BYMEERA AMMANI
l
ast
week’s column discussed
the principles governing
leasehold property in the
Klang Valley. This week, we
are exploring factors influencing
lease-extension and potential lease
renewal of such properties.
Extension of leasehold
properties…
Recapping last week’s article, once
the lease on a property expires,
ownership is reverted back to the
State government. Extension or
renewal of a lease can be done
through an application, provided the
State government grants an approval
and the premium is paid.
According to Andy LowHann
Yong, partner at Low& Partners,
“Legally speaking, there is no
specific provision in the
National Land Code
(NLC) that deals
with the extension
of leases per se,
some state
governments
have relied on
Section 76 (a),
204B and 197 of
the National
Land Code for
this purpose.”
“This is
because section 76
(a) gives power to
the State Authority to
alienate land of a term
not exceeding 99 years.
Section 197 of the NLC
provides the procedure
where the landowner can
surrender their title back to
the government. Section
204B provides certain power
to the State Authority to
approve surrender and
re-alienation.”
When to extend…
Margaret Tan, 55, lives in a
leasehold property in Petaling Jaya
Section 4. With 49 years left before
her lease expires, she is one of the
many leasehold property owners
who is worried and left in the dark as
to how long she
should wait before
applying for an
extension.
“I was told that when
a property reaches a
point where there is
only 30 years left for
the lease to expire,
it’s very difficult for a lessee to even
get a bank loan with it. So when
should I extend the lease?”
Property sources say
homeowners who want to extend
leases on their property can do so
according to their choosing and
there is no minimum number of
years they need to wait before
applying. However, they warn that
when leasehold properties near
their expiry date, the market value of
the property will start to decrease,
hence the difficulty in getting
bank loans.
Christopher Chan, associate
director of Hartamas Real Estate
(Malaysia) and registered real
estate agent, says that the Selangor
government has come up with two
options for extending leases. Under
the first, the homeowner need only
make a payment of RM1000.
However, this option comes with
“restriction”, as the owner is not
allowed to re-sell the property to
profiteer. Transfer of the property
to family members is allowed
though. The State Authorities
will lodge a Registrar
Caveat on the property
to prevent the owner
from disposing
the property
under this
option.
The second option is to pay
the full rate of premium that is
required for the extension of
the lease. With this option,
the owner can dispose the
property as soon as the new
title is received.
The “Premium” in
Selangor…
The calculation of premium varies
with each state, therefore it is
important to get the information
beforehand accordingly.
In Selangor, the formula to
calculate the premium rate is
derived from Section 7 of the
Selangor Land Rules 2003 &
Selangor Quarry Rules 2003,
entitled “Premium”.
Leases are usually renewed so
that there are 99 years of lease to the
title. Therefore, if you have 10 years
remaining on your lease, you need
only pay for an extension of 89 years
(99 years-10 years).
Keep inmind that the
calculation of the premium rate
as mentioned above is for the
land itself.
It does not include the
building constructed on the land.
The “Premium” in Kuala
Lumpur…
Premium on lease to be re-alienated
in Kuala Lumpur is referred under
the Federal Territory of Kuala
Lumpur Land Rules 1995, under
part 3 Premium rule 9. Where an
expired lease is to be re-alienated
to the former registered proprietor,
the rate of the premium to be
determined by the Government is
one quarter of that specified in
sub-rule 8(b), and will exclude the
value of any building or cultivation
then found on the land.
Sub-rule 8 (b) states that
where alienation is by way of lease,
the rate of premium to be charged
shall be calculated as follows. The
value of the land to be calculated
shall be determined by the
Government based on the market
value of the land.
The valuation of the land is
done by the Valuation and Property
Services Department of the Finance
Ministry. It is based on the latest
transaction values in the area.
Once the premium has been paid,
the process and action required is
very simple. One has to wait for the
Land Office to inform the property
owner when he or she can collect
the Land Title.
Premium = 1/4 x 1/100 xMarket
Value of land (in sq ft) x number of
years to renew x land area (in sq ft).
While in principle the
government has the authority to
evict an “owner” upon expiry of
the lease, all parties we spoke to
opine that the government is
unlikely to do so. So leaseholders
are advised to read our notes on
lease extension and renewal
carefully.
Calculation of premium for
residential land where the lease
has expired:
Premium= 1/4 x value of land
x 1/99 x termof lease
Calculation of premium for
residential land where the lease
has NOT expired:
Premium= 1/4 x category of
the land use x value of the
land x 1/99 x (termof new
leaseminus balance of
existing lease)
“Legallyspeaking,thereisno
specificprovisionintheNational
LandCode(NLC)thatdealswith
theextensionof leasesperse...”
ON
friday
Nov 8, 2013
Extension
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>...It is “less complicated” thanperceived
Andthe
award
goesto...
Property
industry big-wigs
and real estate head honchos
will be busy, this time not in
property matters but affairs of
vanity and the wardrobe. With
FIABCI’s Malaysia Property
Award 2013 Gala taking place
tomorrow at One World Hotel
in Bandar Utama, excitement is
already in the air, with
nominees wanting to look
spiffy, photographed collecting
the esteemed award on stage.
This year, nine awards will be
presented, in eight categories
– Property Man; Retail; Office;
Sustainable Development; Pur-
pose Built/Specialised Project;
Heritage; Residential Low-rise
and Residential High-rise.
The ‘Oscars’ of the industry
will kick off with cocktails at the
foyer. Mingle, network or simply
enjoy the grandeur of the night.
With the winner’s list on em-
bargo, adrenaline levels will be
high leading up to the highlight
of the night – the awards presen-
tation. Still, take pleasure in the
event organised by FIABCI’s Dr
YuKee Su, OrganisingChairman,
and his dedicated team. They’ve
arranged for a welcome arch,
plus another to snap pictures at,
along with a display of previous
Malaysia Property Award and
FIABCI Prix d’Excellence Award
winners. To entertain guests is
Charles Barnabas, who will de-
liver Jazz tunes to keep the night
light and pleasurable. Formal
proceedings of the night will
include a video of what went on
behind the scenes that culmi-
nated to the awards presenta-
tion. With eight months to pre-
pare and more than 80 people
involved in the now ISO-com-
plied organising process of the
Malaysia Property Award, here’s
to this year’s winners and the rest
working to make tomorrow’s
event first-rate and fabulous.
ADVERTORIAL
The applicant (homeowner) will have
to submit the following to the state
land office:
•
Application form to surrender and
re-alienate land to extend lease
duration (Borang 12A
Permohonan Untuk Menyerahkan
Balik Tanah - mengenai kesemua
tanah itu)
•
Personal land lease rights (of the
applicant) form (Borang Perihal
Tanah Peribadi Pemohon)
•
Table 1 - Rule 2 - Land Rights of
Malaysian Government (Jadual 1
- Peraturan 2 Kanun Tanah Negara
Perintah Tanah Kerajaan)
•
Personal details of the applicant
(Borang Butir-Butir Permohonan
Tanah Oleh Individu)
•
The original title of the property
(Surat Ikatan Hak Milik Asal)
•
Copy of quit rent and assessment
receipts for the current year
(Salinan cukai tanah dan resit cukai
taksiran untuk tahun ini)
•
Two copies of NRIC (Dua salinan
kad pengenalan)
NOTE:
If the lease has already expired,
the applicant needs to submit the
Application for Land Re-alienation
form (Permohonan Pemberimilikan
Tanah). The land will then be
checked by a settlement officer, who
will submit a report to EXCO for
approval. Upon approval, the land
will need to go through a re-
alienation process by the land
administrator. If the re-alienation is
approved, the Land Office will issue
a Notice (Form 5A) to the property
owner, that Land Revenue is Due.
The owner will then need to pay
a premium.
[Information from Christopher
Chan of Hartamas Real Estate
(Malaysia) and Andy Low Hann Yong,
of Low & Partners. Names of
“documents” are stated in both the
Malay and English language for easy
reference]
Process of lease extension
PART 2
CUT AND KEEP
INSIGHTS
