- Property
Definition of freehold properties in Malaysia
4 minutes read
In the Malaysia context, the definition of freehold properties refers to a property that is fully owned by the buyer without any limitation on the period of ownership. When you buy a freehold property, you have full ownership rights to the land and any structures built on it permanently.
In Malaysia, land ownership is mainly governed by two systems: freehold and leasehold. Freehold properties are considered more desirable because they offer greater security and control over land than leasehold properties.
Freehold property can be inherited, sold, or transferred at the owner’s discretion. Owners have the freedom to develop the land, use it for various purposes, or rent it out. Freehold properties are usually more expensive than leasehold properties due to continued ownership and potential for long-term appreciation.
Meanwhile, leasehold properties are owned for a specific period, usually 99 years or less, as specified in the land lease agreement. At the end of the lease, ownership of the property reverts to the landowner unless the lease is renewed.
Keep in mind that land ownership systems can vary by state and region in Malaysia. Although freehold properties are common, there are variations and exceptions in certain locations. Therefore, it is recommended to consult with local authorities or seek legal advice when dealing with property ownership matters in Malaysia.
Owning a freehold property in Malaysia has several advantages.
Freehold property gives the owner permanent ownership rights with no time limit. You don't have to worry about the lease expiry date as in the case of leased properties. You and your heirs can enjoy ownership of the land continuously.
As a freehold property owner, you have full control over the land. You have the right to develop the land according to your needs and wishes. You can build a structure, expand an existing building, or change the garden according to your personal or business needs.
Freehold properties tend to show long-term appreciation in value. Over the long term, real estate usually appreciates in value, allowing you to get a good return on investment if you decide to sell the property in the future.
As a freehold property owner, you have the freedom to use the land for various purposes. You can use the property for your own residence, as a real estate investment, or develop a business project. This freedom gives you more options in using the property.
Freehold properties tend to be easier to buy than leasehold properties. As a buyer, you don't have to calculate factors such as the length of the lease or the risk of non-renewal. This makes the property purchase process easier and smoother.
However, it is important to remember that the advantages of freehold properties may come at a higher price than leasehold properties. You also need to consider the property’s location, public amenities, and local laws and regulations before deciding to buy a freehold property.
Although owning a freehold property in Malaysia has many advantages, there are also some disadvantages that need to be taken into account.
Freehold properties usually require a higher investment than leasehold properties. The price tends to be higher because permanent land ownership provides long-term stability and certainty to the owner.
Although freehold properties can be inherited, there are restrictions and rules relating to the inheritance of property. This includes inheritance tax payable by heirs when the owner dies. Property owners need to make good succession planning to ensure that the property is handed over to the heirs smoothly.
As a freehold property owner, you are fully responsible for the maintenance of the property. You need to provide financial allocations for routine maintenance such as repairs, landscape maintenance, and other maintenance costs. This includes maintaining buildings, public service systems, etc.
If you buy a freehold property from a property developer who is developing a project, there is a risk that the developer will not be able to complete the project successfully. This may cause delays in completion and the risk of project failure.
Land ownership systems and local regulations vary by state and region in Malaysia. It is therefore important to understand the legislation and regulations relating to freehold properties in the area you are interested in. Changes in local laws can also impact the rights of property owners.
