KNB advocates for a permit requirement for land investments

To better protect buyers in speculative land transactions, the Royal Dutch Association of Civil-Law Notaries (KNB) is advocating for a licensing requirement for these types of transactions. This would place them under the supervision of the Netherlands Authority for the Financial Markets (AFM). The KNB proposed this in a letter to the House of Representatives.

Speculating on land is, in principle, not illegal. It's essentially a form of investment. A license from the Netherlands Authority for the Financial Markets (AFM) is required to offer investment properties. This applies to, among other things, plots of agricultural land and recreational real estate. Currently, there are exemptions from this licensing requirement, for example, if the provider offers a plot to fewer than 100 consumers, if the investment property is part of a series of fewer than 20 investment properties, or if the investment per investment property is €100,000 or more.

2 adjustments
In its letter (pdf), the Royal Netherlands Bank for Enterprises (KNB) advocates for abolishing the exemption from the licensing requirement for providers of these types of land investments. The KNB also advocates for a change in the definition of "investment object." A plot of land is currently not considered an investment object if the acquirer becomes responsible for its management (maintenance). Providers of land investments take advantage of this, meaning no license from the AFM is required. These two changes effectively address the source of the problem, protecting potential victims at the earliest possible stage.

Mandatory in the office
According to the Royal Netherlands Bank for Enterprises (KNB), these changes are simpler than requiring notaries to always meet buyers of speculative land at their offices. Several members of parliament advocated for this following an RTL News segment about speculative land trading. The KNB supports this, but it requires a legislative amendment. This is not only time-consuming, but also not the best possible solution.

No prohibition on power of attorney
A complete ban on the use of power of attorney will practically lead to new and more problems than currently exists and is unnecessary. Power of attorney is a commonly used instrument that works well in the vast majority of cases. The problem isn't the power of attorney itself, but a lack of adequate information. Where notaries fail to fulfill their duty of care, buyers have the option of filing a complaint with the Chamber of Notaries, the notarial disciplinary court. However, in cases of deception, it's more obvious for buyers to report the seller to the police.