Ownership and long leasehold are both property rights in Dutch law, and the difference between them is what you own. An owner holds the land and everything permanently attached to it under Article 5:1 of the Dutch Civil Code (BW). A leaseholder (erfpachter) holds a property right under Article 5:85 BW to hold and use land belonging to someone else, usually a municipality or an institutional landowner, in return for a ground rent (canon) and on the conditions recorded in the deed.
Three practical differences follow. The first is cost over time: a ground rent is payable, and where the leasehold runs in periods rather than perpetually, the rent is reassessed at the end of each period, which can lead to a substantial increase. The second is the conditions themselves. The deed of leasehold governs what may be built, how the property may be used, whether alterations require consent and what happens at the end of the term, and those conditions bind later buyers. The third is financing: lenders assess a time-limited leasehold differently from full ownership, and a term with fewer years remaining than the mortgage restricts what you can borrow.
When a leasehold ends, Article 5:99 BW entitles the leaseholder to compensation for the value of the buildings and works still on the land, unless the deed validly provides otherwise. Reading the deed, not the sales brochure, is therefore the essential step before buying.
Below we set out the rights and duties on each side, explain how ground rent revision and buy-out work, and what to check in the leasehold conditions before you commit.
Ownership or leasehold: what is the difference?
With ownership, you own the land and the building. With leasehold, you own the building and a right to use the land, but the land itself belongs to someone else.
In Amsterdam and several other Dutch cities, much of the land is issued in leasehold by the municipality. Buying a home or business premises there often means buying a leasehold, not full ownership. That affects your costs, what you may do with the property and how much you can borrow. The difference goes much further than who pays which bill.
Note that the English word “leasehold” can also suggest renting. Dutch leasehold (erfpacht) is not a rental agreement: it is a property right that you can sell, mortgage and leave to your heirs. We come back to renting later in this article.
In short: ownership and leasehold compared
The table gives the main differences at a glance.
| Aspect | Ownership | Leasehold (erfpacht) |
|---|---|---|
| What you own | Land and building (Article 5:1 BW) | The building and a right to use the land (Article 5:85 BW) |
| Ongoing payment for the land | None | Ground rent, unless bought off |
| Duration | Unlimited | Perpetual, continuous in periods, or for a fixed term, depending on the deed |
| Use and alterations | Free, within public law such as zoning and permits | Free, unless the deed provides otherwise; deeds often contain restrictions |
| Transfer and inheritance | Free | Free, unless the deed requires the landowner’s consent (Article 5:91 BW) |
| Maintenance and property tax | For the owner | For the leaseholder |
| End of the right | Not applicable | Compensation for buildings, unless validly excluded (Article 5:99 BW) |
What does ownership mean under Dutch law?
Ownership is the most comprehensive right a person can have in a property (Article 5:1 BW). The owner may use the property freely, provided they respect the rights of others and the law.
Ownership of land includes the buildings and works permanently attached to it (Article 5:20 BW). In practice, “free use” is always limited by public law: the environment and planning plan (omgevingsplan) determines what you may build and how you may use the property, and many alterations need a permit. For an apartment, the deed of division and the rules of the owners’ association (Vereniging van Eigenaars, VvE) also apply.
An owner can sell, give away, mortgage and leave the property to their heirs without anyone’s consent. The owner bears all costs: maintenance, insurance, property tax (onroerendezaakbelasting, OZB) and, for an apartment, the contributions to the VvE.
What is leasehold (erfpacht)?
Leasehold is a property right that gives you the right to hold and use land owned by someone else (Article 5:85 BW). In return, you usually pay a ground rent, and you must comply with the conditions in the deed.
Leasehold is created by a notarial deed registered in the Land Registry (Kadaster). Dutch property law treats it as a real right: it binds every later owner of the land and every later leaseholder. Unless the deed provides otherwise, the leaseholder has the same right to use the land as an owner (Article 5:89 BW).
Which types of leasehold exist?
- Perpetual leasehold (eeuwigdurende erfpacht): the right has no end date. The ground rent can be paid annually or bought off in advance. Amsterdam has issued new leaseholds on this basis since 2016 and offers existing leaseholders a scheme to switch.
- Continuous leasehold (voortdurende erfpacht): the right has no end date, but the ground rent is set for a period, for example 50 or 75 years, and reassessed at the end of each period. That reassessment can lead to a sharp increase.
- Fixed-term leasehold: the right ends on a set date. At the end, the land returns to the landowner, and the leaseholder is entitled to compensation for the buildings, unless validly excluded.
What is the ground rent and how does it change?
The ground rent (canon) is the payment for the use of the land. It is often indexed annually for inflation and, in continuous leasehold, reassessed at the end of each period, usually on the basis of the land value at that moment. Many leaseholders have bought off the ground rent for a period or forever, by paying a lump sum.
A bought-off period protects you until its end date. After that, a new ground rent applies. Check the end date of the current period carefully: if it ends within a few years, the new ground rent can significantly affect the value of the property and your monthly costs.
What do the general conditions contain?
Most municipalities use general leasehold conditions (algemene bepalingen), which the deed declares applicable. They often contain rules on:
- the permitted use, for example residential only or no hospitality business;
- consent for alterations, extensions or a change of use, sometimes with an extra payment;
- indexation and reassessment of the ground rent;
- obligations to maintain and insure the building;
- fines or termination if the conditions are breached.
Different versions of the general conditions apply depending on when the leasehold was created. Always check which version applies to the property you are buying.
How do rights and duties differ in practice?
The leaseholder is in practice almost an owner: they bear the costs and risks of the building, can sell it and pass it on. The difference lies in the ground rent and the conditions set by the landowner.
Control over the property
An owner may alter the property within public law. A leaseholder may in principle do the same (Article 5:89 BW), but the deed often requires the landowner’s consent for an extension, a change of use or splitting the property into apartments. Acting without consent can lead to a fine or, in serious cases, termination.
Costs and obligations
Both the owner and the leaseholder pay for maintenance and insurance. The leaseholder also pays the ground rent. Property tax (OZB) for owners is paid by the person who holds the property by virtue of ownership or another property right, so with leasehold, the leaseholder pays it. The old idea that a leaseholder has “limited maintenance obligations” is a misunderstanding based on renting; under a Dutch leasehold, maintenance is for the leaseholder.
Transfer and inheritance
A leasehold can be sold, mortgaged and inherited like ownership. The deed may require the landowner’s consent for a transfer (Article 5:91 BW). If the landowner refuses without reasonable grounds, the subdistrict court can replace that consent. In an inheritance, the leasehold passes to the heirs; no consent is needed. For buyers from abroad, the rules are the same; for cross-border aspects, see our article on international business law.
Can the landowner end the leasehold?
Only in limited cases. Under Article 5:87 BW, the landowner may only terminate if the leaseholder has failed to pay the ground rent for two consecutive years or seriously breaches other obligations. The landowner must then pay the leaseholder the value of the leasehold, minus what the leaseholder owes. The leaseholder may terminate the leasehold themselves, unless the deed provides otherwise.
At the end of a leasehold, the former leaseholder is entitled to compensation for the value of the buildings still present (Article 5:99 BW). The deed can only exclude that compensation in specific cases, for example when the land was not intended for housing, or when the leasehold ends because the leaseholder terminated it.
How does leasehold affect financing and tax?
A leasehold property can be financed with a mortgage, but lenders look closely at the conditions. The ground rent is a fixed cost that reduces your borrowing capacity, and a short remaining term can be a problem.
Mortgage
Lenders take the ground rent into account when calculating how much you can borrow. With a fixed-term leasehold, or a bought-off period that ends soon, many lenders require that the term runs at least as long as the mortgage. With perpetual leasehold and a ground rent bought off forever, the property is usually treated almost like full ownership.
Tax
For a home you live in, periodic ground rent payments are deductible as costs of your own home (eigen woning) for Dutch income tax. A lump sum to buy off the ground rent is not deductible. If you borrow money to buy off the ground rent, the interest on that loan can in principle be deductible as mortgage interest. Check your own situation with a tax adviser; we do not advise on tax structuring.
What does the choice mean for individuals and businesses?
For most buyers, the choice is not free: whether a property is sold in ownership or leasehold depends on the land. The real question is whether the leasehold conditions and the ground rent are acceptable, and what that means for the price.
For individuals
A leasehold home is often cheaper to buy than a comparable home in full ownership, but you pay a ground rent or have paid a buy-off. Compare the total costs over the period you expect to live there, including the expected ground rent after reassessment. Also consider selling later: a leasehold with an unfavourable ground rent or a period ending soon can make the property harder to sell.
For businesses
Businesses that buy premises on leasehold land should pay extra attention to the permitted use in the deed. A change from office to residential use or to hospitality often requires consent and sometimes a higher ground rent. For industrial sites, the landowner may impose specific conditions on activities and environmental impact.
Leasehold is not renting
Many businesses use “leasing” to mean renting premises. In Dutch law, that is a lease agreement (huurovereenkomst), not leasehold. A tenant does not acquire a property right and does not bear the costs of the building. For retail and hospitality premises, tenants have strong protection, including a minimum term of five plus five years (Article 7:292 BW); for offices, protection is more limited (Article 7:230a BW).
The choice between renting and buying premises is a business decision. Renting requires less capital and gives flexibility, for example for a fast-growing start-up. Buying, in ownership or leasehold, gives control and stability, and the value of the property is for your account. That applies to both the risks and the benefits.
| Criterion | Buying in ownership | Buying in leasehold | Renting |
|---|---|---|---|
| Initial investment | High | High, often somewhat lower than ownership | Low |
| Ongoing payment for the land or premises | None | Ground rent, unless bought off | Rent |
| Building up equity | Yes | Yes, depending on the conditions | No |
| Maintenance | Owner | Leaseholder | Largely landlord, depending on the agreement |
| Flexibility to leave | Sale needed | Sale needed | Termination under the lease agreement |
What should you check before buying a leasehold property?
The deed, the general conditions and the ground rent position. The civil-law notary (notaris) registers the transfer, but checking whether the conditions suit your plans is your responsibility, and the purchase agreement is usually signed before the notary gets involved.
- Which type of leasehold is it: perpetual, continuous or fixed-term?
- What is the current ground rent, has it been bought off, and until when?
- When does the current period end, and how will the new ground rent be calculated?
- Which general conditions apply, and which version?
- What use is permitted, and does that match your plans?
- Do you need consent for alterations, splitting or a change of use?
- Does the deed require consent for a transfer?
- Can the ground rent be bought off, or can you switch to perpetual leasehold or full ownership? Several municipalities offer such schemes.
- Does your lender accept the leasehold conditions?
Include a condition in the purchase agreement that allows you to withdraw if the leasehold conditions turn out to be different from what you were told. A consumer buying a home also has a three-day cooling-off period after the signed purchase agreement has been handed over (Article 7:2 BW).
In summary
- An owner owns the land and the building; a leaseholder owns the building and a property right to use someone else’s land (Articles 5:1 and 5:85 BW).
- With leasehold, you pay a ground rent, which may be reassessed at the end of each period, unless it has been bought off.
- The leaseholder bears maintenance and property tax, and can sell, mortgage and leave the leasehold to heirs, subject to any consent requirement in the deed.
- The landowner can only terminate for two years of unpaid ground rent or a serious breach, and must then compensate the leaseholder.
- Read the deed and the general conditions before you sign a purchase agreement, and check the ground rent position and your lender’s requirements.
Frequently asked questions
What is the main difference between ownership and leasehold?
With ownership, you own the land and the building. With leasehold (erfpacht), you own the building and a property right to use land that belongs to someone else, usually the municipality, in return for a ground rent and on the conditions in the deed.
Is leasehold common in the Netherlands?
Yes, especially in some cities. Amsterdam, for example, issues much of its land in leasehold, and since 2016 new leaseholds there are perpetual. Other municipalities also use leasehold, and several offer schemes to buy off the ground rent or convert to full ownership.
Who pays for maintenance and property tax under a leasehold?
The leaseholder. Under a Dutch leasehold, the leaseholder bears the maintenance and insurance of the building and pays the property tax, in addition to the ground rent. Periodic ground rent for a home you live in is deductible for income tax; a lump-sum buy-off is not.
Can I sell or leave a leasehold property to my heirs?
Yes. A leasehold can be sold, mortgaged and inherited. The deed may require the landowner’s consent for a sale; if the landowner refuses without reasonable grounds, the subdistrict court can replace that consent (Article 5:91 of the Dutch Civil Code). No consent is needed for an inheritance.
How can we help?
From our offices in Eindhoven and Amsterdam, Law & More advises individuals and businesses on buying property, leasehold conditions, disputes with landowners and commercial leases. You can find more information on our main site, or contact Law & More directly.
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