Freehold vs Leasehold in Malaysia 2026: What Buyers Need to Know
Property Lab editorial teamPublished 8 min read
Contents
- What is the difference between freehold and leasehold?
- How many years is a leasehold in Malaysia?
- What happens when a leasehold expires?
- How much does it cost to renew a leasehold?
- Can you get a bank loan for a leasehold property?
- Is freehold always better?
- Checklist before you buy a leasehold home
- FAQ
- References
Freehold vs leasehold in Malaysia: freehold land has no expiry date, while leasehold land is leased from the state for a fixed term of up to 99 years and goes back to the state when the lease ends, unless it is renewed. Leasehold homes are often cheaper, but the shorter the lease left, the harder the loan, the weaker the resale, and the bigger the renewal bill.
Freehold: yours with no end date. Leasehold: yours until the lease expires, usually 99 years from when it was first granted, not from when you buy.
Leasehold can be a good buy if plenty of years remain beyond your loan and holding period. Check the expiry date on the title first.
What is the difference between freehold and leasehold?
Land tenure means how long you hold the land your home sits on. In Peninsular Malaysia it is governed by the National Land Code. Sabah and Sarawak have their own land laws.
| Freehold | Leasehold | |
|---|---|---|
| How long you hold it | No expiry date | Up to 99 years |
| On the title | "Selama-lamanya" | Expiry date shown |
| At the end of the term | Nothing changes | Land returns to the state |
| Renewal needed? | No | Yes, with a premium |
| Price | Often higher | Often lower |
| Bank loan | Easier | Harder as lease shortens |
| Government acquisition | Possible, with compensation | Possible, with compensation |
Condos and apartments can be freehold or leasehold: the strata title follows the tenure of the land underneath.
During the lease, a leasehold owner can live in, rent out, sell or mortgage the home much like a freehold owner. The difference is time: the clock keeps running, and it does not restart when the home is sold.
How many years is a leasehold in Malaysia?
Under section 76 of the National Land Code, the state can grant land in perpetuity (freehold) or for a term of up to 99 years. Most residential leases are 99 years. Shorter terms such as 30 or 60 years also exist.
The key point is that the 99 years count from when the lease was first granted. If you buy a subsale home with 72 years left, you get 72 years. The table shows how fast the remaining lease shrinks.
| Lease left when you buy | After 10 years | After 20 years | When a 35-year loan ends |
|---|---|---|---|
| 99 years | 89 | 79 | 64 |
| 80 years | 70 | 60 | 45 |
| 70 years | 60 | 50 | 35 |
| 60 years | 50 | 40 | 25 |
| 50 years | 40 | 30 | 15 |
Years of lease remaining. Your next buyer will look at the lease left when you sell, and their bank will too.
What happens when a leasehold expires?
When the term ends, the land reverts to the State Authority under section 46 of the National Land Code. Under section 47, buildings on the land generally go with it. Renewal is not automatic: the owner must apply to the state before the lease expires, and the state decides at its discretion. It can approve, refuse or add new conditions.
Leases can be extended. Since the National Land Code (Amendment) Act 2016, section 90A provides a route to renew a lease, which began operating in Selangor on 1 June 2018. Selangor also uses a surrender and re-alienation route (sections 197 and 76) in some cases. Your lawyer or the state land office will tell you which route applies.
How much does it cost to renew a leasehold?
Each state sets its own renewal premium, so there is no national rate. Selangor is the best-documented example. Under the Selangor Land and Mines Director's Circular No. 6/2011, the residential premium is:
- Premium¼ × 1% × value × years × area
- Value: land value per sq ftSet by the state
- Years: years addedNew term − years left
- Area: land areaIn sq ft
A worked example from a lawyer quoted by StarProperty: a 2,000 sq ft Shah Alam lot valued at RM80 per sq ft, with 39 years left, renewed back to 99 years (60 more years). Premium: 0.25 × 0.01 × 80 × 60 × 2,000 = RM24,000, or RM16,800 after Selangor's 30% rebate.
| Years left (1,600 sq ft lot) | Years added | Premium | After 30% rebate |
|---|---|---|---|
| 60 | 39 | 39,000 | 27,300 |
| 40 | 59 | 59,000 | 41,300 |
| 25 | 74 | 74,000 | 51,800 |
Illustrative, in RM, using the Selangor formula with an assumed land value of RM250 per sq ft and renewal back to 99 years. The real land value is set by the state and is often the biggest unknown. Premiums in other states use different formulas.
Selangor's circular also describes two ways to pay: the full premium within the set time to get the 30% discount, or a nominal RM1,000 if you agree not to sell, in which case the full premium is due when you do sell or transfer. These options date from 2011, so confirm with the Selangor land office (PTG) that they still apply before you count on them.
For condos, renewal involves the whole development, not just your unit. Ask the management office who would coordinate an application, how the premium would be shared, and whether individual strata titles have been issued.
Can you get a bank loan for a leasehold property?
Yes, leasehold homes can be financed. There is no single Bank Negara rule on remaining lease; each bank sets its own policy and also looks at the valuation and your loan tenure. What changes is how far the lease stretches beyond your loan.
- One guide says many banks apply stricter conditions once a lease falls below 60 years.
- Guidance cited from the Malaysian Bar gives the example that lenders may be reluctant to finance leases of 40 years or less, or may cut the margin and loan tenure.
- Thresholds vary by bank, so ask two or three banks before you commit, especially below 60 years.
As the lease shortens, values may fall, and a lower valuation can reduce how much a bank will lend even if your income qualifies.
Is freehold always better?
No. Freehold suits buyers who want to hold for decades or pass the home to their children. Leasehold can make sense when it is clearly cheaper and the lease is long enough for your plans.
- Price gap varies. There is no reliable national rule that leasehold is a fixed percentage cheaper. Compare recent sales of similar freehold and leasehold homes in the same area.
- Freehold can still have conditions. A restriction in interest, which requires state consent to sell or transfer, can appear on freehold titles too. It depends on the title, not just the tenure.
- Foreign buyers: rules can differ by tenure. In Perak, for example, non-citizens cannot buy freehold property since September 2023.
Checklist before you buy a leasehold home
- Get a land title search through your lawyer or the land office. Check the tenure, the expiry date, any restriction in interest, charges and caveats.
- Work out the lease left when your loan ends and when you plan to sell.
- Ask two or three banks whether they will lend for your full loan tenure on that remaining lease.
- Ask the state land office how renewal works and roughly what the premium would be.
- For a condo, check whether individual strata titles have been issued and whether the management corporation has looked into renewal.
- Compare the price with similar freehold homes nearby, so you know the discount you are getting.
- If the title has a restriction in interest, allow for the state consent step when you buy and when you sell.
FAQ
What is the difference between freehold and leasehold in Malaysia?
Freehold land has no expiry date. Leasehold land is held from the state for a fixed term of up to 99 years and returns to the state when the lease ends, unless it is renewed.
How many years is a leasehold in Malaysia?
Up to 99 years under section 76 of the National Land Code. Most homes are on 99-year leases, counted from when the lease was first granted, not from when you buy.
Can a leasehold be renewed in Malaysia?
Yes, by applying to the state before the lease expires and paying a premium. Approval is at the state's discretion. In Selangor the residential premium is ¼ × 1/100 × land value per sq ft × years added × land area.
Can I get a home loan for a leasehold property with 40 years left?
It is harder. Lenders may be reluctant to finance leases of 40 years or less, or may offer a smaller loan and shorter tenure. Policies differ, so ask several banks.
References
- StashAway: Freehold vs leasehold title in Malaysia (12 August 2026)Used for National Land Code sections 46, 47, 76 and 197, the non-automatic renewal, restriction in interest, the lack of a national price rule and the Malaysian Bar lending example.
- Chia, Lee & Associates: Property law in Malaysia, the extension of a leaseUsed for section 90A, its start in Selangor, the Selangor Circular 6/2011 formula and the two payment options.
- StarProperty: Calculating the renewal cost of a leasehold (April 2018)Used for the Shah Alam worked example and the 30% rebate.
- The Edge Financial Daily: Welcome relief for Selangor homeowners (December 2011)Used for the origin of the RM1,000 option, the full premium on sale and the six-month payment window for the 30% discount.
- RinggitPlus: What Malaysia's land rules mean for your home and money (February 2026)Used for common lease terms, rights during the lease, government acquisition and the "below 60 years" lending point.
- Low & Partners: Land title search, what, why and howUsed for what a title search shows, including "selama-lamanya" for freehold and the expiry date for leasehold.
- Malaysian Bar: Circular No 444/2024Used for the Perak rule on freehold property and non-citizens.
Renewal rules and premiums are set by each state and change over time. Confirm with the state land office (PTG) and a conveyancing lawyer before you buy.
This article is general information only, not legal or financial advice. Premium examples are illustrative and based on the assumptions stated.
General information only, not legal, tax or investment advice. Rules and rates change; check the official source linked below before you act.
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