RESHAPING OWNERSHIP: THE PATH TO FREEHOLD STATUS

In the realm of land tenure, the distinction between lands with freehold tenure and leasehold tenure has profound implications for property ownership and the rights associated with it. While freehold land grants perpetual ownership, leasehold land only offers possession for a fixed term of up to a maximum of 99 years. For leasehold lands, the consequence is that the land will revert to the relevant State Authorities at the end of the leasehold tenure unless an application is made to extend the leasehold tenure.

In Malaysia, the conversion of land from its original freehold status to leasehold by the State Authority through subdivision and re-alienation processes has recently ignited significant interest and debate. The central question emerges: Does the State Authority, empowered by the National Land Code, possess the authority to alter the land tenure?

This was evidenced in the cases faced by property owners in Taman Bukit Maluri where their lands were converted into leasehold status at the time of subdivision for issuance of individual titles. Dissatisfied property owners in Taman Bukit Maluri had instituted legal action against the Federal Territories Director of Land and Mines Office to seek for the status of their lands to be converted back to its original freehold status.

The High Court in the landmark Taman Bukit Maluri case have ruled that the discretion of the State Authority is not unfettered and that the State Authority’s action of issuing leasehold titles instead of freehold titles to landowners is ultra vires to the National Land Code. The High Court had further taken the position that the State Authority’s action is in contravention of Article 13 of the Federal Constitution which stipulates that no individual shall be deprived of property except in accordance with the law. The judgment was grounded on the following reasons:

(a) The State Authority failed to take into account that the lands were surrendered, sub-divided and re-alienated into new lots based on a continuation of previous titles;

(b) The discretion of State Authority under the National Land Code to impose any conditions or other requirements as the State Authority thinks fit is not unfettered. Every legal power must have legal limits, otherwise there is dictatorship. In particular, it is a stringent requirement that discretion should be exercised for a proper purpose, and that it should not be exercised unreasonably. In other words, every discretion cannot be free from legal restraint; where it is wrongly exercised, it becomes the duty of the courts to intervene;

(c) When a power vested in it is exceeded, any act done in excess of the power is invalid as being ultra vires; and

(d) The act of the State Authority in reducing the status of the lands from freehold to leasehold is an interference with the right to property, as it had diminished the bundle of rights traditionally associated with freehold ownership.

Following the orders granted by the High Court in respect of the lands in Taman Bukit Maluri, the Federal Territories Director of Land and Mines Office has taken action to restore the status of the lands affected in Taman Bukit Maluri.

Similar circumstances have arisen for property owners in Sri Petaling in respect of seven (7) affected plots of land. Following from the judgement obtained from the landmark case for Taman Bukit Maluri, property owners of the affected lands in Sri Petaling can now initiate the process of reinstating the status of the lands to their original status of freehold.

The Federal Territories Director of Land and Mines Office has begun accepting applications for the conversion of the land status for the affected lands. For such conversion applications, property owners are required to pay a premium calculated using the formula set out below:



It appears that property owners may have the alternative option to convert their property to freehold status without payment of any premium by way of an application for a court order.

Many property owners with leasehold titles which are expiring would face the issue of having to extend the leasehold tenure and pay a rather exorbitant premium for the extension. The cases surrounding the Taman Bukit Maluri and Sri Petaling are a unique class of its own as these are not cases relating to the extension of leasehold but rather a conversion (or more accurately, reinstatement) of a leasehold land to a freehold land based on its specific circumstances. Property owners with leasehold titles which do not fall within such specific circumstances would unfortunately not be entitled to any such conversion and may continue to face challenges such as difficulty in obtaining financing and devaluation in the market value of the properties as the leasehold tenure decreases.

重塑拥有权：通往持有永久地契的道路

在土地保有权方面，永久地契与租赁地契之间的区别对于房产拥有权以及其他相关的权力产生了深远的影响。永久地契授予永久所有权，而租赁地契仅提供最长不超过99年的固定期限内的占有权。对于租赁土地而言，其后果是在租赁期满时，土地将归还给州政局，除非业主事先获得申请延期的批准。

在马来西亚，州政局通过细分和重新分配过程将土地从其原始永久产权地位转为租赁地的举措最近引发了重大关注和争论。核心问题是：根据1965年马来西亚的国家土地法典(National Land Code 1965)赋予的权力，州政局是否拥有改变土地所有权的权力吗？

这一情况在吉隆坡甲洞武吉马鲁里花园 (Taman Bukit Maluri) 的房地产业主面临的案例中得到了证实, 他们的土地在细分至个别地契时被转换为租赁地。在该地不满的房地产业主已对联邦直辖区土地及矿物局总监提起了诉讼，寻求将地位转回原始永久产权地位的状态。

马来西亚高等法院于标志性的武吉马鲁里花园案件中，裁定州政局的自由裁量权并非无限制，州政局将土地所有者发放租赁产权证书而非永久产权证书的做法违反了马来西亚国家土地法典。高等法院进一步认为，州政局的做法违反了马来西亚联邦宪法第13条的规定，该条规定除非依法进行，否则不得剥夺任何个人的财产权。高等法院的判决是基于以下理由：

（a） 州政局未考虑到这些土地是根据先前的地契继续划归、细分和重新转让为新地段；

（b） 根据马来西亚国家土地法典，州政局行使权力的自由裁量权并非无限制的。每个法律权力都必须有法律限制，否则就会变成专制。特别是行使自由裁量权必须出于合法目的，并且不能不合理地行使。换言之，每项自由裁量权都不能摆脱法律限制；如果错误执行，法庭有干预的职责；

（c） 当赋予州政局的权力被超越时，超出权力范围的的任何行为都是无效的，因为它是违反法律（ultra vires）的; 以及

（d） 州政局将这些土地的地位从永久地契降低为租赁地契的行为干涉了财产权利，因为它减少了与永久地契所有权传统相关的权利束。

根据高等法院针对武吉马鲁里花园土地颁布的命令，联邦直辖区土地及矿物局已采取行动, 恢复了甲洞武吉马鲁里花园受影响的地位。

在斯里八打灵 (Sri Petaling)，涉及七块受影响土地的房地产业主也出现了类似情况。继武吉马鲁里案列获得的判决后，受影响土地的斯里八打灵房地产业主现在可以开始启动将土地地位恢复为原始永久产权地位的流程。

联邦直辖区土地与矿产局已开始接受有关受影响土地地位转换的申请。对于这类地位转换申请，房地产业主需要根据以下的公式计算的方式支付一定的溢价：



另外，房地产业主可能有另一种选择，那就是可以通过申请法庭命令将其土地转为永久产权地位，并无需支付任何溢价。

许多租赁地契的房地产业主，尤其是租赁期限即将到期的情况下，可能面临必须延长租赁期限并支付相当高昂的溢价费用的问题。武吉马鲁里花园和斯里八打灵的案例属于独特的类型，因为这些案例不涉及延长租赁地契的问题，而是基于其特定情况将租赁转换为永久产权地（或更准确地说是恢复）。未符合这种特定情况的租赁地契房地产业主 ，很遗憾可能无法进行此类转换，他们可能会继续面临一些挑战，比如融资难度增加以及随着租赁期限的减少而导致房产市值的贬值。

This article is authored by our Partner, Ms Hoong Wei En and Associate, Ms Ng Shu Pyng. The information in this article is intended only to provide general information and does not constitute any legal opinion or professional advice.

Hoong Wei En
Partner
T: +603 2050 1838
weien.hoong@taypartners.com.my


Ng Shu Pyng
Associate
shupyng.ng@taypartners.com.my