What is Leasehold Property in Malaysia?

What is Leasehold Property in Malaysia

What is Leasehold Property in Malaysia?

Leasehold Property in Malaysia is property that you lease from the government for a period of X number of years. In Malaysia this period varies from 30 years up to 999 years. 99 years is the most common leasehold term for properties in the country.

Many people believe that leasehold properties have a significantly lower value than freehold properties and developers will often highlight this feature when launching new developments.

Leasehold properties only differ from freehold properties in that they will have to be returned to the government when their lease is up.

In countries like Singapore, many property owners are worried that this will mean that their properties are going to drop in value significantly as their lease reaches expiry and will eventually worth $0.

Is the same true for leasehold properties in Malaysia?

In Malaysia the government almost always allows for the renewal of the lease.

In certain instances they may limit the amount of years that you can renew the lease if they have plans to use the area for other forms of development such as for MRT or highways.

In most areas however, the government will accept your application for renewal, you’ll just need to pay them a fee.

This fee will be higher the closer it is to the lease expiry.

Waiting for the lease to expire will result in the land automatically reverting back to state ownership.

That is why the Malaysian government allows you to make this application for the lease renewal before your lease expires.

You will be able to opt for either 60 or 99 years.

Together with the application, you will need to submit to the land office – the application form (Borang 12A), a certified copy of the land title, (which can be obtained from the office’s registration department), a copy of the current year’s quit rent receipt, personal and land particulars, a copy of the latest assessment receipt, two copies of site plans and two copies of your NRIC.

When your property is under a strata title, your lease renewal will have to be done by the developer, as technically, you don’t exactly own the land beneath your unit, or at least you own only a very tiny piece of it.

For the developer to do this, (under the current laws), the developer will need every single owner to agree to share to pay for the premium for the lease renewal. If not they will be unable to proceed with the renewal application.

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Currently, in Malaysia there are no strata title units that are close to having their 99 year lease up and have faced the problem yet, so it’s hard to say what action the government will take when the lease is reaching expiry.

Personally, I believe if the government does not have any plans to use the land, and if people are currently occupying the space, they will work out some scheme to either allow owners to renew the lease or compensate all the owners for taking back the land.

What will actually happen with leasehold strata properties is anyone’s guess. For now, we can only wait and see what the government will do in the future.

If you are looking to apply for your landed leasehold property extension however, the application should be made accordingly to the state government of which the property is located.

This application can be made at any point in time during the current lease. There is no minimum period of ownership before the lease can be renewed.

It is probably wisest to do this when the lease has about 50 years left on it as banks become slightly cautious about giving out loans, even when it comes to refinancing loans. So, just be wary on your property’s remaining lease, especially if it is a family home that has been passed down.

The whole process can take about 3 months but might take longer depending on how backlogged the land office is.

Just how much is the fee that you’ll have to pay the government to get your lease renewed?

It all depends on which state your property is located. Different states have different lease renewal premiums but all have fairly similar models.

In Selangor, the calculation is as follows:

Premium = 1/4 x 1/100 x Market Value of land (in sft) x number of years to renew x land area (in sft).

Assuming that the property land size is 2000 sft, and the land value calculated at RM150 per sft, (Land value is different from the building value) with 50 years left on the lease, this will mean that the total premium that needs to be paid will be:

Premium = 0.25 x 0.001 x 150 x 49 x 2000 = RM36,750

As you can see despite it being a relatively easy thing to get done, you can see it’s still going to cost you a large chunk of cash.

And unlike with your property purchase, banks aren’t going to loan you the money to pay for this at a generous interest rate with 90% financing.

There is a second option however for those of you who may be strapped for cash at the point in time when you need to renew your lease.

This second option for renewing your lease on your property will only cost you about RM2,500. This will be made up of RM1,000 paid to the state government and about RM1,500 as legal fees for a lawyer to handle the application.

The catch here is that it will prevent you from selling the property as the state government will lodge a Registrar Caveat on the property to prevent you from selling the property to anyone else.

You will still be able to transfer it to a family member, but you will have to pay the Stamp Duty or Memorandum of Transfer (MOT). If this transfer is done from parent to child, there will be a 50% exemption on these stamp duty fees.

To have this caveat removed, all that is needed to be done, is to have the premium payment paid up in full when the property is about to be sold.

As you can tell by now, leasehold properties have some additional costs and inconveniences associated with them, but does this really have an effect on the property’s value over the long run?

If you’ve been a subscriber of ours for some time, you’ll know that for questions like these, I just love to head on over to Brickz.my.

My go-to source for actual property transaction values.

It’s here where we can have a look at how transacted property values have fared through the test of time.

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So, let’s have a look at the median transacted prices of all leasehold property in Selangor and compare it to all the freehold property prices over the same time frame.

The median price we are looking at here, is the middle point for all properties in Selangor. The median price is the price in the very middle of all the properties that were sold each year. It is the price that is exactly half of the houses priced for less and half priced for more.

So assuming there were 100 properties being sold during the year, this price is the 50th price if all the prices were arranged from the lowest to the highest.

Selangor All Types Leasehold

Selangor All Types Freehold

It should be noted that data prior to 2000 on these charts was from a very small sample size as the data from back then on Brickz.my is limited.

Looking at these 2 charts however you’ll be able to see quite clearly that leasehold properties do tend to have a slightly lower median price per square foot and have even taken quite a dip leading into this year.

The difference however is not that much and doesn’t have me completely convinced that freehold property appreciates better as compared to leasehold property.

Let’s have a closer look at things and see how some specific freehold and leasehold properties have appreciated over time, so we’re actually comparing apples to apples.


Transaction Date Property Location Land Area (sf) Price Psf (RM) Price (RM)
02/04/1996 841 Jalan Medan 32 1399 195 165,000
04/09/2019 867 Jalan Medan 32 1399 414 350,000


Transaction Date Property Location Land Area (sf) Price Psf (RM) Price (RM)
18/01/1996 25 Jalan SS5A/7 1518 79 97,912
08/06/2018 35 Jalan SS5A/7 1539 281 350,000

The above is a comparison between two sets of terrace units located in slightly different areas that are not too far from each other.

As you can see, the terrace units are different ones but on the same street and we’re looking at how much appreciation there was over a span of about 20 years.

From what we can see, the leasehold terrace unit gained 2.12x its value, while the freehold terrace unit gained 3.55x its value.

That’s quite a significant difference!

Looking at these figures certainly has me convinced that leasehold properties lose out on the capital appreciation when compared to freehold properties.

I’m sure that not all units in similar locations will appreciate in the same manner but these were selected for their similarities and proximity in location and also due to the fact that there is limited data on Brickz for transactions made prior to the year 2000.

Regardless, it still serves as a very good example of how leasehold property clearly doesn’t appreciate as well as freehold property over the same time frame.


There are quite a few setbacks to owning a leasehold property when compared with a freehold property.

It’s important to realize though that the issues that it causes are only more causes for concern when you are looking at holding a property for a longer period of time (> 20 years) or if you are buying a resale property for investment.

Most people however will tend to benefit more from purchasing a freehold property as your property will likely grow in value faster and you will also not ever have to worry about renewing your lease or figuring out what you have to do with your strata title unit lease in the future.

With the growing number of leasehold developments, it looks like freehold developments will continue to drop in number and perhaps this might make freehold units even more desirable and valuable in the future.

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