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What is the difference between
leasehold and freehold tenures?
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THE land laws of Malaysia are
governed by the National Land Code, 1965 (Act 56 of 1965). Section 40 of the
National Land Code, 1965 states that all state land belongs to the state authority.
When state land is disposed off by the state authority to an individual in
perpetuity for an indefinite period, this land is now granted as freehold
title.
When the state land is disposed of by the state authority to an individual
for a term of years, by virtual of law, not exceeding 99 years, this land
is now granted as leasehold title. Upon expiry of the period of the
lease, the land should be reverted to the state authority.
The owner will then have to either apply for a renewal of the lease before
its expiry or apply for a fresh alienation if the lease has expired. These
will involve the payment of a hefty premium which would be close to buying
the land all over again with perhaps some discount
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Summary
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Issue
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Leasehold
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Freehold
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Comment
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| Land uses |
- Lease
duration usually 30, 60, 99 or 999 years.
- Limited
by purpose of lease and land legislation.
- Stocking
levels, cultivation, etc may be restricted by lease conditions.
- Limited by environmental and town planning controls.
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Limited by environmental
and town planning controls |
Leases are subject
to a higher level of control. |
| Duty of care |
- High level of duty
of care defined in land legislation.
- May be responsible for developing and maintaining improvements.
- May be required to engage in property planning. |
- Duty of care following
common law and as required by some Environment Protection Acts or its equivalent. |
Leases are subject
to a higher level of control. |
| Transferability,
aggregation and subdivision |
Lease transfers require
State or its equivalent's approval. |
- Few limitations
on transfer.
- Unlimited right to subdivide and aggregate subject to town planning controls. |
Leases are subject
to a higher level of control. |
| Retrieval/resumption |
Powers to acquire leasehold interest
or withhold land when lease expires. |
Some powers to acquire
land for public works. |
Leases are subject
to a higher level of control. |
| Security of tenure |
Varies according
to lease type but forfeiture for non-performance may be possible. |
Very high level of
security. |
- In general, leases
are less secure than freehold.
- Perpetual leases approach the level of security of free hold |
