpacht, the end of a period is the moment the landowner may reset the canon to the current land value. Because periods run for decades, and Dutch urban land values have risen sharply, the new canon can be a large multiple of the old one.

• The increase is not gradual. It arrives in one step, on a date fixed decades earlier.
• The mechanism sits in the old conditions. Under some older sets, the owner’s discretion is wide and any challenge is limited to a valuation procedure rather than a court.

Before you sign, establish the date the current period ends, the revision mechanism, and, where indicative figures are published, what the canon would be if revised today. If a revision is already under way, ask to see the offer and any objection deadline.

Can the ground rent be bought off?

Instead of paying a canon, the erfpachter can sometimes buy it off for a lump sum. A buy-off for the current period prepays the canon only until that period ends; the obligation then revives on revised terms, so a property advertised as “canon bought off” may be covered only until a date that is now quite close. A buy-off in perpetuity extinguishes the canon for good, with no future revision.

Buying off the canon is not buying the land: ownership stays with the landowner, only the payment obligation ends, and the conditions still govern use and consent. Whether a buy-off must be offered, how it is calculated and whether it is possible mid-period all depend on the conditions, not on general law. It is arranged by notarial deed and registered. Ask a tax adviser to confirm the tax treatment before you commit, since a periodic canon and a capital buy-off are not treated the same way.

Amsterdam: from continuing to perpetual erfpacht

Amsterdam is why this topic matters to most international buyers: a large part of the city’s housing stock sits on municipal leasehold land, historically continuing erfpacht with periodic revision.

Since 2016 the municipality has issued perpetual erfpacht for new grants, under its own general conditions, and it opened a scheme letting existing continuing leaseholders switch (overstappen) to a perpetual canon or a perpetual buy-off. The leaseholder applies for an offer, calculated from the land value at a reference moment the municipality sets; accepting it leads to a deed of amendment, registered at the Kadaster.

The calculation basis and the available discount have changed more than once, and later arrangements have their own terms and closing dates set by the municipality, not by statute. Ask the seller for any offer already issued, and confirm the current position with the municipality at the time of purchase.

Three practical points follow:

• Establish exactly what the seller holds. Continuing erfpacht; continuing erfpacht with a switch applied for but not completed; perpetual erfpacht with an indexed canon; and perpetual erfpacht bought off for good are four different assets at four different prices.
• An offer is not a switch. Until the deed of amendment is executed and registered, the property remains under the old regime. Whether a buyer can take over an outstanding offer, and by when, depends on the scheme’s terms.

What about erfpacht from a private landowner?

Land is also let on long lease by developers, housing corporations, institutional investors, charitable foundations and private landowners. The law is the same, but the conditions often are not.

Private conditions tend to be less favourable in recognisable ways: shorter or fixed terms with no continuation; revision at shorter intervals, sometimes every five or ten years; revision tied to the property’s value rather than the land’s, so the leaseholder’s own improvements feed the increase; compensation excluded or capped; and wide consent requirements over letting, alteration and sale. Some schemes aimed at first-time buyers, where the seller keeps the land to lower the purchase price, are erfpacht constructions of this kind.

Never assume that private conditions resemble the municipal ones you may have read about; read the set that applies to your plot.

Do you get compensation when erfpacht ends?

When an erfpacht right ends, the former erfpachter is in principle entitled under Article 5:99 BW to the value of the buildings, works and plantings he put up himself or bought from his predecessor, and he may keep possession until that compensation is paid.

Two points qualify this. First, under Article 5:99(2) BW the deed can exclude compensation in defined cases, for example where the erfpachter ended the right himself, and older private conditions often use that room. Second, it is compensation for the buildings, not for the gap between leasehold and freehold value: a leaseholder whose temporary right expires does not receive the market value of the home.

Will a bank lend on a home with erfpacht?

An erfpacht right can be mortgaged, and most Dutch lenders will lend on leasehold property, but whether a lender will lend on a particular property depends almost entirely on the general conditions. Lenders look at the type of right and, if temporary, the remaining term against the loan term; whether the canon is fixed, indexed or open to revision, and when the next revision falls; whether termination could destroy their security; whether they must be notified and allowed to cure a default; and whether compensation at the end survives.

The standard conditions of the larger municipalities are generally accepted by the main lenders. Private erfpacht is harder: acceptability has to be established for that specific set of conditions. Where a national mortgage guarantee (NHG) is sought, NHG’s published rules set requirements on the remaining lease term against the loan term, and a non-traditional construction must appear on NHG’s list of accepted constructions.

A financing condition in the purchase agreement protects nothing if the mortgage application never reached the lender together with the leasehold conditions.

What happens on a sale: consent and arrears

An erfpacht right can be transferred, but the deed may require the landowner’s consent to a transfer or a division of the right; if consent is refused without reasonable grounds, the subdistrict court (kantonrechter) can replace it with an authorisation (Article 5:91 BW). With most municipalities consent is a formality, but never assume it: the timetable has to fit completion, and the conditions may require that there be no arrears and no outstanding breach.

Arrears follow the right itself: under Article 5:92 BW, buyer and seller are jointly and severally liable for canon that fell due in the five years before the transfer. The notary should obtain a written statement from the landowner on the canon position, any charges and any alleged breaches before completion.

Can the landowner end the erfpacht?

Under Article 5:87(2) BW, the landowner can terminate erfpacht where the canon has gone unpaid for two consecutive years, or the erfpachter is in serious breach of other obligations. The formalities are strict, and they exist partly to protect the lender: termination is effected by bailiff’s writ, with advance notice, and it must also be served within eight days on anyone registered as a mortgagee or other right holder, so the bank has a chance to step in and cure the arrears. Separately, once 25 years have passed since the erfpacht was created, either party may ask the court to amend or end it because of unforeseen circumstances (Article 5:97 BW) – a narrow route, and not a remedy against a canon that has simply become expensive.

What should you check as a buyer?

The deed and the general conditions decide your costs and risks, so check them before you sign the purchase agreement and its three-day cooling-off period runs out.

• Obtain the registered deed of establishment, every later deed of amendment or buy-off, and the full text of the general conditions by year.
• Check whether the right is temporary, continuing or perpetual, and the exact expiry or period-end date.
• Check the current canon, its indexation basis, the next revision date and whether it is bought off, and if so until when.
• Ask for a written statement from the landowner on arrears, charges and alleged breaches; you are jointly liable for five years of arrears (Article 5:92 BW).
• Get written confirmation from your lender, and from NHG where relevant, that it will finance on these conditions.
• In Amsterdam: check the municipality’s current published position on switching on the day of purchase.

What should you check as a seller?

A buyer, notary and lender will ask for the erfpacht documents, and gaps delay completion or reduce the price.

• Gather the deed of establishment, any amendment or buy-off deed and the applicable general conditions.
• Check whether the landowner’s consent is needed for the transfer (Article 5:91 BW) and how long it takes.
• Pay any canon arrears before completion and request the landowner’s statement early.
• Describe the right accurately in the particulars: continuing or perpetual, bought off until when, and any switch offer applied for or completed.
• Disclose any revision or switch procedure that is under way, with the offer and its deadline.

What can we do for you with erfpacht?

Our real estate lawyers advise buyers, sellers and owners on leasehold conditions; for rental questions, see our tenancy lawyer page.

• We read the deed and the general conditions that apply to your plot and summarise the risks before you sign.
• We check the revision date and mechanism and the effect of a buy-off or switch offer.
• We review the purchase agreement, including the financing condition and erfpacht clauses.
• We respond to a revision offer and assist in the valuation or objection procedure.
• We act for you when a landowner refuses consent or threatens termination under Article 5:87 BW.

Summary

• Erfpacht gives a registered right to hold and use someone else’s land; you do not own the land itself.
• The general conditions named in the deed, not the general law, decide the canon, revision, consent and termination rules that apply to you.
• Continuing erfpacht carries a revision risk at the end of each period; perpetual erfpacht does not, but “perpetual” in English particulars can describe either type.
• In Amsterdam, check whether a switch to perpetual erfpacht has been offered, applied for or completed, since these are different assets at different prices.
• Before you sign, get the registered deed, the applicable conditions and written confirmation from your lender that it will finance the property on those terms.

Frequently asked questions