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Caribbean Netherlands: mandatory inclusion of ground lease payments in calculation of real housing costs

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In many cases, an owner-occupied home involves payment of ground lease. From 1 January 2020, credit providers and advisers in the Caribbean Netherlands are obliged to include ground lease payments in the calculation of the maximum loan to be provided. The AFM will change its calculation model on 1 January 2020 on the website so that advisers can include ground lease payments in the calculation of the customer’s real housing costs.

The calculation model for the maximum permitted loan

The credit provider or adviser must obtain information regarding the consumer’s financial position. It is important that the consumer is willing and able to afford the costs of this maximum mortgage or consumer credit. The customer’s financial position is the starting point.
The AFM has developed a ‘Model for maximum permitted loan’ to calculate the maximum amount of credit that can be provided. This includes the customer’s real housing costs. The real housing costs include at least the net rent or net interest paid, the amount repaid or the premium for a capital accumulation product, and the ground lease payment.

Clarification of real housing costs in the AFM calculation model

The AFM notes that many owner-occupied homes involve ground leases that have to be paid by the customer. This payment of ground lease is part of the customer’s real housing costs. The AFM has clarified the description of real housing costs, and has named ground lease payments as part of the real housing costs. Credit providers and advisers must include all relevant housing costs in their calculation of the maximum loan to be provided. This also applies to housing costs that are not stated in the calculation model.

In case you have any questions regarding this subject, please send an email to bes@afm.nl.

The AFM is committed to promoting fair and transparent financial markets.

As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.

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