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Before moving out of the family home, our parents or grandparents will often advise us that we should buy a freehold property instead of a leasehold one. However, the traditional belief of our ancestors that the former is far more superior than the latter no longer holds true in this modern age.

First of all, many of our forefathers avoided leasehold homes due to the misconception that they would need to fork out an exorbitant amount to extend the lease. But the truth is: You do not have to pay an arm and a leg.

Lease Extension is No Longer Expensive

Homeowners of leasehold properties always believed that extending their lease could cost them up to six figures. However, according to the state government of Selangor, homeowners who want to extend the lease of their property have two options.

Option 1

With the first option, property owners can opt to pay a small sum of RM1,000 to extend the lease, but must also spend another RM500 as a contribution to Selangor’s cemetery trust fund, which is used to acquire burial plots.

It is explained that this option is inexpensive. Regardless of your property’s land area or the remaining tenure, you only need a trifling sum of RM1,500. However, it comes with a restriction: the property owner is not allowed to dispose off the property after extending the lease. For this purpose, the state government will lodge a Registrar’s Caveat on your home. Nonetheless, you are permitted to transfer ownership of your property to a relative.

Should you decide to sell the property after the lease has been prolonged and a new title has been issued, you will be required to pay the full lease top-up premium sans the 30% rebate offered in the second option.

For the above two reasons, many prefer to avoid taking this option – which brings us to our second option, and the most commonly utilised one.

Option 2

The second option is the one that leasehold homeowners dread the most, as they will need to foot the bill for the full lease extension premium. The advantage of this option is that the property owner has the choice of selling the property after extending the lease and receiving the new title.

But we are saying go for this option, especially if your property is located in Selangor. This is because the Selangor State government is providing a 30% discount (as of April 2020) for all those who wish to avail themselves of this option.

In particular, the amount you need to pay to renew the lease will be based on Section 7 of the Selangor Land Rules 2003. Under the part on “Premium,” the mathematical formula to compute the lease top up premium is as follows:

Premium = (0.25) * (0.01) * Land’s Market Value (in sf) * (99 years minus current tenure) * Size of the Land (in sf)

You will want to note that the lease is typically refreshed to 99 years. Thus, if you have 3 decades remaining on your lease, you will only be required to extend your lease for another 69 years (99 years minus 30 years).

For example, a 2,000 sf landed home in Sepang has a remaining lease of 30 years. Assuming the land is valued at RM80 psf by the state government, the computation of the premium will go like this:

(0.25) * (0.01) * (RM80 psf) * (69 years) * (2,000 sq ft) = RM27,600

After taking into account the 30% discount, the final amount is RM19,320. You will want to bear in mind that the calculation of the land premium is based on the land’s assessed market value. It excludes the price of the property built on the site.

With this knowledge, you now know that extending the lease of your land will not go up to six figures – maybe unless you live in a mansion. Moreover, for those planning to refresh the lease of their property, the state government said that you will not need to hire a lawyer for this as the process is simple and straightforward. This is an important point to note, as some attorneys are charging a professional fee of RM1,000 even if the property owner wishes to go with the first option.

Freehold or Leasehold - The Government Can Still Take Your Property

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This brings us to many traditional property buyers’ second misconception. Another touted advantage of a freehold property over leasehold is the claim that you will continue to own the land as long as you live and you can pass it on to your descendants.

However, this is not an absolute truth! Whether leasehold or freehold, the federal authorities or the state government can forcefully acquire your property if they need to use the land for a project that will benefit the public, such as highways, flyovers, and railways. In return, the homeowner will be compensated based on the property’s market value.

Some Malaysians learned this the hard way after the government exercised “Eminent Domain”, the power to mandatorily acquire private properties for public use, on houses along proposed MRT or LRT tracks. This was also used for the land where the Pan-Borneo Highway passed over, and similar other major road projects.

Hence, owning a freehold property is not an assurance that your house will be held in your family’s hand in perpetuity. There may come a time when the government may need to acquire your property for infrastructure projects in the future.

Leasehold Property’s Perks & Popular Projects

Leasehold properties on the other hand come with many advantages, making them an attractive alternative to freehold houses. Some of the main benefits of buying a leasehold home are discussed below:

• Affordability. The main advantage of leasehold properties is their competitive price. In fact, leasehold homes are generally 20% less expensive than their freehold counterparts. Besides the lower entry cost, leasehold projects give you more value for your money due to their wide range of facilities and various promotions offered by the developer.

• Strategic Location. Freehold properties close to the city centre are uncommon, and even if they can be found, their prices are astronomical. This also goes for properties located close to transport nodes and amenities. There are however many choices of leasehold projects within these prime locations, at much more affordable prices.

• High Appeal. Developers tend to make their leasehold projects more enticing to buyers to offset the assumed downside of its tenure. As such, there are many leasehold developments that boast amenities that are usually not seen in freehold properties.

• Great Investment Prospects. Leasehold properties typically command a higher rental yield than their freehold counterparts due to the lower price tag and hence lower monthly instalment. In particular, newly completed ones are more sought-after by rental tenants due to their new-ness and their plethora of features.

Given the perks, it is then not surprising that several leasehold developments continue to see robust demand. For instance, 83 units of leasehold semi-detached houses (semi-Ds) and terraced homes at Taman Bentara in Telok Panglima Garang, Selangor changed hands from February 2019 to January 2020.

During the same period, 73 units of leasehold cluster residences, semi-Ds, and terraced houses in Puncak Alam, Selangor were taken up. At Bandar Putera 2 in Klang, Selangor 55 units of leasehold terraced homes were sold.

As seen from the strong sales, leasehold properties can also be an excellent investment. This is as long as its prices are reasonable, the project comes with many cool features, and it is situated in a strategic location with immense potential.

Setia Warisan Tropika

In fact, if you are on the lookout for your next new home, we present to you Setia Warisan Tropika at Kota Warisan in Sepang, Selangor.

Expected to be completed by 2022, this residential project by the highly acclaimed developer SP Setia contains spacious landed homes with large windows and high floor to ceiling height (11ft). Besides the units’ flexible layouts and rooftop solar panels for water heaters (only selected units), these dwellings are competitively priced from only RM557,600.

Cool Features

The landed housing project comes with many attractive features that will leave your guests green with envy, from the magnificent guarded entrance to the eight themed tropical gardens, where you can have a crazy good time with your kids, or just enjoy being one with nature.

Apart from an outdoor cinema, where you can watch movies under the stars, there is an exclusive clubhouse equipped with a swimming pool and other facilities to keep you healthy and fit. Adjacent to the clubhouse is a picturesque mini lake with a gushing water fountain. Completing the eco-resort ambiance are meandering streams, where you can dangle your feet in the water as you relish the beauty of the place.

Promising Future

Location is the number one consideration when buying a property, and Setia Warisan Tropika is a strong contender in this aspect given the bright and dazzling future of its address.

In fact, property experts have revealed that home buyers have set their sights on Sepang, southern Selangor thanks to the large-scale developments in the area, like the Kuala Lumpur International Airport (KLIA), KLIA2, Mitsui Outlet Park and Sepang International Circuit.

Another catalyst is KLIA Aeropolis, a gargantuan project measuring 24,710 acres that is part of the Alibaba-led Digital Free Trade Zone (DFTZ), which is envisioned to generate around 56,000 jobs over 15 years. The DFTZ went live in November 2017. One of its components is an e-fulfilment hub near KLIA Aeropolis that will be constructed in two phases. The first at KLIA Air Cargo Terminal 1 is already up and running, while the second one will start operating by 2020.

With such facets, Setia Warisan Tropika is truly a home worth having. So let not the prejudice of our ancestors over leasehold properties cloud your judgment and perceive this brilliant gem as an ordinary rock.

If you require more details, check our review.

You can also call the developer at +603-8706 2552/553/557/558 or visit the sales gallery at No. 41, Jalan Warisan Sentral 1, Kota Warisan, Sepang.

(3 June 2020)


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A useful information for everyone. 

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Very Informative! Thanks for sharing