Amsterdam man's ground lease explodes from €315 to €35,000 per year

Henk Raaf, 87, was completely stunned when he received a letter informing him of the new ground lease for his property on Hugo de Grootkade under Amsterdam’s new ground lease system. Where he used to pay €315 per year, he will pay €35,291 under the new system - over 100 times as much, Parool reports.

An additional shock came when he discovered that the ground lease for an identical property in the same neighborhood increased from €374 to €5,120 per year because those neighbors had accepted the municipality’s offer to switch to the new system, called perpetual ground lease, under more favorable conditions. “A substantial increase, but reasonable,” Raaf told Parool about his neighbors’ new ground lease. “But €35,000 is a significant blow to my livelihood.”

Amsterdam overhauled its leasehold system in 2016, switching from a continuous system in which leasehold contracts were revised every 50 to 75 years to a perpetual system in which leaseholders will pay the same amount for the duration of their contract.

To entice leaseholders to switch, the city offered more favorable terms until 8 January 2020. Under those terms, the calculation was based on the 2014 market value of the property, and a 35 switching discount was offered. Under political pressure, a regret scheme was later introduced for those who missed the deadline to switch.

Raaff is one of around 6,000 ground leaseholders who still have not made the switch and whose leasehold contracts are about to expire. According to Raaff, the shockingly high amount “feels like a penalty for not switching.”

Raaff told the newspaper that his wife had inquired about switching within the deadline, in November 2019. Two years later, in 2021, he received a letter from the municipality offering a ground lease of €6,279 per year, based on a property value of €1,073,500. “During that period, I was a full-time caregiver for my severely disabled wife. The letters were difficult, and I thought I would simply have to pay that amount from then on.” He said he didn’t realize that he had to take action, so he accidentally stayed on the old system.

There are several reasons why Raaff’s ground lease is now so much higher. His property value has risen over €2 million, he no longer qualifies for the switching discount, and the municipality now allocates 49 percent of the property’s value to the land, instead of 39 percent.

Raaff expects that more people will soon discover that their ground lease has increased explosively, and by much more than their neighbors who switched to the new system earlier. “I think many people who didn’t switch are older and didn’t fully understand the letters,” Raaff said.

The CDA and VVD want the city to reopen the regret scheme, which would mean that Raaff and others like him could again get much lower offers. The CDA pointed out to Parool that the Netherlands Authority for Consumers and Markets (ACM) ruled in 2021 that the municipality had not sufficiently clarified the consequences of not switching in time. According to the party, the city placed way too much responsibility on the leaseholder.