The hassle started on March 1. That day Elma Niessen (58) received registered mail from her municipality, The Hague. The letter was “incredibly technical” and contained “especially a lot of numbers”. But after reading it a few times, confusion gave way to shock. The message: as of 2026, Niessen will not have to pay 94 euros per year in ground lease, but 2,965 euros.
Niessen has lived for twenty years in an apartment of about 130 square meters on the ground floor in the Bezuidenhout district of The Hague. She has been an independent entrepreneur in human resources for the same length of time. As a self-employed person, Niessen paid attention to her finances, in particular to be able to continue living in her owner-occupied home after her retirement. But she hadn’t counted on a thirty-fold increase in the leasehold.
“The impact on my financial security is enormous,” she says. “As it stands now, I will have to sell my house when I reach retirement. I simply cannot afford the leasehold, plus my other fixed costs.”
A tour of the neighbors taught Niessen that they had received similar letters. Some even with higher amounts, up to 10,000 euros. Since then, a group of Bezuidenhout residents have regularly gathered in a local café. They made contact with appraisers and real estate agents, and spoke at council meetings of the municipality to challenge the, in their view, unlawful and disproportionate increase. For the time being, this has not led to the lower levy that the residents hoped the municipality would promise.
Currently, only the so-called leasehold canon, the annual fixed payment for the use of the land, of Bezuidenhout is being recalculated. This district is located right behind the central station and next to the Haagse Bos, and it concerns about 150 households, says Koen de Lange. He is director of the Netherlands Institute for Ground Lease, a company that offers ‘first aid’ for ground lease problems.
Read also: ‘Leaseholders in Amsterdam get the knife to the throat’
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According to De Lange, the ground lease conditions of some 13,000 homes in The Hague will be reviewed in the coming years. It is very likely that the residents will also receive a considerably higher bill. Recalculations in Amsterdam have already caused a stir among residents.
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Elma Nissen. Photo Bart Maat
Leasehold is the system in which residents own a house, but not the land underneath. That land belongs to someone else, and in the vast majority of cases that is the municipality. The leasehold canon is in fact the rent for the land and comes on top of other housing costs. Cities introduced the system in the late 19th and early 20th centuries, says Justus Uitermark, professor of urban geography at the University of Amsterdam. Partly to control what was built on their land, partly to collect additional taxes.
The most recent figures on homes on leasehold land date from 2016. At that time, there were still 650,000 homes, calculated accountancy and consultancy firm Deloitte and the Kadaster. That was about 8 percent of the total at the time. The leasehold construction is most common in Amsterdam. This concerns almost 275,000 homes, half of the city. The Hague is second with almost 100,000 leasehold homes, out of 280,000 in total. This is followed by Rotterdam (90,000 leasehold homes) and Utrecht (65,000).
The ground rent is calculated on the basis of two factors: the value of the land on which the house stands and a ground rent percentage, related to the interest rate on the capital market. The basis for the levy is usually fixed for decades. In Bezuidenhout, that period will end in 2026 after 75 years. Now the residents have received an offer for perpetual leasehold. They can buy it off in one go – in the case of resident Niessen, this costs more than 70,000 euros – or continue to pay annually. With a perpetual leasehold, that periodic payment no longer goes up or down.
As it stands, I will have to sell my house when I reach retirement. I simply cannot afford the leasehold, plus my other fixed costs
Elma Niessen (58) lives in Bezuidenhout
Annual lease payments provide municipalities with considerable extra room in the budget. The Hague estimates the income from leasehold in 2023 more than 20 million euros on a budget of EUR 3.1 billion. This will probably increase considerably after the revisions of the canon. Amsterdam, which already introduced significant increases and redemption options a few years ago, cashed in last year more than 280 million euros in lease payments, on a budget of 6.5 billion. Before the increase, the city met annually 60 to 90 million euros.
The factors that determine the canon partly explain why the costs for residents are rising so much. House prices and land values have exploded in recent years. At the same time, the residents of Bezuidenhout are unlucky that their canon is due to expire now that interest rates are rising. The interest rate for this year has been set by the municipality at 4 percent. Substantially higher than the 0.9 percent of 2022.
The people in Bezuidenhout had therefore expected that the canon would go up. Neighborhood resident Linda Holst has turned out to be their ‘forewoman’ and has addressed the city council in that capacity on several occasions. She expected a tenfold increase in her canon. But also with her, this went from less than 100 euros to almost 2,500 euros per year.
Facade inspections
Holst has his own explanation for the increase. She argues that the appraisers hired by the municipality have determined the land values incorrectly – and therefore too high. A number of appraisers to whom NRC presented this, supports this reasoning.
“Appraisers use a calculation model, a paper reality, on which they calculate land values,” says De Lange of the Netherlands Institute for Erfpacht. For the valuation of Bezuidenhout, they use a municipal work instruction from 1986.
But over the past 37 years, the profession has changed and practices have modernized. For example, the appraisers in Bezuidenhout only carried out ‘façade inspections’, whereby the house was not viewed from the inside. The land has also been compared with new-build plots, sometimes in other parts of the city. This conflicts with the rules of the professional organization NRVT, because land values cannot be determined accurately enough in this way. For example, new-build land can have a completely different value than land that already contains homes, simply because little can be done with that land.
Photos Bart Maat
“Usually, the land value in The Hague was about 10 percent of the WOZ value of a home,” says De Lange. “But in Bezuidenhout it is now suddenly at 15 to 35 percent.”
Opinions on the matter vary within the profession. “It just went according to the rules of the game as they were,” says Otto Koppen, chairman of the Dutch Association of Leaseholders, which provides support to leaseholders. However, according to him, the case is characteristic of the entire system. After all, an appraisal is not a hard science that yields one concrete answer, but an informed estimate.
That is precisely what makes leasehold complicated and open to discussion, says Koen de Lange. Because the consequences of such an assessment are indeed concrete, and for some far-reaching. He lacks a ground lease law that lays down unequivocal and clear national rules. Ground lease rules drawn up by municipalities in the last century, says De Lange, are often defined vaguely and open to multiple interpretations.
Also exemplary: there is hardly any consumer protection for homeowners who have to deal with this, says De Lange. While leasehold is a complex financial product. “We have organized all sorts of things in the Netherlands. We have the Netherlands Authority for the Financial Markets for banks and the Netherlands Food and Consumer Product Safety Authority for food. But there is nothing for leasehold.”
Without a long lease, the North-South line might never have been built
Otto Koppen Dutch Association of Leaseholders
In addition, according to Koppen of the leaseholders’ association, those who buy a house are often insufficiently aware of the effects of leasehold. Certainly not in the past, very tense years on the housing market.
“Buyers fall in love with a home and do not take leasehold into account. Usually it does not lead to a price difference either,” he says. “Nobody cares about 80 euros a year. Certainly not with a horizon of decades.”
But if that horizon goes from decades to two years, and if 80 euros per year rises to several thousand euros, things will change. Residents in Bezuidenhout therefore fear that their house will be worth considerably less, or that it cannot be sold.
Does this mean that the leasehold system is bankrupt? Opinions differ on this too. Professor of Urban Geography Uitermark, for example, sees the negative sides of the system – citizens who are taken by surprise, vague rules regarding valuation – certainly does. But he finds leasehold in itself very valuable. “In general, taxing increases in the value of land is a very efficient way of taxing,” he says. “I don’t think it’s crazy to tax residents for an increase in value in which they themselves have no part.”
Ultimately, leasehold and its adjustment is mainly “a political issue,” says Koppen. “Municipalities are in a dilemma here. Because if they financially favor homeowners and leaseholders, they disadvantage yet another group.” He sees it as a distribution issue. “For example, the Board can decide to lower the canon, but then you have to take money elsewhere at the same time. If there had not been a leasehold in Amsterdam, the North-South line would have been [voor metro] may never have come.”
A version of this article also appeared in the newspaper of May 27, 2023.
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