HBA objects to leasing of private land for housing purposes

KUALA LUMPUR: Future home buyers may find themselves "renting" in perpetuity if a proposed private lease scheme makes its way into the National Land Code 1965.
National House Buyers Association (HBA) secretary-general Chang Kim Loong said the government, under the previous administration, was looking to introduce a new chapter into the Code, which would allow landowners (private corporations) to lease out their freehold land for development.
Note that the term "leasehold property" is commonly used in Malaysia and refers to a state lease. This type of leasehold land is owned by state authorities, who have a moral obligation to renew the lease upon expiry, at a nominal fee.
"In a private lease, the land for development is a freehold property and is owned by private corporation. The land owner will lease the land to a developer for a period of 99 years with the rights given to the developer to develop and construct condominiums for sale to the public. The pertinent question is, what is being sold to the public?" a lawyer with direct knowledge of the issue questioned.
Chang said the Department of Lands and Mines under the Natural Resources and Environment Ministry was keen on the proposal, which would be accompanied by a proposed amendment to the Strata Title Act 1985 to facilitate the implementation of the private lease scheme.
According to the lawyer, who declined to be named, there are already several projects developed under such a scheme in Medini, Johor, despite the scheme being only at the proposal stage. Some of these projects were already completed last year and should be handed over to buyers soon.
"These projects are already built and done, without changing the law. Now they want to bulldoze the proposal through, I think it is not right," he told SunBiz.
Medini Iskandar Malaysia Sdn Bhd the master developer of the Medini project in Johor is owned by Jasmine Acres Sdn Bhd (60%), United World Infrastructure (20%) and Mitsui & Co Ltd (20%). Jasmine Acres is jointly owned by Khazanah Nasional Bhd and Iskandar Investment Bhd.
Checks with developers with projects in Medini revealed that all projects in Medini, a special zone within Iskandar Malaysia, are being developed under the private lease scheme.
According to Chang, the current Code does not allow for leases to be created for more than one person but the proposed private lease scheme will counter this provision.
"The scheme also will result in land ownership in perpetuity as private landowners would have a monopoly on merely 'renting' out land where condominiums or apartments are built or even landed houses and they will have the absolute right after 99 years not to renew or continue with the lease," he said.
According to the lawyer, most property purchasers are unaware of the scheme and would assume that they are buying a leasehold property under the state government, which is not the case.
Under the scheme, the sale and purchase agreement signed by the purchaser and the developer is not for the sale of the property, but for the sale of a lease over the strata parcel. This effectively makes the purchaser a lessee of the property, and not the owner of the property, as assumed by most buyers in general.