Freehold factory land is held in perpetuity. Leasehold factory land is held for a fixed term of at most 99 years under section 76 of Malaysia's National Land Code, and reverts, with its buildings, to the State when the term ends unless it is extended. What changes for a buyer, a bank and a tenant is on the title: the years left, and any restriction in interest requiring State consent.
What do freehold and leasehold mean for factory land in Malaysia?
Freehold is held in perpetuity. Leasehold is held for a fixed term of at most 99 years, under the National Land Code (Act 828, Peninsular Malaysia).
- A term of years is the default: section 76 allows perpetuity only where the Federal Government requires it, for a public purpose or in special circumstances.
- Buildings revert without compensation, unless the title says otherwise (section 47).
How do you tell freehold from leasehold on a factory title?
By its name: a grant (Geran) is freehold, a lease (Pajakan) is leasehold.
- A qualified title (HSD or HSM) does not show tenure in its name: read the term on it.
- The title also lists its express conditions and restrictions in interest; for what the condition allows, see light, medium and heavy industry on a land title.
Confirm it officiallyAn official search (section 385) lists the registered owner, the express conditions and the restrictions in interest. In Selangor you can apply online through e-Tanah.
Photo for illustration purposes onlyWhat does a restriction in interest mean for a buyer?
State consent turns on the title, not the tenure: freehold and leasehold titles can both carry a restriction.
- Search the titleLook for a restriction in interest (section 120): the land “cannot be transferred, leased or charged without the consent of the State Authority”.
- The vendor appliesIf there is one, the vendor must obtain consent to transfer to the buyer.
- Allow the timeOne to six months, depending on the land office (Halim Hong & Quek, 2023). Selangor's 2008 circular set a two-week target.
- Then registerWithout consent, a transfer, charge or lease is “void and unable to be registered” (sections 214, 241 and 225).
Example: NCT Smart Industrial Park's Phase 1 titles“Tanah ini tidak boleh dipindahmilik, dipajak atau digadai melainkan setelah mendapat kebenaran Pihak Berkuasa Negeri”
This land may not be transferred, leased or charged without State Authority consent.
Foreign buyers and tenantsIncluding a Malaysian company 50% or more foreign-held: a purchase or a registered lease needs the State's prior approval whatever the title says, unless state rules exempt it (sections 433A and 433B). The old exemption for industrial land was deleted.
What happens as a lease runs down, and can it be renewed?
Renewal is not automatic: the State decides and charges a premium. Ask the land office well before expiry.
Possible with State approval and a premium. NCT's Phase 3 land has a 31-year extension, to January 2123.
The State's decision, not an owner's right (section 76).
"Legally speaking, there is no specific provision in the National Land Code (NLC) that deals with the extension of leases per se, some state governments have relied on Section 76 (a), 204B and 197 of the National Land Code for this purpose."
Read the article (copy hosted by Low & Partners)
In 2024 Selangor's Menteri Besar said the land office would draw up a new premium formula for commercial lease extensions (The Star). We found no outcome for industrial land, so ask the land office.
Will a bank finance a leasehold factory?
Two things decide it: State consent to the charge where the title restricts charging (section 241), and the years left against the bank's policy.
"... banks are reluctant to finance properties that have a short lease of, say, 40 years or less ... the margin of financing as well as the tenure of the loan may be significantly reduced."
Read it on malaysianbar.org.my (republished from The Star)
RHB notes that some banks may not finance leasehold below a certain balance tenure. We found no published industry-wide minimum, so ask each bank.
Does freehold or leasehold matter to a factory tenant?
On a short tenancy it changes little. It matters when the lease is long or the title is old.
No registration needed, but it binds a later buyer or chargee only if endorsed on the title (sections 213 and 316).
Registered on Form 15A: up to 99 years over the whole land, 30 years over part, such as part of a factory.
Must consent to any lease or tenancy of charged land (section 226).
Should fall well after your lease and any option to renew it.
Freehold or leasehold: what changes for each party?
Leasehold adds one thing for each party: an expiry date, the years left, or a title that must outlast the lease.
Freehold
- Buyer
- No expiry. Consent only if the title is restricted.
- Bank
- Consent to the charge only if the title restricts charging.
- Tenant
- Registration and consent as the title and any charge require.
- Owner selling later
- No expiry for the next buyer's bank to weigh.
Leasehold
- Buyer
- Land and buildings revert at expiry unless the lease is extended.
- Bank
- Also weighs the years left: a short lease can mean a lower margin and a shorter loan.
- Tenant
- The same, and the title must run well beyond the lease.
- Owner selling later
- Buyers and banks weigh the years left; an extension needs State approval and a premium.
Is freehold or leasehold factory land the better buy?
Neither always. For leasehold, the test is the years left when you expect to sell: that is what the next buyer's bank will weigh.
- NCT Smart Industrial Park Phase 1: about 95 years left in 2026
- Bought with 60 years left, financed over 20 years (our arithmetic, an illustration)
- 40 years left when the loan ends: where, on Susan Joseph's rule of thumb, banks grow reluctant
- Bank Islam's Biz Smart Property Financing for factories and warehouses runs to 20 years at most.
- We found no sourced figure for the freehold premium: a registered valuer prices the specific title.
Photo for illustration purposes onlyWhich Selangor industrial parks are freehold or leasehold?
It varies by park, so check each unit's title.
Phase 1 leases end in December 2121; consent needed to transfer, lease or charge. (Bursa filing)
Described as “leasehold industrial land” by EcoWorld in 2025. (EcoWorld)
22 acres of freehold land, its developer says. (Welloyd Properties)
Public sources disagree: search the unit's title.
Weighing a unit in one of these parks? Send Chris the lot and the tenure you need.
WhatsApp ChrisWhat should you check, and who should you ask?
Confirm tenure from documents, not a listing or a brochure.
- The title · land officeAn official search: tenure, expiry, conditions, restrictions and charges. See what each document settles.
- Consent · lawyerIf the title is restricted or the buyer foreign, ask how long consent is taking and allow for it in the sale agreement.
- Renewal · land officeIf the lease is short, ask about an extension and its premium.
- Financing · bankAsk its minimum balance tenure for this title, and the loan term.
- Value · registered valuerWhat the years left do to the price.
Johor, Penang and Negeri Sembilan: the same Code, but ask that state's land office. Put the tenure you need in a requirement written to be matched.
Send Chris the size, power, tenure and budget you need, or browse the factories and warehouses on offer now and ask for the tenure of any you shortlist. Agents can post a buyer's requirement.
WhatsApp ChrisSources (13)
- National Land Code (Revised 2020), Act 828, revised by the Commissioner of Law Revision, Malaysia (long title and sections 5, 46, 47, 76, 77, 86, 87, 120, 197, 204B, 213, 214, 221, 223, 225, 226, 228, 228A, 241, 316, 385, 433A and 433B): faolex.fao.org; reference copy of the National Land Code (Act 56 of 1965) published by JKPTG, including the former industrial-land proviso to section 433B: jkptg.gov.my
- Susan Joseph, "Importance of a property title search", The Star, 3 June 2019, republished by the Malaysian Bar (title searches, restrictions in interest, banks and short leases): malaysianbar.org.my
- Halim Hong & Quek, Teoh Jackline, "Property Transactions: When State Authority Consent is Required", 28 February 2023: hhq.com.my
- Kuala Lumpur Bar, Circular No 169/2023 on the e-Tanah portal of the Selangor State Land and Mines Office, 7 November 2023: klbar.org.my
- Pejabat Tanah dan Galian Selangor, Pekeliling Pengarah Tanah dan Galian Selangor Bilangan 4 Tahun 2008 (consent to transfer), 12 December 2008: ptg.selangor.gov.my
- Agility Valuers & Property Consultants, "Valuation and title: how to read Malaysian land and strata titles", 2025: agilitymy.com
- NCT Alliance Berhad, Bursa Malaysia announcement, 21 August 2025 (NCT Smart Industrial Park tenure, lease extension and restriction in interest): insage.com.my
- EcoWorld Development Group, "EcoWorld - data centre & recurring income strategy", 25 February 2025 (Eco Business Park V land tenure): ecoworld.my
- Welloyd Properties, Welloyd Industrial Park page: welloydproperties.com
- Meera Ammani, "Extension of leasehold properties", The Sun, 8 November 2013, copy hosted by Low & Partners: lowpartners.com
- The Star, "MB: Formula in the works to make leasehold land extension more affordable", 5 July 2024: thestar.com.my; and Jade Chan, "Selangor Land Office to produce new formula for leasehold properties extension, says MB", 3 August 2024: thestar.com.my
- RHB, commercial property financing page: rhbgroup.com
- Bank Islam, Biz Smart Property Financing Program: bankislam.com
Common questions
What is the difference between freehold and leasehold industrial land in Malaysia?
Freehold industrial land is held in perpetuity and its title has no end date. Leasehold industrial land is alienated by the State for a fixed term, at most 99 years under section 76 of the National Land Code, and reverts to the State Authority when the term expires unless it is extended. A freehold title is a Geran or Geran Mukim; a leasehold title is a Pajakan Negeri or Pajakan Mukim.
Do I need State consent to buy a leasehold factory in Selangor?
For a Malaysian buyer, only if the title carries a restriction in interest that requires it; NCT Smart Industrial Park's Phase 1 titles do, according to NCT's 2025 Bursa filing. A foreign company or non-citizen needs State Authority approval under section 433B of the National Land Code whatever the title says. Halim Hong & Quek put consent at one to six months, depending on the land office.
Will a bank lend on a leasehold factory?
It depends on the years left on the lease and the bank's own policy. A lawyer on the Bar Council's Conveyancing Practice Committee wrote in 2019 that banks are reluctant to finance properties with a short lease of, say, 40 years or less, and may significantly reduce the margin and loan tenure. RHB notes that certain banks may have a policy against financing leasehold property below a certain balance tenure.
Can a leasehold factory's lease be renewed in Selangor?
It can be extended with State approval and a premium, but it is not automatic. The National Land Code has no section on extending a lease; some states rely on their powers to alienate land and approve surrender and re-alienation. NCT Smart Industrial Park's Phase 3 land carries a 31-year extension to 2123. Selangor's Menteri Besar said in 2024 that the land office would draw up a new premium formula for commercial lease extensions.
Does a factory tenant need to register the tenancy?
A tenancy of up to three years is exempt from registration under section 213 of the National Land Code and can even be oral, but it does not bind a later buyer or chargee unless it is endorsed on the title under section 316. A lease of more than three years must be registered on Form 15A, for up to 99 years over the whole land or 30 years over part.
Is leasehold factory land worth less as the lease runs down?
It can be, because a buyer's bank looks at the years left. Lawyer Susan Joseph wrote in 2019 that banks are reluctant to finance properties with a short lease of, say, 40 years or less, and may cut the margin and loan tenure. An extension needs State approval and a premium. We found no published, sourced figure for the freehold price premium on industrial land, so a registered valuer prices the specific title.