Leases & Tenancies 2019 : Impact of Recent Developments

25 Feb, 2019, Kuala Lumpur

FOCUSING ON NEW ISSUES :
  • Screening tenants – best practice
  • Certificate of occupancy – is it necessary?
  • Security deposit law (should we follow US?)
  • Covenant of quite enjoyment – constructive eviction
  • Security of tenure – tenant’s right to renew tenancy
  • Evicting defaulting tenants – eviction order really necessary?
  • Airbnb short rentals of strata properties – Licence or lease? Legal or illegal?
  • Private lease schemes (PLS) – illegal or lacuna in the law?
  • Development of wakaf land / MR land – what does a “purchaser” get?
  • RTO and lease-purchase contracts
  • New Housing Policy / a new Tenancy Act?
OBJECTIVES

In November 2018, National Housing Department director-general N. Jayaselan told the media that the revamped National Housing Policy has been approved by the Cabinet, with its main focus the separation of public and private housing, with an emphasis on renting. “We have put forward a Public Housing Management Act,” he said.

 

The new policy will also focus on the drafting of Tenancy Act. Jayaselan explained that the government wanted to promote “social renting” where the tenant first rent public housing before moving into what he calls “social ownership” of public housing. He added “This is where private housing by private developers can come in and the next step-up for the tenant is to move up from “private renting” to “private ownership”.

 

The Private Lease Scheme (PLS) was introduced by Iskandar Investment Bhd (IIB) as a way to retain its land ownership in the 902ha Medini special zone of Iskandar Puteri, Johor. According to IIB senior vice-president Fauzidah Abdul Rahman, “selling leases instead of land enables IIB to remain the landowner and retain control over the special zone”.

 

Under the scheme, IIB as the landowner sells the lease to master lease concessionaires, who will then subdivide the master title and sell down to property developers. These property developers will then develop the land and sell to the end purchasers.

 

According to the National House Buyers Association (HBA), there is no provision in the National Land Code and the Strata Title Act to allow private lease schemes as practised in Medini.

 

The rent to own (RTO) scheme was first introduced by PR1MA in 2014, where tenants were given the option to buy the property after five or ten years at a predetermined price. Since then private developers have launched their variants of the deferred home ownership scheme. Selangor Dredging Bhd launched its “Reside and Purchase” scheme in 2016 while IOI Properties Group Bhd later offered its “Stay Now and Buy Later” package. Financial institutions have also hopped on the RTO bandwagon, with Maybank Islamic Bhd being the first to do so when it launched HouzKEY.

 

In early 2014, Perbadanan Wakaf Selangor (PWS) signed a joint-venture with a private company to develop a piece of wakaf land in Selangor. The parties will apply the concept of “Ijarah” or lease in the implementation of development projects for the land. Through the concept of Ijarah, the land to be developed continues to remain the property of MAIS and only its benefit is transferred to the “purchasers”. Meanwhile, Selangor Government-Linked-Companies (GLCs) have been asked to assist PWS in developing abandoned wakaf lands in the state.

In January 2015, UDA Holdings Bhd launched its subsidiary UDA Waqf Sdn Bhd to develop wakaf land in Malaysia as part of the company’s effort to ensure growth and diversification of wakaf assets. There are at present over 10,120ha of wakaf land in Malaysia that has not been developed, with great potential to be converted into commercial as well as residential projects.

 

In February 2018, UDA Holdings Bhd announced that it has plans to develop about 1.62 million hectares of Malay reserve land in the country, most of which are idle agricultural lands. .

 

According to a media report in March 2018, there are over 31,900 listings in Malaysia on Airbnb, with the annual median host income averaging RM4,725. Hosts in Kuala Lumpur shared their homes with more than 507,000 guests in 2017, which is a 135% increase from the previous year, according to Airbnb.

 

This one day newly-designed program (the first for 2019) will start in Session One with an introduction (perhaps for some, a refresher) on the Malaysian Torrens system, the concept of security of tenure, the different categories of land titles, the four main recognized “dealings” under the National Land Code 1965 (the Code), the tenancy or leasing of Malay reserve land and the drafting of a sound lease agreement that protects both the landlord and the tenant.

 

In Session Two, the focus will be on dealing with a prospective tenant (including tenant screening and showing the rental property), the security of deposit, the rights and obligations of both the landlord and the tenant, followed by a detailed discussion of issues such as quiet enjoyment, duty to pay rent, effect of default in rental payment, distress actions, eviction proceedings and finally the examination of specimen agreements.

 

In Session Three, discussion will focus on the RTO schemes introduced by both PR1MA and the private developers and financial institutions, the lease purchase contracts (including the practice in UK and Australia), the private lease schemes (PLS) as introduced in the Medini area in Johore, reservations on the scheme as expressed by the HBA, expectation of a new law, the development of wakaf land and finally the development of Malay reserve land.

 

Finally, Session Four will wrap up with a discussion on the rights of parcel owners in strata developments to rent out their parcels to conventional long term tenants as well as to participate in the Airbnb short term rentals, their right to pay rent of their parcels to the authorities directly, effect of their default, the rights of co-tenants in cases of shared accommodation, the new Housing Policy and the future Tenancy Act, and finally a closer look at the tenancy legislation in Ontario (Canada) and Victoria (Australia).

WHO SHOULD ATTEND
  • Property Owners & Developers
  • Property Consultants
  • Property Managers
  • Bankers
  • Insurance Companies
  • Financiers
  • Valuers
  • Land Administration Managers
  • Investment Advisers
  • Development & Planning Managers
  • Town Planners
  • Project Co-ordinators
  • Contractors
  • Contract Managers & Executives
  • Contract Administrators
  • Architects
  • Engineers
  • Quantity Surveyors
  • Construction Managers
  • Legal Advisors
  • Lawyers
  • Project Managers
  • Government Ministries & Departments
  • Local Authorities
METHODOLOGY
Interactive Lectures, Discussions and Practical Case Studies on all relevant areas to ensure participants grasp clearly issues presented.
COURSE OUTLINE
9:00 SESSION ONE
  • The Torrens System – forms and registration, indefeasibility, security of tenure, effect of fraud etc, assurance fund
  • Land titles – restrictions in interest, express conditions, Land Office & Registry titles, qualified & final titles; position of TOL holders and squatters
  • Land dealings under NLC – effect of common law and equity; Parts 14 to 17 NLC
  • Leases and tenancies – principal elements, duration, forms, registration; equitable leases; tenancies coupled with equity
  • Lease and tenancy of Malay reserve land – TOL
  • Drawing up the Lease Agreement – Landlord’s standard terms? Negotiated? Collateral contracts?
  • Hong Kong case – tenant obtains adverse possession from landlord
11.00 SESSION TWO
  • Dealing with a prospective lessee / tenant – tenant screening (physical / online); consent for credit check, etc; showing a rental property
  • Certificate of occupancy – is it necessary?
  • Security deposit – check what has been agreed / requested by tenant; security deposit law (US)
  • Landlord’s rights and obligations – right to receive agreed rent on time; right to inspect property; right of entry vs tenant’s right of privacy; obligation to give tenant quiet enjoyment; obligation to repair; what is “constructive eviction” of tenants; landlord’s right to double rental or damages if tenancy has been properly terminated
  • Tenant’s rights and obligations – right to
    exclusive possession and quiet enjoyment; security tenure (right to renew tenancy / lease); tenant’s
    obligation to pay rent and keep in repair; effect of tenant’s default; distress actions and eviction procedures by landlord; is our law pro-tenant or pro-landlord?
  • Guide to renting out business premises – analysis of specimen agreements
  • Suing landlord in negligence; criminal liability for not carrying out repairs
1:00 Lunch

2:00

SESSION THREE

  • RTO (Rent to Own schemes) – IOI and PR1MA
  • Lease-purchase contracts – main elements (content, structure, benefits, difficulties); practice in UK and Australia.
  • Private lease schemes (PLS) – the Medini model (JB); recent developments affecting the project; expectations of a new law.
  • Development of wakaf land – what does a “purchaser” get from the developer? Projects undertaken by Perbadanan Wakaf Selangor, and UDA Holdings Berhad.
  • Development of MR land (JV between Malay owner and private developer) – what does a “purchaser” get from the developer? Must the law be amended?
3:45 SESSION FOUR
  • Strata properties – ensure your tenant’s compliance of strata by-laws
  • Strata properties – avoiding conflicts with your own tenants / conflict with other parcel owners
  • Short rental of Strata homes under Airbnb – by parcel owners or tenants? permitted by strata by- laws? permitted by local authorities? check your relationship with Airbnb; latest cases from Australia and US.
  • Payment of rent by parcel owners – forfeiture in the event of default; effect of recent amendments
  • Shared accommodation – duties of co-tenants
  • New National Housing Policy / a new Tenancy Act?
  • Ontario Residential Tenancy Act / Commercial Tenancy Act
  • Victoria Retail Lease Act
5:00 End of course

 

LEARN FROM THE BEST

PROF. DATO’ SALLEH BUANG formerly served as a Federal Counsel in the Attorney-General’s Chambers, Kuala Lumpur, before he left for private practice, then the corporate sector and finally the academia. He was The Deputy- Dean, Kulliyyah of Laws, and International Islamic University until 1990, when he went into full-time consulting.

 

Over the last 3 decades, he had conducted numerous workshops, seminars, corporate briefings and courses covering land law, housing development, construction law, joint ventures and planning law. Author of more than 25 books and monographs on a wide range of legal topics, he now writes for his weekly column in Utusan Malaysia and New Straits Times.

 

Until 2013, he was a Visiting Professor at the Faculty of Geoinformation and Real Estate, UTM, Johor. He is currently a Member of the Board of Trustees of the Kuala Lumpur Foundation to Criminalise War (KLFCW).

 

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