Todays, We will cover 4 main types of land title found in Malaysia, Which is :
1. Bumiputera lot
2. Malay reserved
1. Bumiputera Lot
Bumiputera Lots are open for sale or lease only to Bumiputera. Bumiputera is inclusive of Malays, Sarawakians and Sabahan, and also Orang Asli.
Malay: A child is considered to be bumiputera if one of the parents is a Muslim Malay, as stated in the Constitution. The Federal Constitution defines a Malay as a person who professes the religion of Islam, habitually speaks Malay, conforms to Malay customs and is the child of a Malaysian parent.
Orang Asli: The natives of Peninsular Malaysia, they number over 150,000. Consisting of 18 tribes, most live in rural areas with 34 per cent of their households categorised as poor.
Sabah natives: Based on the Constitution, Sabah natives with at least one parent of an indigenous race in Sabah. The indigenous groups in Sabah include Kadazans, Dusuns, Bajaus and Suluks.
Sarawak natives: Malaysians with both parents who are of an indigenous race in Sarawak. They include Ibans, Bidayuh, Orang Ulu, Melanaus, Penans and Malays.
For example, within Penang, every new development must allocate 30% of its units as Bumi Lots. This regulation was put in place in order to boost the shares of Bumiputera in real estate.
Changing the land title of a Bumi Lot to a non-Bumi lot requires much time (counted in years), and procedures in order to obtain consent from the government. In many cases, most requests are also rejected.
2. Malay Reserved Land
Often mistaken for Bumiputera Lots, Malay Reserved Land titles are actually slightly different.
Where Bumi lots are open for sale to Malays, Sabahan and Sarawakians, and also non-Malay Muslims, Malay Reserved Land; otherwise known as “Tanah Rizab Melayu”; are only for Malay Muslims.
Sabahan and Sarawakians, and also non-Malay Muslims are not eligible to purchase properties on Malay Reserved Land.
A freehold property is a property that is disposed to the owner in perpetuity by the state. In other words, a plot of land is set aside by the government and is given indefinitely to an individual.
Type of property that can be associated with freehold are condominiums, private housing, and bungalows.
The most notable perk of purchasing a freehold property is that there will be fewer regulations and conditions should the owner like to transfer the ownership of the property.
The owner also has the right to subdivide and allocate the land but it is subjected to the town planning controls.
One of the drawbacks of having a freehold property is that for public purposes (transportation, economic development etc) the state has the authority to take back the freehold land but it will be compensated.
Leasehold, on the other hand, is the state’s government property or land that is being leased with a fixed amount of years to the public. The years could be varied within the range 30, 60, 99 or it can be up to 999 years.
The ownership of the property will then be given back to that government upon the expiration of the lease.If the owner decided to renew or extend the lease, consent must be obtained from the state government with a premium that is based on the percentage of a similar freehold property market value.
The restrictions and regulation are usually stated in the lease itself. Inability to follow through this compliance might cause the tenant to be declared as unfit and the security for the tenure might be compromised.
In order for one to sell a leasehold property, you need to get the consent from the state before starting the sale that could take up to 6 months or maybe even a year.For cases like purchasing a secondhand leasehold property in Selangor and Kuala Lumpur, the paperwork for the ownership transfer might take up to a year or more dependent on the number of consent requests.
Even though the value of a leasehold property has more value than a freehold property during its earlier years, once it reaches 30 years, the value will remain static or even declining until it reaches its expiry.