Property Q & A

Publication: NST

Date of publication: Jan 6, 2012

Section heading: Real Estate Decor

Page number: 009

  

Q/A 1

Mohd Ashraf@Shah Alam: I recently looked at some properties for sale in leasehold and freehold areas. While the properties are both attractive in their own right, what are the advantages and disadvantages of buying leasehold or freehold properties?

RED: In investment terms, the tenure basically does not make much difference to investment returns.

The rate of return mainly depends on other factors such as the usage, property trends and market sentiments.

However, if it does have any difference, it will be very much obvious to see it in landed properties rather than strata properties, and also much obvious in residential properties rather than commercial properties.

Landed leasehold properties in an area with a mix of freehold and leasehold land will have more impact in terms of disposal but not so much price-wise, maybe just a 5pc difference which is insignificant, as when you acquired it before, it is usually at a lower price anyway.

For commercial properties, it usually depends on the business.

There are many leasehold properties that fetch high rentals and selling prices, and which are located right next to freehold commercial areas.

Furthermore, if the whole area is leasehold land, for example in China and Vietnam, it makes no difference in the price for whichever property type.

In the same vein, if you purchase properties in Ampang or the Pandan area, where most of the land is leasehold, the impact on the disposal price may not be that significant.

In conclusion, I believe that buying the right properties is more important than the tenure of the land. By Gavin Tee, property investment consultant

Q/A 2

Susan T@KL: I own a property in Desa Petaling where the current tenancy has lapsed by two months. The tenant has yet to move out, citing financial and family problems, and not paying rent for that duration. How do I evict a delinquent tenant?

RED: What the landlord can do is to file an application for a Writ of Possession with the court, including the request for outstanding rental in the same order.

Once the order is obtained, the court bailiff and the landlord can go to the property to repossess it.

By C.S. Wong, legal advisor

Q/A 3

Salmah Zakaria@Ipoh: I'll be moving from Ipoh to KL to start work and will look for a place to stay. As a tenant, do I need to pay any GST or any fees on the monthly rental to the land lord?

RED: The tenant does not pay GST for rent. GST only applies to real estate agency fees being professional fees rendered, whether paid by the tenant or landlord. By Lee Ding Ding, registered real estate agent

Q/A 4

P. Philips@Canada: I am a Malaysian living and working overseas for many years now. Do I need a Malaysian bank account to buy properties in Malaysia? Can I get a bank loan from a Malaysian bank when I'm over seas?

RED: You do not need to have a Malaysian account to apply but you must be able to prove your income overseas to the bank for approval. There is no difference in the terms and conditions if you are a Malaysian.

You can apply a loan from overseas but not every bank will accept. By Michael Yeoh, financing consultant

Q/A 5

K.L.Lim@Selangor: I've been living in a house for the last 5 years which I'm thinking of selling off now, as my kids are all grown up, and the house is too big for my wife and myself now. I spent about RM100,000 on renovations then. Please advise what would be the recommended selling price in order to break even, and what factors do I consider for this purpose?

RED: The rule of thumb for ROI was previously set at 7% to be considered a good investment, but it has now been adjusted downwards to 5% as interest is lower compared to few years back. Interest and service charges are usual consideration factors. Anything 1% above the interest charges should be the break-even point. As for renovation costs, you may not be able to get back the whole costs, unless the renovation has given some kind of value to the property, eg. extension of space, bigger built-up, etc. which makes the property more usable and enhances its value. Otherwise, you may just be able to add 10-20% of the renovation costs to the selling price compared to a non-renovated one. By Gavin Tee, property investment consultant

* Ask the RED-expert: Please fax your question to: 03-2282 0840 or email to nstred@nstp.com.my