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Leasehold Land Malaysia
Leasehold land is land that is held by an individual by virtue of a lease agreement between the individual and the owner of the land, allowing the individual to own the land for a given duration of time. The duration ranges from thirty years to 99 years. In Malaysia, leasehold land is owned by the government as governed by the National land code 1965. Specifically section 40 of the national land code states that all state land is owned by the state. After the period of leasing is over, the land is reverted back to the government or the owner can opt to renew the leasing period.
During the period of lease, individuals owning leased land can only transfer to a third party with the consent of the state. Lease land usage is limited to the purpose for which the land was leased. Such issues as cultivation and stocking levels are limited to the lease conditions. The leased land is subject to town planning and environmental controls and owners may be required to do property planning. Owners are responsible to developing the leased land and maintaining any developments.
Owners of leased land in Malaysia may face some uncertainties. For instance, what happens to the constructions on any leased land when it is reverted to the state? The owner of a leased land is faced with the choice of either renewing the lease before it expires or apply for a fresh alienation to continue enjoying the benefits of their labor. This involves the paying of a premium for the renewal of the land. It is true that there have been no cases of the government refusing to renew leases, but this does not dismiss the thought that you own buildings on a land that does not belong to you. The process of renewal of the lease or getting a fresh alienation will need consent from land office of state authorities. Failure to renew the lease will mean reverting the land back to the government and that the government is at liberty to lease it to anyone wanting to lease the land.
The other challenge that comes with leasing land is its marketability. Statistics indicate that for the first thirty years of leased land, there is continued appreciation of the land, holding all other factors constant. After this period, the land starts to depreciate and losses market value. Most banks prefer to give loans for leased properties that have more than 75 years of leased life and this makes it had to get financing for development.
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