Renewing a leasehold property is a significant concern for property owners in Malaysia, particularly as the lease term approaches its end. Knowing how to calculate renewal fees can help in financial planning and ensuring a smooth renewal process. Here's a detailed guide to calculating leasehold renewal fees:
1. Understanding Leasehold Renewal
Leasehold properties in Malaysia typically have fixed lease terms, such as 99 years or 60 years. As the lease nears expiry, owners must apply for a lease extension to retain usage rights. Renewal fees are based on the current market value of the land and the number of years to be renewed.
2. Leasehold Renewal Fee Formula
Renewal Fee = 0.25 × 0.01 × Land Market Value (per sq. ft) × Renewal Years × Land Area (sq. ft)
0.25 : Fixed percentage rate applied by most states.
0.01 : A fraction representing the annual charge.
Land Market Value : Current value of the land per square foot.
Renewal Years : The number of years for the lease extension.
Land Area : Size of the property in square feet.
3. Example Calculation
Scenario:
Location : Shah Alam
Property Size : 2,000 sq. ft
Remaining Lease : 39 years
Land Market Value : RM80 per sq. ft
Renewal Period : 60 years (to extend lease to 99 years)
Calculation : Renewal Fee = 0.25 × 0.01 × 80 × 60 × 2,000 Renewal Fee = RM24,000
4. Discount or Rebates
For example, the Selangor State Government currently offers a 30% discount on renewal fees.
Net Fee After Discount :
RM24,000 − (30% of RM24,000) = RM16,800
5. Steps to Apply for Lease Renewal
Submit Application:
Visit the local land office.
Submit the lease renewal application form with necessary documents (e.g., property title, identification documents).
Land Value Assessment:
The land office will assess the current market value of your property.
Pay the Renewal Fee:
Pay the calculated renewal fee based on the land office’s assessment.
6. Other Considerations
Legal Advice :
It is advisable to engage a real estate lawyer to ensure compliance with legal requirements during the renewal process.
State Policies :
Different states may have varying rates, policies, or incentives, so always check for updates or additional discounts offered by the state government.
Summary
Renewing a leasehold property in Malaysia involves a clear formula that calculates fees based on land value, area, and renewal period. For property owners, understanding the process and potential discounts ensures effective financial planning and smooth lease renewal. Always consult professionals or land authorities for the latest updates and accurate assessments.