When buying a home in the Netherlands, you may come across leasehold (erfpacht). This is especially common in cities like Amsterdam. For many buyers — and particularly for expats and international buyers — leasehold is one of the most confusing and misunderstood parts of the buying process.
Many buyers only realise late in the process that a property is on leasehold land. And even when it is mentioned, a lot of people still don’t fully understand how leasehold works or what it may mean for their housing costs, the value of the property, and future obligations.
In this blog, we explain step by step what leasehold is, which forms exist, and what the key differences are — so you can make an informed decision and avoid surprises later.
What is leasehold (erfpacht)?
Leasehold (erfpacht) is a legal right that allows you to use land that you do not own. In other words: with leasehold, you usually buy the home, but not the land underneath it. The land remains owned by another party — often the municipality or a private landowner.
In practice, this means:
- you own the property (the home or apartment)
- you do not own the land
- you have the right to use the land
- and you typically pay a fee for that right: the ground rent (canon)
Legally, you are therefore not the owner of the land, even though you own the home. This is an important difference compared to full ownership (freehold), where you own both the property and the land.
Who owns the land?
In most cases, the land is owned by:
- the municipality (for example, the City of Amsterdam)
- a housing corporation
- or a private landowner
The specific leasehold agreements are recorded in a leasehold deed (erfpachtakte) and the applicable leasehold conditions. These documents describe, for example:
- how long the leasehold right applies
- whether and when the ground rent can change
- what rights and obligations the leaseholder has
What is the ground rent (canon)?
The canon is the fee paid for using the land. Depending on the agreement, it can be:
- paid annually
- bought out for a fixed period
- or bought out indefinitely
How the canon is arranged can affect:
- your monthly housing costs
- the market value of the property
- and sometimes the financing options
When do you deal with leasehold in the Netherlands?
Leasehold can apply to all types of residential properties in the Netherlands. It does not matter whether you are buying an apartment or a house. As soon as the land underneath the property is not owned by the homeowner but by another party, the property is subject to leasehold.
For many buyers, this is not immediately obvious.
Leasehold is more common than many buyers realise
In practice, many buyers only discover that a property is on leasehold land late in the buying process. This happens for several reasons:
- leasehold is often mentioned only briefly in property listings
- the focus is usually on the asking price and the home itself
- buyers often assume that owning a home automatically means owning the land
Even when leasehold is mentioned, many buyers do not fully understand how leasehold works or what the consequences are.
How is leasehold usually mentioned in listings?
In property advertisements and listings, leasehold is often described using terms such as:
- leasehold (erfpacht)
- ground rent (canon)
- bought-out leasehold
- perpetual leasehold
These terms are usually not explained in detail, which can easily lead to confusion — especially for buyers who are not familiar with the Dutch property system.
Why it is important to understand this early
Leasehold can affect:
- your monthly housing costs
- the long-term value of the property
- future financial obligations
If leasehold is discovered late or misunderstood, it can lead to:
- uncertainty during the buying process
- unexpected costs later on
- doubts after the purchase has already been completed
What types of leasehold exist?
Leasehold is not always the same. There are different types of leasehold, and the differences between them can have a major impact on:
- your monthly housing costs
- your long-term financial certainty
- the value of the property
A lot of confusion arises because these types are often mixed up or incorrectly described. Below, we explain the most common forms of leasehold clearly and separately.
What is temporary (fixed-term) leasehold?
With temporary leasehold, the leasehold right is granted for a fixed period of time, also called a leasehold term. This term may run until, for example, 2035, 2050 or 2075.
Key characteristics of temporary leasehold:
- the leasehold right has an end date
- the ground rent (canon) is usually paid annually
- when the term ends, the conditions may be revised
- the ground rent can increase after revision
This means there can be uncertainty about future costs. When the term expires, new conditions are set, which may differ significantly from the current ones.
What is perpetual leasehold?
With perpetual leasehold, the leasehold right has no end date. The right to use the land continues indefinitely.
Important points to understand:
- the land remains owned by the municipality or a private landowner
- the leasehold right itself does not expire
- the conditions are generally fixed
Perpetual leasehold therefore offers more long-term certainty than temporary leasehold, but it is still not the same as full ownership (freehold).
What is bought-out leasehold (temporary or perpetual)?
With bought-out leasehold, the ground rent (canon) is paid in advance, so there is no annual ground rent during the agreed period.
It is important to understand that bought-out leasehold is not always perpetual.
There are two main situations:
- Temporarily bought-out leasehold
The ground rent is bought out until a specific date, for example until 2090.
Until that date, no annual ground rent is payable.
After the end of this period, new conditions may apply and ground rent may become payable again. - Perpetually bought-out leasehold
The ground rent is bought out forever.
You will never have to pay annual ground rent again, but you still do not own the land.
In both cases:
- you have a right of use
- you are not the owner of the land
A common misunderstanding: bought-out leasehold is not freehold
A very common misconception is that perpetually bought-out leasehold is the same as full ownership (freehold). This is incorrect.
The key difference:
- with bought-out leasehold, the land remains owned by the municipality or another party
- you have a permanent right to use the land
- with freehold, you own both the property and the land
This distinction is important because it can affect:
- the value of the property
- future buyers’ perception
- and long-term legal rights
What is ground rent (canon) and how do you pay it?
The ground rent (canon) is the fee you pay for using the land when a property is on leasehold land. It is one of the most important elements of leasehold, because it can directly affect your monthly costs and long-term financial planning.
Many buyers focus mainly on the purchase price of the property, but overlook the fact that ground rent can be an additional ongoing cost.
What exactly is ground rent (canon)?
Ground rent is the payment made to the landowner — usually the municipality — in exchange for the right to use the land. Even though you own the home itself, the land remains owned by another party.
The amount of ground rent is typically based on:
- the value of the land
- the leasehold conditions
- the moment at which those conditions were set
How can ground rent be paid?
There are several ways in which ground rent can be arranged:
Annual ground rent
With annual ground rent, you pay a fixed amount each year.
This amount:
- is usually paid yearly
- may be adjusted when a new leasehold term starts
As a result, your housing costs may change in the future.
Ground rent bought out for a fixed period
In this situation, the ground rent has been paid in advance until a specific date, for example until 2050 or 2090.
Until that date:
- no annual ground rent is due
- monthly housing costs are lower
After the buy-out period ends:
- new conditions may apply
- and ground rent may become payable again
Ground rent bought out perpetually
With a perpetual buy-out, the ground rent is paid once and for all.
This means:
- no annual ground rent
- no future ground rent increases
- but still leasehold, not freehold
The land remains owned by the municipality or another landowner.
What does ground rent mean for your monthly costs?
How the ground rent is structured has a direct impact on:
- your monthly housing costs
- how affordable the property is in practice
- how the property compares to similar homes
A property with high annual ground rent may seem attractively priced, but can be more expensive in the long run.
Tax aspects of ground rent
In many cases, ground rent is tax-deductible. This can reduce the net monthly costs. Whether this applies depends on personal and tax circumstances, so it is always wise to check this in your specific situation.
Leasehold vs freehold (full ownership)
A common question when buying a home in the Netherlands is:
what is the difference between leasehold and freehold?
Especially when leasehold is bought out, many buyers assume it is almost the same as full ownership. In reality, there are important legal and financial differences that should be clearly understood.
What is freehold?
With freehold (full ownership), you own:
- the property
- and the land on which the property is built
This means:
- no ground rent
- no leasehold conditions
- full ownership rights over the land (within zoning rules)
- maximum long-term certainty
Freehold is more common outside major cities, but relatively rare in cities such as Amsterdam.
How does leasehold differ from freehold?
With leasehold:
- you own the property
- you do not own the land
- you have a right to use the land
- leasehold conditions apply
Depending on the type of leasehold:
- monthly costs may be higher or lower
- future costs may be uncertain
- rights and obligations can differ
Key differences at a glance
Leasehold
- Land is not owned by you
- Ground rent may apply
- Conditions may change
- Less long-term certainty
Freehold
- You own both property and land
- No ground rent
- No leasehold conditions
- More certainty and clarity
What does this mean for the value of the property?
The form of ownership can affect:
- the market value of the property
- how attractive it is to future buyers
- financing considerations
Properties with unclear or expiring leasehold conditions may raise additional questions for buyers and lenders.
This does not mean a leasehold property is a bad choice — but it does mean that understanding the details is essential.
Common mistakes buyers make with leasehold
Leasehold does not have to be a problem. However, in practice many buyers make mistakes because leasehold is misunderstood or underestimated. These mistakes can lead to uncertainty, unexpected costs, or regret after the purchase.
Below are some of the most common mistakes we see.
Underestimating leasehold
A common assumption is:
“Leasehold is probably not a big deal”
or
“Most homes in this area are on leasehold anyway”
As a result, buyers sometimes do not take the time to properly understand the leasehold conditions, even though these conditions can have significant long-term financial consequences.
Assuming bought-out leasehold equals freehold
Many buyers believe that:
- bought-out leasehold
- or even perpetually bought-out leasehold
is the same as freehold ownership. This is incorrect.
Even with bought-out leasehold:
- the land remains owned by the municipality or another party
- leasehold conditions still apply
- you do not own the land
This misunderstanding is one of the most common sources of confusion.
Not paying attention to the end date
With temporary leasehold or temporarily bought-out leasehold, buyers often overlook the end date of the leasehold term.
This can mean that:
- new conditions will apply after that date
- ground rent may be reintroduced or increased
- future costs can rise significantly
In many cases, this only becomes clear years after the purchase.
Only looking at the purchase price
A leasehold property may appear cheaper than a comparable freehold property. However, when:
- annual ground rent applies
- or future costs are uncertain
the property may turn out to be more expensive over time than expected.
Taking leasehold seriously too late
Some buyers only start looking into leasehold:
- after making an offer
- or even after signing the purchase agreement
At that stage, options to adjust or reconsider are often limited.
Why professional guidance is so important when dealing with leasehold
Leasehold is not necessarily a reason to avoid buying a property, but it must be properly understood. In practice, we see that leasehold is often underestimated or misunderstood, especially by buyers who are not familiar with the Dutch property system.
Much of the confusion comes from the fact that:
- leasehold exists in different forms
- terms such as “bought out” and “perpetual” are often misunderstood
- the consequences are not always immediately visible
As a result, buyers sometimes make decisions without fully understanding the legal and financial implications.
Leasehold requires insight and clear explanation
Leasehold conditions are legally defined and not always easy to interpret. Small differences in wording or structure can have a major impact on:
- future costs
- long-term certainty
- and the value of the property
Without proper explanation, leasehold can appear simpler than it actually is.
What we do for our clients
At HMD Makelaardij, we do more than help our clients find and buy a home. We also carefully review the leasehold situation:
- we explain which type of leasehold applies
- we clarify what this means in both the short and long term
- we help clients include leasehold in their decision-making
- and we ensure there are no surprises after the purchase
We provide this guidance in Dutch, English and Turkish, so everything is fully understood.
