A Guide To Land Ownership in Malaysia

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Land ownership is the process of buying and being given unrestricted access to a predetermined square footage of land. Property laws have undergone a series of changes since the first land ownership laws were established and each country tends to adhere to a different set of rules and regulations. Continue reading to find out everything you need to know about land ownership in Malaysia and how it can benefit you whether you are a property developer, investor, or homeowner.

Land title

A land title is a legal document issued to an individual that proves land ownership or possession of a property. They are usually kept at the Land Office or Registry and issued after the successful payment of stamp duty. Once you have received a copy of your land title, you will be granted full ownership and can use your property in any way you wish. You even have the authority to transfer your land title to another individual in the event of unforeseen circumstances or to a beneficiary. This is done through the successful completion of a title deed. It is worth remembering, however, that land titles can take a considerable amount of time to be delivered to you.

Leasehold

There are three main types of land ownership in Malaysia. Leasehold is one of the most common. It is the name given to the process of renting or leasing a property from the government. The lease can be granted for as little as 60 years but usually lasts up to 99 years. When the lease expires, the property will be returned to the government and you will receive no compensation.

The lease can be extended or renewed but in order to do so, you must pay a lease extension premium. This fee depends on a number of factors including the type of property, property location, and length of extension required. A successful lease renewal can boost the value of the property by a considerable amount.

Freehold

A freehold lease is designed to last forever. It allows properties to be transferred from one individual to another with ease and requires no involvement or consent from the state or any relevant federal government authorities. If the government requests access to land owned within a freehold lease, you are within your right to refuse and receive compensation. It is worth noting, however, that the value of your property will be determined by government valuers and not current market value, so you stand to lose a considerable amount of money. Freehold leases are suited to property investors as it tends to yield greater sales and rental prices.

Bumiputera Reserve

A large majority of the Malaysian population are either Malay or Bumiputera. This type of land ownership is reserved for them in line with government economic policies. As a result of these restrictions, homeowners are only allowed to transfer their property to a fellow Malay or Bumiputera. Attempting to transfer a property to a non-Malay or Bumiputera requires a considerable amount of paperwork and can take a number of years to be finalised and approved. This type of land ownership is unsuitable for investors as the appreciation is lower than that of leasehold and freehold properties due to fewer potential buyers.

Alternative land ownership titles

As well as leasehold, freehold, and Bumiputera Reserve, there are a number of less common land ownership titles available in Malaysia that you should also be aware of. For example, Master titles are granted to housing developers with express permission to develop a predetermined area of land. The Land Office will grant this title for the entire duration of the development project. Strata titles are granted for high-rise apartments. The developer must apply for the title on behalf of the homeowner before it is issued between seven to 20 years later.

Individual titles, on the other hand, have been designed for landed properties. Landed properties generate income for the owner for little to no involvement on their part. Once a developer has transferred a property to its relevant owner, they will be required to apply to split the Master titles into Individual or Strata titles as necessary. The homeowner can also receive this title in a fraction of the time of a Master title.

The process of land ownership in Malaysia can be relatively complex and time-consuming. By familiarising yourself with everything you need to know ahead of time, you can streamline your property investment journey. There are a number of factors you must consider before you apply for land ownership in the country. Most importantly, you must find out about land titles and decide which type of land ownership title is likely to suit you.

Whether you are a property developer, investor, or homeowner, knowing what to expect from the land ownership process ahead of time can save you a considerable amount of time and money.

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