The Effect of Land Lease on House Prices

25 Pages Posted: 28 May 2017

See all articles by Pieter A. Gautier

Pieter A. Gautier

Free University of Amsterdam; Tinbergen Institute Amsterdam (TIA); IZA Institute of Labor Economics

Aico van Vuuren

Department of Economics, Gothenburg University

Date Written: April 2017

Abstract

In Amsterdam, houses located on private land and houses with various land-lease contracts coexist. The city of Amsterdam plans to abandon the present system. This requires an estimate of the market valuation of future land-lease payments on the house price. We investigate the impact on house prices of: (i) the number of years that the land lease has been paid in advance and (ii) the amount that must be paid up front. Houses on privately owned land are on average 10% more expensive. Houses with a land-lease contract that has been paid in advance are 0.41% more expensive for each year that no land lease has to be paid. We find a negative impact of the land-lease rent that needs to be paid on the house price.

Keywords: House prices, Land lease

JEL Classification: R30, R38

Suggested Citation

Gautier, Pieter A. and van Vuuren, Aico, The Effect of Land Lease on House Prices (April 2017). Available at SSRN: https://ssrn.com/abstract=2975498 or http://dx.doi.org/10.2139/ssrn.2975498

Pieter A. Gautier

Free University of Amsterdam ( email )

Amsterdam, ND North Holland
Netherlands

Tinbergen Institute Amsterdam (TIA) ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Aico Van Vuuren (Contact Author)

Department of Economics, Gothenburg University ( email )

Sweden

HOME PAGE: http://https://sites.google.com/site/aicovanvuurenshomepage/

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