Leasehold properties generally see
slower price growth than freehold properties especially after 30 years into the
lease. This means that it is best to renew the lease early.
Although there isn’t any “best
timing” to renew a lease, one should not wait until the lease has expired as it
will then be more difficult to apply for an extension.
“The application for the renewal of
the lease should be done before its expiry. If the lease has expired, [owner
will need to submit] the application for a fresh alienation and this will incur
a large amount of payment which could be similar to the amount for buying the
land,”
If the owner does not renew the lease
and lets it expire, the land shall revert to and be vested in the state
authority upon the expiry of the tenure. The “expired” land is then available
to any other people who want to apply for the ownership.
He noted that the owner of the
property could send in the application to the state government to apply for
extension but there is no guarantee that the renewal [of the lease] will be
approved and the tenure duration might be different from the original.
He added that leasehold land belongs
to the state government, thus every state has a different formula or rate of
calculation of the premium to be paid. For instance, owners of leasehold land
in Kuala Lumpur will need to pay a quarter of the land value multiplied with
the number of years of the new lease, while Sarawak has a fixed amount on lease
renewal.
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Kaizen Realty
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