After the lease period over, the owner needs to renew it.
The rate is base on the location of the land.

If you go to PJ old town, you see a lot of vacant bungalows and houses. The reason is most of those houses owner have moved out but the house is not desirable in the market as it is at the very end of the lease. It will depreciate a lot for the buyer.

The renewal rate is between RM60k-250k.

That means if you buy the bungalow at RM1.8mil, you need to add say RM150k cash for renewing the lease within 10 years.

The actual house own value will be RM1.8mil + RM150k* + (time u own the house x 5% of RM150k)**.

*if you borrow the RM150k, then you also need to add interest from the loan.
**Rough way to calculate the loss of gain from interest.

Also, the paper value of the house is RM1.8mil, the bank will only borrow you 1.8Mil at max (which is not likely at all...).

No one who understands this will want to pay ~RM2mil to stay in an RM1.8mil house since there is a lot of property supply in msia...

This post has been edited by chamelion: Mar 25 2021, 11:39 PM

Normally is a strata title. The title is held by a legally appointed representative body. If the owner does not pay, he can be sue and need to pay all interest because he already agrees with the term during purchase.

You pay RM2mil from your pocket.
RM1.8 for house and ~RM200k (If you calculate in detail, it might higher) for leasing fee.
Generally, gov allow lease renewal with no issue.

It is also an issue if you want to sell. You have to wait the appreciation of RM200k + the normal loan interest and fee to avoid lost.

This post has been edited by chamelion: Mar 26 2021, 07:50 AM

That is why in my first post i mention the rate is subject to location.

the last part of the video is similar to the example I gave. It put the buyer in a difficult position, that is why the property is no desirable.

Welcome to PJ property....