May I clarify what are the developer’s mandates / responsibilities in renewing lease tenor upon handover?

If all purchasers unanimously agree to put forth the application for renewal obviously with premium incurred - will this be sufficient to set the motion for developer to act?

https://www.starproperty.my/news/81902/exte...or-kuala-lumpur

There no strict requirement for the developer to do it.

The issue with "all purchasers", it might not be all of them and thus, the developer might be the party paying for the renewal. Might as well give the purchasers the title and let them DIY.

Why would a developer wants to develop a piece of land with a short lease tenure. How can they convince buyers ? Even with 99 years lease, many are also hesitating.

Seldom do lease tenure be less than 90 years upon vp, unless revival of abandoned projects.

This post has been edited by mini orchard: Jun 2 2021, 10:06 PM

Strata will need developer to apply - so I’m unsure if that’s possible by individual application.

Dont think there's any strata title being renewed so far in Malaysia real estate history.
If any does know, do share here. I am curious too, as how strata title lease is renewed, especially on high rise buildings.
But if individual title, yes. In Kuching, there are many renewed leasehold titles around.

This post has been edited by Michaelbyz23: Jun 2 2021, 11:13 PM

Isn’t this common for new project at least upon vp renew to 99 years lease

One must understand that the renewal of any lease extension is NOT automatic upon application to the state govt.

Similar to tenancy. The right of renewal is upon the landlord agreeing to the request.

That article only explains how to go about extension and the calculations. It doesnt state anything about approval which is the discretion of the State Govt.

Similar to a SnP of a leasehold property.

This post has been edited by mini orchard: Jun 3 2021, 05:27 AM

Hi, properties sold by developers are usually still 90 years and above for leasehold properties.

Upon expiry of your lease, (assuming 90 years later), usually the JMB will raise it within the residence and apply for the extension of lease, which later on will be divided as per the size of your unit unless there is an acquisition of property by the government, usually, the extension will be allowed by the land office.

Hope this helps

I dont think there is any leasehold highrise that is due for renewal. Those very old leasehold highrise or walk-up apartments are only around like 40 years above and our merdeka is only 63 years.

Long way to go.....is the next generation to worry.

This post has been edited by mini orchard: Jun 16 2021, 11:51 PM

Stratified Leasehold Residential: (Kuala Lumpur)

Addressing a few comments from this thread.

1. Developer’s responsibility:

There is no responsibility for the developer to renew the lease back to 99 years before HOVP (Delivery). This is because the Sales & Purchase Agreement (SPA) signed by the purchasers will state the remaining years or expiry of the lease. Meaning the purchasers are aware and have agreed.

However, most developers will renew the lease prior to delivery of vacant possession for the simple reason of selling the property for a higher value or if the lease remaining is close to 50 years (banks will be reluctant to finance)

Less renewal will be done via Master title (land) prior to the strata titles being issued (upon completion), meaning that upon delivery, you should have very close to 99 years left.

2. How to renew lease of Strata Titles (individual owners)

The main factor for renewal of lease will be driven by financing. Meaning Banks will start to become reluctant to finance the purchase (subsale) of leasehold strata properties with 40-50 years left on the lease (depending on the bank).

Therefore when the lease remaining is less than 50 years, owners will want to extend their lease.

According to PTGWKL to process to renew lease is as follows:
The estimated premium is as follows and based on the method of calculations as outlined in by Amended Rules 2023 by PTGWPKL:

For residential building: 1/16 x value of land x 1/99 x (term of new lease – balance remaining)

The interesting thing here is that the Land value for a stratified building (or the master title) will largely remain unaffected, meaning over 50 years, the land value should only increase by 2-3%. This is a small fraction of the increase in value the individual units or strata titles will increase in value.

Once you do the calculations on a future scenario, the renewal from 45 years remaining back to 99 years, is a tiny fraction of the value of the unit, usually much less than 1% of the value, per unit.

The method for apportionment is via Share Units. Total renewal could be RM 8 million on master title, divided by the total share units in the development. Then each owner will need to pay for the number of share units he owns, could work out to be RM50k (or much less than 1% of the value of the unit)

The process to renew requires an AGM and resolution via vote to renew. If the Management Corporation (MC) is any good, they will have planned in advance for this, and probably started collection from owners years in advance (to ease the burden).

There is risk that some owners may be unwilling to pay when the time comes, but with good planning this can be mitigated.

Hope this answer helps.

This post has been edited by babu_my: Dec 13 2023, 10:41 AM