By Datuk Chang Kim Loong
THE land laws of Peninsular Malaysia are governed by the National Land Code, 1965 (revised in 2020 and known as Act 828) and has been in force since Jan 1, 1966.
Section 40 of the National Land Code states that all state land belongs to the state government.
When state land is disposed of by the authorities to an individual in perpetuity for an indefinite period, this land is now granted a freehold title.
When the state land is disposed of by the authorities to an individual for a term of years, by virtue of law, not exceeding 99 years, this land is now granted a leasehold title.
Upon expiry of the lease period, the land should be reverted to the state authority. The owner will then have to either apply for a renewal of the lease before its expiry or apply for a fresh alienation if the lease has expired.
These will involve the payment of a premium which would be close to buying the land all over again or perhaps, with political intervention, at nominal fee.
As in the case of PJ Old Town Section 1, leasehold lands that had expired were renewed for a new tenure of 99 years at a premium fee of RM1,000, with certain conditions attached.
HBA is against new amendment
The National House Buyers Association (HBA) does not support the malicious introduction of a new Chapter to the NLC or to the Strata Titles Act on “Private Lease Scheme” (PLS) concept as it offers ‘no proprietary rights’ for the buyers.
The current NLC does not allow for ‘Leases’ to be created for more than one person – the PLS will be counter to this provision.
As reported in the media, PLS was first mooted in 2012 by Iskandar Investment Berhad, a strategic developer of Medini, to prevent foreigners from possessing too much land in the Johor. At that time, there were no such law regulating PLS.
It was on Oct 21, 2018 that the Putrajaya Department of Lands & Mines (JKPTG) director-general announced intention to introduce a new chapter titled: PLS / ‘Sijil Pajakan Persendirian’ to our National Land Code (NLC).
However, if the PLS concept is introduced in the NLC, it would then apply throughout Peninsular Malaysia and to the public, regardless of residents or citizenship status.
According to a research, if the PLS becomes a trend, it will reduce the supply of property ownership in the market and thereafter push up the already unaffordable house prices even further, triggering a mad rush by rich barons to buy up lands with ‘freehold’ status.
Do you not know that the entire property landscape will be changed forever from ‘sale of property with titled ownership to that of a long-term rental or ‘lease’ of property for a tenure?
Freehold lands will then become the most sort after commodity.
The PLS will also result in land ownership in perpetuity as private landowners will now have a monopoly on merely ‘leasing aka renting’ out their land where condominiums or apartments are built, or even landed houses, and they will have the absolute right after 66 years or 99 years not to renew or continue with the lease.
Property owners especially house owners (inclusive of strata property owners) under PLS will be renters in perpetuity.
PLS will also contribute towards an increase in house prices which is against Dasar Perumahan Negara 2.0 to ensure affordability to Malaysians, not merely profits for housing developers and allow foreigners to own houses.
PLS may affect the future generation
This PLS issue may open up a ‘new can of worms’ as owners of ‘freehold’ land status will now hold on to their ownership forever for the benefit of their future generations, like the feudal system of land ownership and under the colonial days where lands are granted by lease and license to cultivate.
Should we not be moving away from our colonial days? If PLS becomes a reality, cash rich land barons and property developers will quickly snap up all freehold lands.
The same modus operandi will be adopted whereupon the prices will escalate and dwellers will continue to remain as tenants in perpetuity, rather than home owners.
Naïve and innocent buyers will not know the repercussions. There is no ownership security anymore for our next generation of buyers.
Our current generation cannot allow the creation of a monster that will affect our children and grandchildren.
Land scarcity in Hong Kong and Singapore
Although land leasing with relatively short lease periods is popular in jurisdictions facing shortage of land such as Hong Kong and Singapore: Malaysia has abundant lands.
The Government should not paddle to the need of Medini, Iskandar and those in Johor Bharu and must consider the overall ramification across our country.
PLS will create lots of confusion to the Commissioner of Buildings (COB), banks and property market.
Since ‘lease’ has no sense of ownership and security, house buyers will continue to be hoodwinked into buying leases.
We have to bear in mind that the values of lease will diminish with each expiring lease tenure and PLS property depreciates, becoming worthless in the long run.
Consequently, house buyers lose everything and become homeless after struggling to pay off full market price with interest and risk.
If the common properties and facilities are not maintained in serviceable conditions, market prices will drop exponentially after the 60th year and become zero at the end of the 99 years lease whilst land proprietors gain everything with enhanced land value and do nothing.
Example of properties that are affected are those that are currently up for resale, public auction and refinancing cases.
The way forward
Unfortunately, the ‘die has been cast’ for certain developments in Johor who had used PLS though the laws are not in place.
To minimise the damages done, there should be special legislations for certain gazette international economic zones like Medini, Johor with proper safeguards for the buyers with its land ownership restrictions.
It cannot be allowed to be applied nationwide as it would ‘open the flood gates of rampage’. – Dec 6, 2020
Datuk Chang Kim Loong is the Honorary Secretary-General of National House Buyers Association.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
