Guidelines for Homebuyers
Sale and Purchase of Houses
Withdrawal EPF to Purchase a House
Difference Between Leasehold and Freehold Tenures
Mortgage Reducing Term Assurance (MRTA)
Malaysia My Second Home Programme (MM2H)
About Penang
DIFFERENCE BEWTEEN LEASEHOLD AND FREEHOLD TENURES

Source: National House Buyers Association


What is the difference?

The land laws of Malaysia are governed by the National Land Code, 1965 (Act 56 of 1965). Section 40 of the National Land Code, 1965 states that all state land belongs to the state authority.


When state land is disposed off by the state authority to an individual in perpetuity for an indefinite period, this land is now granted as freehold title.


When the state land is disposed of by the state authority to an individual for a term of years, by virtual of law, not exceeding 99 years, this land is now granted as leasehold title. Upon expiry of the period of the lease, the land should be reverted to the state authority.


The owner will then have to either apply for a renewal of the lease before its expiry or apply for a fresh alienation if the lease has expired. These will involve the payment of a hefty premium which would be close to buying the land all over again with perhaps some discount

Summary #1 - Land Uses

1. Leasehold

Lease duration usually 30, 60, 99 or 999 years.

Limited by purpose of lease and land legislation.

Stocking levels, cultivation, etc may be restricted by lease conditions.

Limited by environmental and town planning controls.


2. Freehold

Limited by environmental and town planning controls.


3. Comment

Leases are subject to a higher level of control.

Summary #2 - Duty of Care

1. Leasehold

High level of duty of care defined in land legislation.

May be responsible for developing and maintaining improvements.

May be required to engage in property planning.


2. Freehold

Duty of care following common law and as required by some Environment Protection

Acts or its equivalent.


3. Comment

Leases are subject to a higher level of control.

Summary #3 - Transferability, Aggregation and Subdivision

1. Leasehold

Lease transfers require State or its equivalent's approval.


2. Freehold

Few limitations on transfer.

Unlimited right to subdivide and aggregate subject to town planning controls.


3. Comment

Leases are subject to a higher level of control.

Summary #4 - Retrieval / Resumption

1. Leasehold

Powers to acquire leasehold interest or withhold land when lease expires.


2. Freehold

Some powers to acquire land for public works.


3. Comment

Leases are subject to a higher level of control.

Summary #5 - Security of Tenure

1. Leasehold

Varies according to lease type but forfeiture for non-performance may be possible.


2. Freehold

Very high level of security.


3. Comment

In general, leases are less secure than freehold.

Perpetual leases approach the level of security of free hold

Enquiry

National House Buyers Association
No. 31, Level 3, Jalan Barat,
Off Jalan Imbi,
55100, Kuala Lumper.
Malaysia.
Tel: 603.2142.2225
Fax: 603.2260.1803
E-mail: enquiries@hba.org.my
Website: http://www.hba.org.my

Note: Dream House Properties takes no responsibilities for any mistakes made above and does not

guarantee the accuracy of the information provided.