Understanding Leasehold Land Extension in Selangor

Understanding Leasehold Extension in Selangor – What Every Landowner Must Know

If you own leasehold land in Selangor and the lease is running low, it is important to understand how leasehold extension works. If you do not apply for an extension before expiry, the land may revert back to the State Government.

The Selangor State Government, through land laws such as the Selangor Land Rules 2003, provides a mechanism for landowners to extend their lease.

The lease extension premium varies depending on:

• Type of land use (Residential / Commercial / Industrial / Agricultural)

• Market value of the land (per sq ft)

• Number of years to extend (usually up to 99 years)

• Remaining lease years

• Land size (sq ft / acres)

Different land categories are subject to different premium rates, which is why the extension cost differs between residential, industrial, commercial, and agricultural lands.

Leasehold Extension Premium Calculation in Selangor

Below are commonly used formulas in Selangor for extending your lease to 99 years.

Land Category	Premium Formula
Residential	¼ × (1/100) × Market Value × (99 – remaining years) × Land Area
Commercial / Industrial	¾ × (1/100) × Market Value × (99 – remaining years) × Land Area
Agricultural	Some guidelines use approx.: 1/10 × 1/100 × Market Value × (99 – remaining years) × Area (varies by district)

Important Notes for Residential Land:

The Selangor government usually offers two options:

1. Full premium payment (with possible discounts, e.g., around 30% depending on current policy)

2. RM1,000 fixed premium if the owner commits to continue living in the property (a caveat will be entered to restrict sale/transfer)

Examples of Premium Calculations

These examples help illustrate approximate extension costs.

1. Residential Land

• Land size: 3,000 sq ft

• Remaining lease: 10 years

• Market value: RM120 per sq ft

• New lease target: 99 years → Extension years: 99 − 10 = 89 years

Calculation:

Premium = 0.25 × 0.01 × 120 × 89 × 3000  

         = RM 80,100

If there is a 30% discount:

Payable = RM 80,100 × 0.70 = RM 56,070

2. Commercial / Industrial Land

• Land size: 5,000 sq ft

• Remaining lease: 20 years

• Market value: RM150 per sq ft

• Extension years = 99 − 20 = 79 years

Calculation:

Premium = 0.75 × 0.01 × 150 × 79 × 5000  

         = RM 4,443,750

Commercial & industrial lands usually have the highest premium due to the higher ¾ rate.

3. Agricultural Land (Approximate)

• Land size: 10,000 sq ft

• Remaining lease: 30 years

• Market value: RM5 per sq ft

• Extension years = 99 − 30 = 69 years

Calculation (approx. guideline):

Premium ≈ 0.10 × 0.01 × 5 × 69 × 10,000  

         = RM 345

Actual premium for agricultural land varies and must be confirmed with the District Land Office.

What Landowners Should Do Next

✔ 1. Check your remaining lease term

If your lease is below 30–50 years, extend it early to avoid complications during sale or refinancing.

✔ 2. Determine current market value

Market value (per sq ft) is a key factor and will be assessed by the State Valuation Department.

✔ 3. Understand your category’s rate

Residential land is cheaper to extend.Commercial & industrial are much higher due to the ¾ multiplier.

✔ 4. Check eligibility for residential discounts

If you intend to stay in your home and not sell, the RM1,000 fixed premium option may apply (subject to conditions).

✔ 5. Apply early

Lease extension takes time — do not wait until the last few years of the lease.

Final Advice for Selangor Landowners

Extending your lease is an important process that protects your land’s long-term value. With the correct formula, you can estimate your extension premium before approaching the Land Office.

Residential landowners may enjoy discounts, while commercial and industrial owners should prepare for higher premiums due to higher market value and premium rate.