What is ground rent?
The fee for the use of the plot of land on which your house stands is called the ground rent. This is in addition to your mortgage payments, and is a type of rent that you pay to the owner of the land. In the case of municipal ground rent properties (gemeentelijke erfpacht), the owner of the property is the municipality. For example, if the owner is a water board, church or private person, then these are referred to as private leasehold.
About the ground rent agreement
The ground rent agreement states the amount you pay for the use of the land. You will typically pay about 5% of the land value in ground rent every year. The land owner usually revises the amount every 5 to 10 years. With municipal ground rent agreements, this revision timeframe is often longer. Ground rent is tax deductible, as is the case with mortgage interest. Sometimes you can also buy out the ground rent agreement. In that case, only the additional borrowed amount for the buy-out is tax deductible, the buy-out figure itself is not.