The Dutch mortgage market has seen some dramatic developments in the past year. Among other things, banks are less willing to lend to expats or happy to do so with bad terms and conditions. Also, maximum loan amounts have been drastically decreased.
Now a new development has arisen that does not only affect (potential) new home owners, but especially current home owners that plan to sell their house: private land lease can currently no longer be financed. Though you might not be familiar with the terminology, you might very well be affected if you bought a house in Amsterdam or are looking to do so.
Perhaps the topic needs some introduction. In most of the country, when someone buys a house they also buy the land that the house sits on. In Amsterdam, this is often not the case. Most of the land in the city is owned by the city of Amsterdam. Homeowners on the city’s land pay either an annual fee as land lease or they pay a big sum to buy off the payments for approximately 50 years. Since the annual payments are tax deductible and the buy off can be financed along with the house, no one ever worried about this construction. 50 Years is, after all, almost a lifetime and a long period to look ahead.
The big problem is not with the city owned land, though. The problem is that private landowners (those lucky enough to own land in Amsterdam) and real estate developers have also been granting land lease contracts. That means a private individual or company owns the land your house is built on. In this case you pay them an annual amount. That was all fine up to 1 January this year. Since that date, all of a sudden, banks will no longer finance homes with private (non-government) land lease.
What does this mean?
This means that at this time everyone that owns a house with private land lease will only be able to sell their house to someone who will not need a mortgage. And those with enough money to pay a house in cash will demand a significant discount in the price. In short: you won’t be able to sell your house!
Was it to be predicted?
Honestly, no. The main reason the banks give is that it is dangerous to buy a house with private land lease, because the landowner might raise the leaseprice or cause other sorts of trouble. Also, they do not want to be forced to do business with potentially dubious parties. The weird fact of the matter is that many private land lease contracts have much better conditions than those granted by the city. Banks don’t even take the time to look at these contracts or the people providing them. This argument also seems absurd for another reason: no one is as likely to increase rates as a city government with a big deficit. We believe the real reason is that the banks do not want to go through the hassle (and cost) of assessing individual private land lease contracts. It is just a cost saving measure.
So, what will happen if I have a land lease house and want to sell?
We believe that one of two things will happen:
Some banks will figure there is money to be made. Every time there’s an opportunity to fill a market niche, someone will take it. This will involve either a mortgage with higher interest rates or a fixed fee for the assessment of the land lease contract. All in all, getting a mortgage will be possible, but at less favorable conditions. Conclusion: your house will be worth less in the market.
A standardized land lease contract will be proposed by NVM (national organization of real estate agents), a bank or another big party in the housing sector. In that case land lease contracts according to that model can be treated similar to the municipal land lease contract. However, this is not very likely.
An even less likely option was suggested by the Labour Party (PVDA) in Amsterdam. They would like the city to buy all the private landlease contracts and reissue them as city landlease contracts. We believe this will not be politically viable now that Amsterdam and the Netherlands are facing big budget deficits.
Finsens hopes a combination of the first two materializes and a situation results in which homeowners are not targeted again by seemingly random rules.
Does this apply to me?
It might. Just in Amsterdam hundreds, perhaps thousands of homes have been sold with these contracts. If you are in this tough spot, all we can advice is to stay put and enjoy living there for a while. A solution will present itself. Whether it is a very good one, remains to be seen. | 
