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- Ownership of Malaysian real estate
Ownership of Malaysian real estate
After independence in Malaysia, state governments were given the authority to manage and own land. While some land is being developed as “permanent ownership” land, others are being developed as “lease hold” land leases for a certain period of time from the state government.
⚫︎ Freehold
- Feature: Permanent ownership, allowing indefinite possession of property and land.
- Advantages: Stable asset value and easier resale.
- Notes: In certain regions, foreigners face restrictions on available properties.
⚫︎ Leasehold
- 特徴: 99年や60年など、一定の契約期間に基づく土地使用権です。
- Renewal: Owners may apply to the government for extension when the lease expires.
- Advantages: Generally lower price compared to freehold.
- Notes: Properties nearing lease expiry tend to lose value more easily.
- Lease hold for 99 years, which is common in Malaysia
Malaysian 'lease hold' periods are typically 30, 60, 99 years, etc.Condominium about 99 years oldAnd most of them are long-term. Some states have a period of 999 years, which can be called almost freehold. in Malaysia,As indicated by the fact that more than half of the properties are “lease hold” properties, this is a major type of right, with a period set that greatly exceeds the useful life of a typical building.With these factors considered, freehold and leasehold are treated with little distinction in practice. In particular:If the remaining lease term is 50 years or more, there is almost no impact on the property value, evaluation at the time of resale, bank loan screening, etc.“The National House Buyers Association states that if the remaining lease period exceeds 50 years, property prices are not affected. Major Malaysian banks also note that as long as the lease period is longer than the loan tenure, financing is not an issue.”
In practice, location matters more than ownership type in Malaysia. Leasehold properties with superior living and transport convenience often sell at higher prices than comparable freehold properties in less favorable locations, and there is no significant difference in the pace of price appreciation.Depending on the area, the area that is expected to develop in the future is the land of the state government = "lease hold"Therefore, if the lease period is set for a long period of time, such as 99 years, it would be wise to choose based on future prospects and location rather than the type of right, whether for residence or investment.
- On Lease Renewal
In the case of residential "leasehold" properties, unless there is a specific reason for the state government's refusal, such as performing public works,As a general rule, the lease term can be renewed by paying renewal fees.. In addition, the renewal fee paid to the state government is "market price of land x 0.25% x number of renewal years" (approximately 25,000 yen/year for land equivalent to 10 million yen).
- Ownership-Related Risks When Buying Property in Malaysia
1. Incomplete Transfer of Ownership
- Seller’s Outstanding Debt: If the seller has unpaid housing loans or property taxes, the transfer of ownership may be delayed.
- Inaccurate Land Title Information: If the registered ownership details are incorrect, the buyer risks not obtaining the true ownership.
2. Expiry of Leasehold
- For leasehold properties, as the lease period nears its end, asset value decreases and renewal costs arise.
- If the state government rejects the renewal application, ownership may be lost.
3. Issues with Purchase Restrictions
- Foreigners face restrictions on property purchases based on price and location (varying by state).
- Malay Reserve Land and agricultural land are not available for foreign buyers.
4. Risks of Buying Under-Development Properties (Off-Plan)
- Developers may face financial collapse, leading to project cancellation.
- Completed properties may differ from contract terms (smaller size, poor construction quality, etc.).
5. Disputes in Shared Ownership Properties
- In housing estates or condominiums, lack of transparency in management committees may result in poor maintenance.
- Disputes may also arise over usage rights of common areas (parking lots, facilities).
To avoid these issues, thorough due diligence and proper professional support are essential. If any doubts or irregularities arise during the purchase process, it is strongly recommended to consult a professional immediately.
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