Leasehold Property Extension or Renewal

Guide to Leasehold Extension – What You Need to Know Before Applying

The Importance of Having a Lease Extension as well as the Process for Getting One

1. What is a leasehold property?

A leasehold property is a property built on a land owned by the State Government and can only belong to its owner for a limited period of time for 30, 60 or 99 years. Once the lease on the property expires, the ownership is returned to the State Government, and that property owner shall be lost the ownership of the property unless extension or renewal of lease is approved.

2. How to apply for leasehold extension or renewal?

You may appoint a lawyer to submit the application of extension of Lease or renewal of Lease to the relevant Land Office/ State government together with relevant documents soonest possible. The whole process will take about 6 months to 2 years to complete depending on the authorities efficiency.

3. When should I apply for leasehold extension or renewal?

You should apply as early as possible. We strongly recommend to apply for an extension of the lease where the remaining lease is less than 30 years to preserve the value of your property. The value of the leasehold property tend to run down and the price growth of the leasehold property tends to be slower in the event the tenure of the lease is lesser than 30 years before its expiry as the bank is generally unwilling to finance.

If you are only applying for renewal near/after your lease is expired, there’s a very high risk that your renewal/ extension will be rejected where you lost the property ownership forever.

4. How much to pay?

There will be premium payable to the state government, you can refer the calculation of the premium for both Kuala Lumpur & Selangor property at the Sun’s interview with our managing partner. In addition to that, there shall be legal fee payable to law firm appointed. Please contact us for quotation.

5. What happens if my lease is expired?

Once the lease is expired, technically speaking, the land shall be automatically return to State Government and heavy penalty will be imposed by the State Government from time to time for renewal. The “expired lease property” would then be open for the public to apply and own the property. The financial loss to the property owner is huge as it would incur a large amount of cost to acquire the property with the similar size at the same location. As such, it’s advisable to apply for extension many years before your lease is expired to avoid these risks.

6. What if I own a leasehold condominium and how should I apply for the extension of lease?

The application for the extension of lease for a leasehold property which held under a strata title is to be handled by the Developer/Management body. Technically, the owner to the respective units of the condominium do not own the whole piece of the land but only the particular unit which forming part of the land. The Developer/Management will then require all owners of the condominium to agree to share for the premium imposed on the lease renewal.

This article is written by 

Andy Toh Chin Lee
Partner, Low & Partners

Julene Ngui Yew Feng
Associate, Low & Partners