Ask Me Anything: Calculating renewal cost of property leasehold

Compiled by: Tharmini Kenas tharmini@thestar.com.my

Ask Me Anything is a platform for all readers to ask about all things property. If you have any inquiries, key in your questions at http://bit.ly/AskMeAnythingProperty .

This week, Low & Partners managing partner Datuk Andy Low Hann Yong deals with readers’ questions regarding the cost calculation for the renewal of property leasehold.

Cost calculation for the renewal of property leasehold

Q: I would like to know how to calculate the cost to renew my leasehold property as I plan to resell it. My house is in Shah Alam and currently has 39 years left on the lease.

A: If you intend to extend the lease of your property for the purpose of selling it subsequently, you need to pay the premium for the lease extension. Currently, the Selangor government is giving a 30% rebate on the rate of premium under this option.

The formula for the calculation of the rate of premium is as follows:

Premium=0.25 x 0.01 x Market Value of land (sq ft) x number of years to renew x land area (sq ft)

Assuming you intend to extend the lease for a 2,000-sq-ft residential property in Shah Alam with 39 years remaining on the lease, and assuming your property is valued at RM80 per sq ft by the authorities, the premium is 0.25 X 0.01 X 80 X 60 X 2,000 = RM24,000.

Leases are usually renewed for 99 years. In your case, you need only pay for an extension of 60 years (99-39 years).

After deducting the 30% rebate, the premium payable will be RM16,800.

To Read More: Whether to purchase freehold or leasehold properties?

To Read More: How to extend your lease for leasehold properties

To Read More: Tackling tenant-landlord issues and leasehold renewal cost calculation

Disclaimer: All data and information provided are for informational purposes only. All information is provided on an as-is basis. All users are strongly encouraged to seek professional advice before relying on any data and/or information provided.



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