Sunday, June 3rd, 2018
KUALA LUMPUR: Future home buyers may find themselves “renting” in perpetuity if a proposed private lease scheme makes its way into the National Land Code 1965.
National House Buyers Association (HBA) secretary-general Chang Kim Loong said the government, under the previous administration, was looking to introduce a new chapter into the Code, which would allow landowners (private corporations) to lease out their freehold land for development.
Note that the term “leasehold property” is commonly used in Malaysia and refers to a state lease. This type of leasehold land is owned by state authorities, who have a moral obligation to renew the lease upon expiry, at a nominal fee.
“In a private lease, the land for development is a freehold property and is owned by private corporation. The land owner will lease the land to a developer for a period of 99 years with the rights given to the developer to develop and construct condominiums for sale to the public. The pertinent question is, what is being sold to the public?” a lawyer with direct knowledge of the issue questioned.
Chang said the Department of Lands and Mines under the Natural Resources and Environment Ministry was keen on the proposal, which would be accompanied by a proposed amendment to the Strata Title Act 1985 to facilitate the implementation of the private lease scheme.
According to the lawyer, who declined to be named, there are already several projects developed under such a scheme in Medini, Johor, despite the scheme being only at the proposal stage. Some of these projects were already completed last year and should be handed over to buyers soon.
“These projects are already built and done, without changing the law. Now they want to bulldoze the proposal through, I think it is not right,” he told SunBiz.
Medini Iskandar Malaysia Sdn Bhd the master developer of the Medini project in Johor is owned by Jasmine Acres Sdn Bhd (60%), United World Infrastructure (20%) and Mitsui & Co Ltd (20%). Jasmine Acres is jointly owned by Khazanah Nasional Bhd and Iskandar Investment Bhd.
Checks with developers with projects in Medini revealed that all projects in Medini, a special zone within Iskandar Malaysia, are being developed under the private lease scheme.
According to Chang, the current Code does not allow for leases to be created for more than one person but the proposed private lease scheme will counter this provision.
“The scheme also will result in land ownership in perpetuity as private landowners would have a monopoly on merely 'renting' out land where condominiums or apartments are built or even landed houses and they will have the absolute right after 99 years not to renew or continue with the lease,” he said.
According to the lawyer, most property purchasers are unaware of the scheme and would assume that they are buying a leasehold property under the state government, which is not the case.
Under the scheme, the sale and purchase agreement signed by the purchaser and the developer is not for the sale of the property, but for the sale of a lease over the strata parcel. This effectively makes the purchaser a lessee of the property, and not the owner of the property, as assumed by most buyers in general.
PETALING JAYA: The National House Buyers Association (HBA) and four other associations are preparing a joint memorandum against the proposed addition of a new chapter for private lease schemes in the National Land Code 1965.
HBA secretary-general Chang Kim Loong said the decision was made after a briefing by HBA on the proposed private lease scheme and its ramifications at a meeting organised by Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) held last Friday.
“We will be jointly submitting a memorandum to the Prime Minister since the Natural Resources and Environment Minister has not been appointed. We are preparing the joint memorandum now and we hope to meet the Urban Wellbeing, Housing and Local Government Ministry soon,” he told SunBiz.
The associations in support of HBA opposing the proposal are the Royal Institution of Surveyors Malaysia, Malaysian Institute of Professional Property Managers, Malaysian Institute of Professional Estate Agents and Consultants and PEPS.
According to Chang, the proposed scheme would not only result in home buyers becoming renters in perpetuity, it would also contribute towards an increase in house prices.
“The proposed private lease scheme would potentially create a generation of homeless people. When the lease expires after the maximum 99 years with no reasonable expectation to have the lease extended with reasonable fee, house owners will live at the whim and fancy of developers/proprietors. Unlike the government, developers/proprietors are not accountable and do not have moral obligations to the people,” he said.
Chang said the public at large would also be confused and have difficulty in distinguishing between leasehold land (under state lease) and private lease.
As the value of a lease declines when it draws closer to the end of its term, such leases under the proposed scheme would not have much value as collateral, in comparison with state leasehold and freehold land. This would prevent wealth from being passed on from one generation to another.
“The value of lease will diminish with each expiring lease tenure. Example of properties being affected are those for resale, auction and refinancing cases,” he added.
While the proposal appears to be motivated by efforts to prevent foreigners from possessing too much land in Johor, the introduction of a new chapter in the Code means that the scheme would be applicable throughout Malaysia.
“This issue may open a new can of worms in that owners of 'freehold' land status will now hold on to their ownership forever for generations like the feudal system of land ownership and under the colonial days where land are granted by lease and license to cultivate. Should we not be moving away from our colonised days?” Chang questioned.
“Our current generation cannot allow the creation of a monster that will affect our children and our children's children,” he said.
SYDNEY: Trade tensions could dampen economic growth and have a negative impact on travel demand, especially for lucrative business travel that drives airlines' profits, aviation industry executives said today.
The Trump administration has renewed tariff threats against China, while key US allies Canada, Mexico and the European Union have been hit with duties on steel and aluminium.
“When you have these situations going on with world trade it's sending a message that is impacting business travellers for sure,” Gloria Guevara Manzo, chief executive of the World Travel and Tourism Council (WTTC), told Reuters at a major gathering of aviation executives here.
“They need to wait and see what happens – will their business be impacted, do they need to diversify, go some other places. War in trade is not good,” she added.
Planemakers Boeing and Airbus echoed that the uncertainty was negative for business and highlighted that free trade helped to drive economic growth, creating jobs.
“It brings down costs to consumers and creates jobs both with our partners as well as at our company,” Boeing Commercial Airplanes marketing vice-president Randy Tinseth told Reuters.
Airbus said the aviation industry existed because people were able to travel freely and markets were open.
“We are in a worldwide industry here. We see it in a negative way because it is putting borders and putting constraints for everybody, including our customers,” Airbus chief commercial officer Eric Schulz told reporters.
Asked about the impact on tariffs on its business, Boeing's Tinseth said it would not have a material impact on the company's financials. “For example, I think 90% of the aluminium we acquire comes domestically,” he said.
Airbus' Schulz said it was too early to give an answer as to the direct financial impact on the European company.
Guevara Manzo said the WTTC is concerned about tariffs because it means less money for businesses to invest in critical infrastructure, such as ports, airports and hotels.
The annual meeting of the International Air Transport Association brings together about 130 CEOs and 1,000 delegates. This year in Sydney, concerns that a three-year run of unusually high returns might end due to rising fuel, labour and infrastructure costs are in the spotlight.
PETALING JAYA: The Employees Provident Fund (EPF), which bought a retail mall in Poland recently, said it will look at all its investments from a long-term perspective.
“The decision to invest in Poland was made in accordance with our strategic asset allocation and we ensure that it is within our risk return profile,” an EPF spokesperson told SunBiz, but declined to provide more details on the purchase.
It was reported that EPF bought the mall Galeria Katowicka for “close to £300 million (RM1.58 billion)”, quoting a source from Britain. The deal is believed to have been completed in March.
Back in February, EPF, via SIM, bought two logistics assets in the Netherlands, in Rotterdam and Moerdijk.
According to EPF’s annual report, it is the pension fund’s long-term and forward looking strategy to continuously increase its exposure in the real estates and infrastructure asset class.
In 2017, the asset class recorded a growth of 9.19%, from RM29.46 billion in 2016 to RM32.17 billion in 2017. Most of the investments in the asset class were made through associate and subsidiary companies, of which dividend income from these companies made up the majority of the asset class’ gross investment income.
For 2017, real estate and infrastructure asset class registered a gross investment income of RM2.97 billion, an increase of 19.62% compared with 2016 of RM2.49 billion. This translated to a return on investment of 8.55% in 2017, higher by 33 basis points compared with 8.22% recorded in 2016.
Within the asset class, foreign investments, which were initiated in 2010, have shown encouraging performance and have played their intended role as an effective hedge against inflation.
BEIJING, June 3 ― China warned the United States today that any agreements reached on trade and business between the two countries will be void if Washington implements tariffs and other trade measures, as the two ended their latest round of talks…
WHISTLER, June 3 ― Finance leaders of the closest US allies vented anger over the Trump administration's metal import tariffs yesterday, ending a three-day meeting with a stern rebuke of Washington and setting up a heated fight at a G7 summit next…
BEIJING, June 3 ― US Commerce Secretary Wilbur Ross said today he had been having frank, useful talks in China about exports, as Washington presses home its message to Beijing about structural economic changes amid a festering trade dispute. Ross…
WHISTLER, June 3 ― Bank of Japan Governor Haruhiko Kuroda said yesterday that inflation had recently been weak despite a steady economic expansion, signaling the bank's readiness to maintain its massive stimulus programme. Kuroda also voiced…
BEIJING, June 3 ― The United States wants trade talks in Beijing this weekend to result in structural changes to China's economy, in addition to increased Chinese purchases of American goods, US Treasury Secretary Steven Mnuchin said yesterday. US…