I believe you often see “Freehold” and “Leasehold” in property sales.
Generally speaking, there are 3 types of land contracts in Malaysia, namely Freehold, Leasehold and Aboriginal Reserve.
1. Freehold
Freehold is a property that you own for life until you sell it. When the property changes hands, the buyer will inherit the same ownership. You will only be forced to surrender ownership if the government compulsorily expropriates the land. When the government needs to use the land for a public facility (such as a highway), it has the right under Malaysian law to expropriate the property or land and pay you compensation at market value.
2. Leasehold
This type of lease allows you to own the property for a period of time, usually up to 99 years. In any case, you can apply for an extension before the lease expires in 20 years or less. If the application is approved and a nominal extension fee is paid, you will almost certainly make a profit as the value of the property will generally rise. The size of the increase depends on the location of the property.
3. Aboriginal reserved units
This type of property is restricted to Aboriginal use only, including resale at a later date. Special discounts are available for Aboriginal reserved units. However, as the market for this type of property is limited to a certain type of buyer, it will certainly have lower capital appreciation than other unrestricted properties. It goes without saying that some Aboriginal investors prefer to invest in non-Aboriginal reserved units.
