3 biggest risks of selling a house with leasehold

Last modified on: 11 April 2025

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A property with leasehold is often less attractive than a property without leasehold, as paying leasehold brings additional costs. Moreover, leasehold can complicate obtaining a mortgage. Below you will read about the 3 main risks of leasehold that can hinder the sale of your property.

Leasehold: what is it again?

If you have a property with leasehold, you are only the owner of the property. The land on which the property stands is owned by the leaseholder. This is usually the municipality, but it could also be Staatsbosbeheer or a private leaseholder. You pay a leasehold fee for the use of the land. This is a kind of rent that you pay per month, per half-year or per year.

There are different forms of leasehold:

In case of perpetual leasehold every 50 or 75 years the current land value is reassessed, upon which the leasehold fee is adjusted. Because the land value usually increases significantly, the leasehold costs also become more expensive after that period.
With everlasting leasehold the amount of the fee remains the same forever. You have to apply to 'lock' the leasehold. The amount is usually higher than what you currently pay, but the advantage is that the amount cannot change in the future.

In addition, you can apply to buy off the leasehold fee. You then pay a one-off large buy-out sum for a certain period (perpetual leasehold) or forever (everlasting leasehold). This makes your property more attractive for sale. Are you interested in buying off your leasehold? Ask your leaseholder for the conditions.

The 3 biggest risks of selling a house with leasehold

A property without a leasehold is naturally more attractive to buyers than a house with leasehold. If the leasehold has not been redeemed, the buyer of your property will have to deal with periodic costs for paying the ground rent. Additionally, it can be more difficult for buyers to secure financing for a property with leasehold, as mortgage lenders may be hesitant.

In some cases, you also need permission from the leaseholder to transfer the leasehold right (when selling the property). Fortunately, the leasehold does not always have to be a hindrance to the sale. Always get good advice from your real estate agent on how the leasehold can affect the sale, and consider taking steps to reduce the risks for buyers.

Below you will read about the 3 biggest risks of leasehold for the sale, and what you can do to reduce the risk.

Risk 1: The leasehold period is 'quickly' expiring
Risk 2: There is a high ground rent
Risk 3: There is private leasehold

Risk 1: The leasehold period is 'quickly' expiring

Is your property subject to perpetual leasehold? Then check what the term of the leasehold is, in other words: until when does the current ground rent for the leasehold continue? Your real estate agent will help you retrieve this information from the leasehold conditions. In addition to the duration of the leasehold, you can also find out who the leaseholder is, how high the ground rent is, whether you can redeem the ground rent, and how the ground rent can be reviewed.

Have you determined the year until when the ground rent continues? The further away the date of the period, the more favorable it is for the sale of your property. Mortgage lenders 'panic' when they are less able to estimate the expenses (such as the ground rent) the buyer will have to deal with. They are reluctant to provide mortgages where the leasehold ground rent expires in the first half of the term.

Periods of < 15 years are a risk factor

If the land value has risen at that time (which is usually the case), the ground rent will also increase. Buyers usually apply for a mortgage for a period of 20 or 30 years, so a period of less than 15 years is a risk factor. It makes it difficult for mortgage lenders to estimate future costs, and for buyers it is more difficult* to get a mortgage.

*The risk will be less high if buyers only need to take out a mortgage for a part of the purchase price.

Example: The period of your leasehold expires in 12 years. For a buyer who takes out a 20-year mortgage, this is not a problem. But if the buyer wants a 30-year mortgage, this can indeed be an obstacle, because the leasehold expires in the first half of the term.

In general, it is often said that buyers can borrow 20 times less the annual ground rent at the bank. For buyers who are at the maximum when applying for a mortgage, the chances are high that they will not get the mortgage.

Choosing the right bid

As a seller, you therefore run the risk that the buyer's financing will not come through if, in the case of perpetual leasehold, there is a period of less than 15 years. To anticipate this, it may be wise to choose a bid without a financing reservation, or a bid where no (full) mortgage is needed, when receiving bids. Always consult your real estate agent.

Is the highest or only bid a bid with a financial reservation? Then it may be wise to ask your real estate agent to contact the buyer to ask if contact can be made with the buyer's financial advisor. Your real estate agent can then determine whether the leasehold can become an issue for the sale, or not.

Locking in or redeeming perpetual leasehold

To limit this risk, you could also try to get rid of the perpetual leasehold. You can apply to lock in or redeem the leasehold. You will then have to deal with perpetual leasehold, where the ground rent remains the same forever (locking in) or is redeemed forever. This provides mortgage lenders with clarity about future costs.

The disadvantage is that these applications can take a long time and are often not arranged in time if you want to sell the property soon. Have you previously received or even accepted an offer to redeem the leasehold? Then let your real estate agent know and get advice. This can have a positive effect on the sale of your property!

Risk 2: There is a high ground rent

Also, if the ground rent is very high, this can deter potential buyers. It is an additional expense next to the rest of their charges. Especially people who are already at the max of their budget will tend to look further. To prevent interested parties from dropping out upon discovering the ground rent, it is wise to consult with your real estate agent about possible solutions.

Redeeming the ground rent

Is the ground rent high? Then consider discussing with your real estate agent whether it is possible to redeem the ground rent. In the leasehold conditions, you can check whether redemption is an option. Although this can be a considerable cost, it can be a good solution if the leasehold complicates the sale of your property.

When redeeming perpetual leasehold, you redeem the ground rent for the remaining duration of the period, while with perpetual leasehold you definitively redeem the ground rent. This gives buyers the certainty that they will temporarily or never have to pay the ground rent again, which makes the property more attractive and possibly attracts more interest.

It is a large investment you are making, so you can also choose to first put the house on the market to see what happens. But beware: many municipalities take a long time to process redemption applications, so the sooner you act, the better.

Unfortunately, it is often not possible to arrange the redemption 'quickly' for the sale. If you have previously received or accepted an offer from the municipality to redeem the leasehold, this changes the matter! Immediately pass this on to the real estate agent and discuss your options.

Risk 3: There is private leasehold

In most homes with leasehold, the leaseholder is the municipality. In exceptional cases, there can also be private leasehold. Mortgage lenders are often very hesitant to provide mortgages on which a private leasehold lies, because the leaseholder can increase the ground rent in the future. The conditions for the increase are laid down in the leasehold conditions.

Choosing the right bid

A small advantage is that you can put a house with private leasehold on the market for a favorable selling price, because you do not have to take into account the price of the land. Because buyers find it harder to secure financing, it is wise to choose a bid without a financing reservation, or a bid where no (full) mortgage is needed, when receiving bids.

Think of someone who buys a house without a mortgage or who has a significant overvalue on the previous property. Your real estate agent can help you make a good trade-off between different bids.

The leasehold opinion

To not immediately scare off buyers with the announcement that there is a private leasehold on your property, it might be useful to request a leasehold opinion from the notary. This document shows the criteria against which the value of the leasehold property can be tested. Based on this, the notary can give 3 types of scores:

A red score means that securing financing is (almost) impossible
An orange score means that securing financing is possible, but the options are very limited
A green score means that there are possibilities for securing financing

If your leasehold opinion turns out positive, this makes the house a bit more attractive to buyers. Your real estate agent can help you with requesting the leasehold opinion and evaluating whether or not to mention it in the sales advertisement.

Tip: Find a real estate agent with leasehold expertise

Want to sell a house with leasehold? Engage a real estate agent with the right leasehold expertise, so you are provided with the correct information and advice. The real estate agent not only helps you in understanding the leasehold conditions and minimizing the risks of the leasehold, but also with the rest of the steps of the sales process.

Find the best local real estate agents (with leasehold expertise!) quickly

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Tip: mention in the description that you are looking for a real estate agent with leasehold expertise, so the right real estate agents can make you an offer.