What is the difference between leasehold and freehold tenures?

THE land laws of Malaysia are governed by the National Land Code, 1965 (Act 56 of 1965). Section 40 of
the National Land Code, 1965 states that all state land belongs to the state authority.

When state land is disposed off by the state authority to an individual in perpetuity for an indefinite period,
this land is now granted as freehold title.

When the state land is disposed of by the state authority to an individual for a term of years, by virtual of
law, not exceeding 99 years, this land is now granted as leasehold title. Upon expiry of the period of the
lease, the land should be reverted to the state authority.

The owner will then have to either apply for a renewal of the lease before its expiry or apply for a fresh
alienation if the lease has expired. These will involve the payment of a hefty premium which would be
close to buying the land all over again with perhaps some discount

Summary
issue Lease hold freehold comment
Land use Lease duration usually Limited by environmental Leases are subject to
30, 60, 99 or 999 years. and town planning a higher level of
- Limited by purpose of controls control
lease and land
legislation.
- Stocking levels,
cultivation, etc may be
restricted by lease
conditions.
- Limited by
environmental and town
planning controls.

Duty of care High level of duty of care - Duty of care following Leases are subject to
defined in land common law and as a higher level of
legislation. required by some control.
- May be responsible for Environment Protection
developing and Acts or its equivalent.
maintaining
improvements.
- May be required to
engage in property
planning.
Transferability, Lease transfers require - Few limitations on Leases are subject to
aggregation and State or its equivalent's transfer. a higher level of
subdivision approval. - Unlimited right to control.
subdivide and aggregate
subject to town planning
controls.
Retrieval/resumption Powers to acquire Some powers to acquire Leases are subject to
leasehold interest or land for public works. a higher level of
withhold land when control.
lease expires.
Security of tenure Varies according to Very high level of security - In general, leases
lease type but forfeiture are less secure than
for non-performance freehold.
may be possible. - Perpetual leases
approach the level of
security of free hold