Freehold vs Leasehold Factory in Shah Alam and Rawang: What Changes for the Buyer

Written by Jason Low, PEA 1478 · Updated 2026-10-28

Short answer

A freehold factory sits on land held in perpetuity; a leasehold factory sits on land granted by the state for a term, usually up to 99 years. In Selangor, renewing an industrial lease costs a full premium of ¾ x 1/100 x approved land value x 99 years x land area, and many leasehold titles need state consent before a sale, so check the years left and the title before you pay a deposit.

Key Takeaways

Freehold means the title has no expiry date; leasehold means the state granted the land for a fixed term, usually up to 99 years. Under section 76 of the National Land Code, state land is alienated for a term not exceeding 99 years, and in perpetuity only for public purposes or special circumstances (Selangor State Assembly written answer, 2023).
Renewing an industrial lease in Selangor costs a full premium. The state rate for industrial land is ¾ x 1/100 x approved land value x 99 years x land area (Selangor State Assembly oral answer, 2014). The RM1,000 and RM5,000 renewal schemes are for homes only.
Many leasehold industrial titles carry a restriction in interest, so a sale needs state consent first. In Selangor this is applied for on e-Tanah, and the Land Administrator's part takes 14 working days with complete documents (PTG Selangor FAQ).
Tenure alone does not set the price. In JPPH-registered deals, Shah Alam leasehold factories had a higher median price than freehold ones, while Rawang and Kundang showed the opposite, because location, size and type are mixed into those medians.
The years left on the lease matter more than the word "leasehold". A factory with 80 years left and one with 25 years left are very different purchases.

What is the difference between freehold and leasehold for a factory?

A freehold factory sits on land held in perpetuity: the owner keeps it until they sell, and there is no date when the land goes back to the state. A leasehold factory sits on land the state granted for a term of years. When the term ends, the land reverts to the state unless the lease is renewed.

The legal basis is the same everywhere in Selangor. Section 76 of the National Land Code limits alienation to a term not exceeding 99 years, with perpetual grants allowed only where the land is for a public purpose or the State Authority sees special circumstances (Selangor State Assembly written answer No. 332, 2023). That is why many newer industrial titles in Selangor are leasehold, while older estates often include freehold lots.

Day to day, a tenant or owner-occupier will not feel the difference: the factory runs the same, quit rent is paid the same way and the council licence works the same. The difference shows up at three moments: when you buy, when you borrow, and when the lease runs short.

How do I check whether a factory is freehold or leasehold?

Do not rely on the advert. The title is the only answer, and the same park can have both. On Jason's HICOM Glenmarie park page the units listed are freehold, but tenure is set title by title.

When Jason prepares a shortlist in Shah Alam or Rawang, he asks the seller's side for a copy of the title and then gets a current official search (carian rasmi). From the title he notes:

Tenure: "Selama-lamanya" (in perpetuity) or "Pajakan" with the expiry date. Work out the years left from today, not from the date the title was issued.
Category of land use and express condition: it should say industry (Perusahaan or Industri). If it does not, see Jason's guide on industrial land title conversion.
Restriction in interest (sekatan kepentingan): whether the land cannot be transferred, leased or charged without state consent.
Encumbrances: existing charges, caveats or leases registered on the title.

An official search in Selangor is valid for one month from issue (PTG Selangor FAQ), so the lawyer will order a fresh one close to signing.

Only titles that carry a restriction in interest need consent to transfer, but many leasehold industrial titles do. PTG Selangor states that since 26 October 2024 every consent application goes through the e-Tanah system from start to finish, including payment, queries and the decision letter (PTG Selangor FAQ). The same page gives the timelines:

Consent route	Processing time stated by PTG Selangor
Land Administrator's jurisdiction	14 working days, with complete documents
Menteri Besar's jurisdiction	14 working days at the district land office, then 14 working days at PTG Selangor, before the decision
Validity of the consent letter	3 years from approval

Two practical points. Quit rent must be paid before consent is applied for, so ask the seller for the latest receipt. And a buyer that is a foreign interest (a foreign citizen, permanent resident or foreign company) needs separate state approval under section 433B. Listed companies show how normal this step is: when Chin Hin Group Property agreed to buy a leasehold industrial property in Selangor Science Park 1, it said completion was subject to state consent for the transfer and charge of the land (The Edge). Build that time into the completion date in the sale agreement.

What happens when an industrial lease runs out in Selangor?

The owner can apply to extend it. The state said the extension period for an expired lease is 99 years, or depends on the land use applied for, and set the premium for industrial land at ¾ x 1/100 x approved land value x 99 years x land area under the Selangor Land Rules 2003 (Selangor State Assembly oral answer No. 173, 2014). Because the formula uses the land value and the land area, a large factory lot in a high-value park carries a large premium.

The low-cost schemes people hear about do not cover factories. The state's nominal RM1,000 premium scheme is for individually titled residential houses only (Selangor State Assembly written answer, 2023), and The Star reported that the RM5,000 residential scheme is not offered for business use (The Star, September 2025).

Can you convert leasehold to freehold? It is not a routine application. The same 2023 answer recorded no approvals for converting leasehold titles to freehold in the Taman Medan seat, and perpetual grants under section 76 are limited to public purposes or special circumstances. Price a leasehold factory as leasehold.

Is a leasehold factory cheaper than a freehold one?

Not automatically. FactoryHub's aggregation of JPPH-registered transactions (latest month August 2026) shows:

Shah Alam: freehold factories median price RM3.36 million (136 deals) vs leasehold RM5.92 million (22 deals); the gap mixes location, size and type, not tenure alone (Shah Alam transaction prices and rents).
Rawang and Kundang: freehold factories median price RM4.1 million (165 deals) vs leasehold RM3.51 million (24 deals); again the gap mixes location, size and type (Rawang and Kundang transaction prices).

So compare like with like: same park, same factory type, similar land size, and then ask what discount the remaining lease justifies. A leasehold unit with most of its term left can be a fair buy; a short lease should be priced for the renewal premium the next owner faces.

What should a leasehold factory buyer ask before paying the deposit?

How many years are left on the lease today, and what will be left when your loan ends?
Does the title carry a restriction in interest, and who applies for consent and pays the fee?
Is quit rent paid up to date (needed before consent)?
Will your bank finance the remaining term? Ask the bank directly with the title copy before you commit.
Does the price reflect a future renewal premium?
What will legal fees and stamp duty come to? FactoryHub's legal fees and stamp duty calculator gives an estimate.

You can browse current units on the Shah Alam factory for sale page and the Rawang area page, and check the title on each one before a viewing turns into an offer.

If you are weighing a freehold and a leasehold factory in Shah Alam or Rawang, WhatsApp Jason Low, Probationary Estate Agent PEA 1478 with CID Realtors, on +60 12-288 1834.

Questions people ask

01What is freehold versus leasehold?+

Freehold land is held in perpetuity, so the owner keeps it until they sell. Leasehold land is granted by the state for a term of years, at most 99 years under section 76 of the National Land Code, and reverts to the state when the term ends unless it is renewed.

02What happens after 99 years of leasehold in Malaysia?+

The land reverts to the state unless the owner applies to extend the lease. In Selangor an expired lease can be extended for 99 years, and for industrial land the premium is ¾ x 1/100 x approved land value x 99 years x land area under the Selangor Land Rules 2003.

03Can we convert leasehold to freehold?+

It is not a routine application. Perpetual grants under section 76 are limited to public purposes or special circumstances, and a 2023 Selangor State Assembly answer recorded no leasehold to freehold approvals in the Taman Medan seat. Price a leasehold factory as leasehold.

04Do the RM1,000 or RM5,000 lease renewal schemes apply to factories?+

No. The state's nominal RM1,000 premium scheme covers individually titled residential houses, and the RM5,000 residential scheme is not offered for business use. A factory owner pays the full industrial premium.

05Why does buying a leasehold factory take longer?+

Many leasehold industrial titles carry a restriction in interest, so the transfer needs state consent. In Selangor it is applied for on e-Tanah, and the Land Administrator's part takes 14 working days with complete documents, longer when the Menteri Besar decides.

06Is a leasehold factory always cheaper?+

No. In JPPH-registered deals, Shah Alam leasehold factories had a higher median price than freehold ones, while Rawang and Kundang showed the opposite. Location, size and factory type are mixed into those medians, so compare units in the same park and type.