From leasehold to freehold

Leaseholders of state land have welcomed Penang’s new land policy allowing them to convert their property to freehold status as it would mean an increase in property prices.

Pioneer Bayan Baru resident and the area’s Rukun Tetangga chairman Chai Tsing Boo, 64, said he would meet with the township’s various residents associations (RA) and Bayan Baru MP Datuk Zahrain Mohamed Hashim to discuss the procedures for getting their residential leasehold titles converted.

“Everything we know so far is from the media. I think it is important to speak to a state representative who can advise us on what needs to be done so that we can submit the relevant forms collectively,” he said.

According to Chai, “thousands and thousands” of Bayan Baru township homeowners would benefit from the policy as a majority of the homes there were built by the Penang Development Corporation (PDC).

“Developed in 1974, my single storey terrace house was under the first phase of PDC’s Bayan Baru development comprising 477 single-storey terrace houses and 74 units of single-storey semi-detached houses.

“The unit was originally priced at RM29,500. Today, despite being a 99-year leasehold property, the value has increased by sevenfold.

“Some of my neighbours who have renovated their homes managed to sell them for about RM300,000,” he said, adding that there was “about 30 years” left on his lease.

“Of course I will take advantage of the conversion policy because I want to leave our family home to my children,” he said, adding that under the last administration, a similar conversion policy was allowed but only for certain areas.

Food outlet owner Azhar Ramli and his mother, Halijah Yusof, were both unaware of the new policy but welcomed the news.

“Between my two siblings and me, we own two commercial shop lots and four flats in Bayan Baru – all are 99-year leasehold properties by PDC.

“We definitely want to convert our residential titles and will find out more at the Land Office on the procedures involved. Hopefully the premium won’t be too high,” Azhar, 36, said.

Halijah was “very happy” but hoped the policy could be extended to include conversion of commercial leasehold units into freehold titles as well.

A photographer who only wanted to be known as Ch’ng, said he would not be “rushing” to convert his land just yet.

“We don’t know how long it will take for the re-alienation to take place. If it is within six months, then I will consider.

“For people like us who are not planning on selling our units, the increase in value after conversion doesn’t really make a difference. In fact, we may end up paying more in assessment after conversion,” the 56-year-old said.

Penang Development Corporation Properties Sdn Bhd (PDCP) chief executive officer Osman Kallahan said he was in “total agreement” with the new land policy as it would benefit the rakyat.

“The change in title will add value to the property, making it more ‘bankable’. This will allow PDC home owners to upgrade their lives and standard of living,” he said, adding that prior to 2005, all PDC development projects in the state were leasehold properties.

“In the past 35 years, PDC had built 22,000 homes but since PDCP was incorporated three years ago, we have developed four freehold projects on the island and mainland.

“With this new policy, we hope to focus on building freehold properties from now on so that we can offer home owners a more valuable title," he said.

Real Estate and Housing Developers Association (Rehda) Penang chairman Datuk Jerry Chan lauded the new land policy as it would prevent property prices from dipping.

"Generally, property prices always appreciate in value but if you own a leasehold property, the prices of the land or unit will fall after a certain period.

"For example, if you have a 99-year leasehold property, chances are you will not be able to sell it for a good price if you only have about 20 years left on the lease.

"Furthermore, a leasehold property can only remain in the family for two or three generations - which is not long at all," he said, adding the home owners still preferred to purchase freehold over leasehold property if given choice.

"Just look at Singapore and Kuala Lumpur.

"A freehold title can easily fetch between 25% and 30% more in market as compared to a 99-year leasehold property. At the end of the day, a freehold title will give you peace of mind because it is more tangible - you can renovate it and give it to your children without worrying," he said.

Raine & Horne International senior partner and property consultancy director Michael Geh agrees.

"I believe conversion will result in an immediate property appreciation of over 30%.

"Lim's new land policy is definitely a good decision as it provides certainty for land title holders," he said, adding that the majority of PDC's residential developments were leasehold titles.

"My advise is to apply for the conversion but let your lawyer and bank handle the legal documentation process for you," he said.

Geh also noted that the decision to allow commercial and industrial leasehold owners to extend their 66-year lease to 99 years would instil "confidence" in leaseholders in investing in their companies. - By The Star

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