As a property buyer, you need to understand all of the important aspects of property ownership that include the types of land titles in Malaysia. Lack of awareness in these titles may lead to owning a property that has certain trade restrictions or diminishing value. There are 3 existing property titles; Freehold, Leasehold & Bumi Lot. Let us look into the comparison of each title before going into detail.
Above are the 3 fundamental forms of legal property ownership in Malaysia. Many people who don’t sort this out when they buy a home end up regretting it – getting it wrong can be hugely expensive. Hence, as a real estate portal, we felt like it’s a part of our responsibility to let you know the vital information of Malaysian land titles that are classified into:
To understand it better, read the term by splitting into two i.e. free-hold. Freehold means taking complete ownership of the property outright including the unit and the land it stands on, with your name registered as the landowner. Freehold can be known as a perpetual right in the property, an inheritor can inherit the property upon the owner’s death. So essentially, the property stays in the same family.
For the Freehold properties, the transactions in the activities of sale are more convenient, straight forward and easier. They also have the right to do any modifications and upgrades on the property they own. if you plan on living at a place for a long time and find a home that you love and would like to keep in the family, then freehold might be best for you.
As the name suggests, here the owner of the land on which the property is built is leased for a certain amount of time to the developer. Generally, the lease period varies from 30-99 years. Technically it is buying the right to occupy or live in a property for a fixed period where you will pay ground rent to the landowner to stay throughout that duration. The ownership, however, will revert to the landowner after the end of the lease period.
A leased property can be sold, used or rented in the same manner as the Freehold. They can also extend the ownership upon the expiry of the lease period. Leasehold homes are comparatively cheap over freehold homes as the demand is less compared to Freehold. But if you are planning to sell your home within 10 years of purchase or if you are a seasoned property investor basing your decision on expected returns, leasehold might be the best option for you.
Bumi lot was introduced under the new economic policy of Malaysia in the 1970s as a measure to increase Bumiputra shares in real estate through a mandatory minimum quota of 30% and a minimum 7% discount (Bumi Discount) on property. This means that developers have to allocate at least 30% of all property units (be it residential or commercial) to Bumiputeras. Bumiputera is inclusive of Malays, Sabahan and Sarawakians, and also non-Malay Muslims.
Bumi lots may be harder to sell as the market is strictly confined to Bumiputeras. In general, these properties will be advertised and sold only to Bumiputera buyers and also the state will have full control over these kinds of lands. Bumi Quota regulations fall under the State Government’s jurisdiction. The quota was implemented to encourage more Bumis to own houses and promote greater interaction among the various ethnic groups of Malaysia.
It is important to be informed of the legal rights and responsibilities that come with each type of ownership. The most prominent difference between Leasehold and Freehold is "control" and the question of how far into the future you are looking at this point, while home for a price cheaper than both categories and separate categories of people is what makes Bumi different from Freehold and Leasehold. At the end of the day, each option has its perks. It is a question of what you need, so do your due diligence to ensure you make a decision that you won’t regret in the long term. In this case, location is the major component that affects the availability of the property title. Perhaps you can start looking around to check which area suits you the most by referring to our platform here NuProp.my