Difference Between Freehold & Leasehold in Malaysia

When buying a property, many of us often asked the same question. Should we go for freehold properties or leasehold properties? This is almost always the first question asked when we decides to buy or invest in a property whether it’s from the developer or from a sub-sale market.

FREEHOLD

When a plot of land is disposed by the authority to an individual indefinitely it becomes freehold. This is seen when developers purchase land to build freehold bungalows, private housing and condominiums. Should the owner wish to transfer ownership, there are much fewer and less stringent limitations as compared to leasehold property owners. The owner has unlimited rights to subdivide and allocate the land, but is still subjected to town planning controls. The owner also has some means to use the land for public works. The State cannot claim the land from the owner if no development takes place.

LEASEHOLD

Leasehold is when State land is released to an individual for a definite number of years not exceeding 999. Once the term expires, the land ownership reverts to the State authority. In order to extend the leasehold, the current owner must apply for a renewal before the expiry date. A significant sum of money is usually expected – one that is close to the original sum paid for albeit with minor discounts. In Malaysia, Leasehold tenures usually last 30, 60, 99 or in some cases, 999 years. As compared to freehold lands, there are more restrictions to a leasehold land as things like land cultivation may be effectively barred by environmental and town planers. Also, what is detailed in the lease conditions will limit the type of activity that can be performed on the land.

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