Q.
Encik Ali owns two (2) pieces of land in Malaysia. He plans to develop the land as follows:
i. Lot 222 has a title in perpetuity with an agricultural category of land use and a total land area of 10 acres. This lot will be developed into a housing scheme comprising 120 units of single storey terrace houses and 10 units of double storey shop houses.
ii. Lot 345 has a leasehold title with a remaining tenure of 20 years. The category of land use is building for commercial use and the total land area is 35,000 square feet. This lot is to be developed with a retail block and office. Encik Ali will apply for a new lease of 99 years.
With reference to any State Land Rules:
a) Calculate the premium or additional premium for the above lots. (10 marks)
b) Explain the procedure involved for these cases. (15 marks)
(25 marks, 2019 Q5)
A.
Take for example, En Ali's lands are in Selangor. So, we follow the Selangor Office of Lands and Mines.
PEKELILING PEJABAT TANAH DAN GALIAN SELANGOR
BILANGAN 2/1987
================================================================
PREMUIM PEMBERIMILIKAN TANAH DAN PREMIUM TAMBAHAN
TUKAR SYARAT TANAH
a) Premium or additional premium calculation.
i) Lot 222 - perpetuity agriculture 10 acres to category change
In this Lot 222, premium are for:
- Change of category from Agriculture to Building.
- No change of leasehold as it is perpetuity title.
120 units single storey house (kediaman) - 20% Market Value
10 units double storey shop house (Perusahaan) - 30% Market Value
Premium on land category change can be found below:
As we do NOT have the plan of the development, we do NOT know the proportion of land allocated for Residential and Commercial, so, we just assume the below:
70% of land is used for Residential = 7 acres
30% of land is used for Commercial = 3 acres
IF the Market Value of the 10 acres of Land for En Ali is:
RM10 million if it is Residential use.
RM30 million if it is Commercial use.
The additional premium calculation should be
RM10 mio x 70% x 20% = RM1.4 million (for the 120 units of single storey houses)
RM30 mio x 30% x 30% = RM2.7 million (for the 10 units of shop houses)
ii) Lot 345 - leasehold remaining 20 years, commercial (building) 35,000 sqf, extend lease to 99 years (additional 79 years) same category.
Change of lease period to 99 years. Premium for leasehold extension can be found in earlier posting below:
Premium payable for lease extension
Commercial land title, extension of lease to 99 years requires further 79 years.
The formula for commercial property is
3/4 % x Market Value x years to extend
(1/4 % Market Value x Years extended for Residential Property)
If the market value of this commercial land is RM10 million, the additional premium for the lease extension to 99 years shall be
3/4 x 1/100 x RM10,000,000 x (99-20) = 0.0075 x 10,000,000 x 79 =
RM5.925 million.
b) Procedure involved.
i) Change of category of use.
The two main departments are
- Office of lands and mines (local State)
- JPPH (branch office) Jabatan Penilaian & Perkhidmatan Harta
The land office will need to get the "Market Value" of the land from JPPH. The JPPH side needs to follow the below steps:
There are prescribed fee to be paid.
ii) Extension of lease.
Ref:
http://www.mylawyer.com.my/leasehold-extension/
Meera Ammani, 2013 Nov, 1 & 8. Extension of Leasehold Properties Part I & II. The SUN, available at,
http://thesun-epaper.com/Property/November%202013/files/assets/common/downloads/publication.pdf