KUALA LUMPUR, July 21 — Leasehold property owners in Petaling Jaya, one of the largest and oldest cities in Selangor, continue to grapple with an enduring legacy dilemma.

Initially set up as a satellite township, the early parts of Petaling Jaya were developed on rubber estate land, some of which was acquired by the state government and later alienated under leasehold titles.

Currently, leasehold property owners in Petaling Jaya have two options:

Option 1: A property owner can pay a nominal fee of RM5,000 and apply to extend the lease up to 99 years.

After extending the lease in this manner, the owner can only transfer the property to his or her spouse or biological or legally adopted children.

Option 2: Should the property owner intend to sell the property, he or she has to renew the lease for 99 years and pay the full premium based on this formula:

[¼ x 1/100 x Value of land x 99 years x Area of Land]

The property owner is entitled to a 30 per cent discount, but the premium must be settled within six months after Form 5A for lease renewal is issued.

However, many residents lament that the arrangement — especially the nominal fee option — risks becoming a financial trap for property owners, particularly senior residents.

Rajesh Mansukhlal, 70, who has lived in Section 6 for nearly 60 years, said the high premiums force many aged residents to either dip into their retirement savings or sell their properties below market price.

Rajesh said many property leases in Sections 1 to 18 would expire in about 42 years, with some properties having only 20 or 25 years remaining.

“Banks generally refuse loans for properties with leases between 20 to 25 years or less,” Rajesh, who is also the Kawasan Rukun Tetangga Section 6 deputy chairman, told Malay Mail.

“The majority of property owners — mostly retired senior citizens — live on limited resources and cannot afford high premiums.

“Potential buyers, especially wage earners and the younger generation, are affected by the narrow margins of loans and the repayment periods extended by banks, based on the shorter lease period.

“This has further negated the sale of properties to such buyers, leading to further decline in the prices of the properties,” he added.

Rajesh said leasehold properties are also at a disadvantage because of neighbouring freehold properties such as Gasing Indah, Petaling Gardens and some parts of Sections 14, 16, 17, 18, 20, 21, as well as SS1 to SS5.

“Residents have also been engaging with the Selangor government since 2010, seeking a better lease extension deal and the possibility of converting to freehold, but to no avail,” he said.

Another Section 11 resident in her 50s, who requested anonymity, said the exorbitant premium further constricts the pool of potential buyers for leasehold properties.

“Only cash-rich people can afford to purchase the property because of the premium requirements — but they usually resort to bargaining for a very low price.

“Furthermore, the restriction of interest clause, which was introduced in lease approvals a decade ago, adds another bureaucratic hurdle that drags the sale process longer.

“This can potentially lower the property value even further,” the resident explained.

The restriction of interest refers to a clause that prevents leasehold property owners from selling, pledging or leasing the property without the state authority’s permission.

Meanwhile, Dr Renuka Yogalingam, 64, who is the Section 11 Residents Association chairman, urged the Selangor government to emulate the Negeri Sembilan administration, which fulfilled its 2018 election pledge to allow freehold conversions.

In August 2022, Negeri Sembilan Menteri Besar Datuk Seri Aminuddin Harun announced that leasehold residential properties — except for 40 Chinese new villages and 19 kampung tersusun in the state — could be converted to freehold.

Dr Renuka, who owns a property in Section 11 with 42 years of lease tenure remaining, said freehold status for residential properties would offer long-term assurance for senior residents.

No reason for insecurity, says assemblyman

Despite the concerns raised, Bukit Gasing assemblyman Rajiv Rishyakaran defended the current lease options, saying the Selangor government has not rejected any application that met the necessary requirements.

“They can renew any time they want. They can renew it five years before it (the lease) expires or 50 years before it expires.

“There is no record of rejection of renewal or refusal to renew (the lease) as long as the applications are complete and meet all the requirements.

“So, there is no insecurity of losing your property,” he told Malay Mail when contacted.

However, Rajiv admitted that the approval process might take up to two years due to a surge in the number of applications received by the Petaling District and Land Office.

Asked whether Selangor would consider adopting the Negeri Sembilan model, Rajiv said the matter would have to be referred to the Menteri Besar’s office.