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An Overview of Malaysia’s Land and Real Estate Laws: Key Insights for Chinese Investors

  • Writer: wwy
    wwy
  • Mar 27
  • 4 min read

📚 Series: Legal Guide to Real Estate Investment in Malaysia (For Chinese Investors)


Chapters in this Series:

1. Introduction

Malaysia, a diverse and rapidly growing nation in Southeast Asia, spans 330,000 square kilometers and consists of 13 states and 3 federal territories. The country is divided into two distinct regions—West Malaysia (Peninsular Malaysia) and East Malaysia (Sabah and Sarawak)—each with its own unique legal landscape and governance structure.


  • West Malaysia (Peninsular Malaysia): Includes 11 states and 2 federal territories (Kuala Lumpur and Putrajaya). It shares borders with Thailand and is separated from Singapore by the Straits of Johor.


  • East Malaysia (Northern Borneo): Comprises Sabah, Sarawak, and the Federal Territory of Labuan. In 2021, a constitutional amendment reaffirmed Sabah and Sarawak's special autonomy as originally agreed upon in 1963.


Unlike many countries where land laws are centrally regulated, land related matters in Malaysia fall under the jurisdiction of individual state governments. However, they must still operate within a federal legal framework, creating a dual-level governance system (federal + state government).


This means that while each state has control over its own land policies, transactions, and ownership regulations, they must still comply with overarching federal land laws, ensuring a structured and unified system across the country.


This article provides an overview of Malaysia’s land and real estate legal system, covering key regulations, government agencies, and fundamental legal principles. It aims to help investors develop a clear legal understanding for property transactions and development.


 

2. Malaysia’s Land Management System

2.1 Legal Framework for Land Administration

Malaysia’s land administration system is structured across three main levels:


  1. Malaysian Federal Constitution;

  2. Federal Land Laws; and

  3. State Land Policies


Under the Federal Constitution, state governments have control over land administration as outlined in Schedule 9. However, in the event of a conflict between state and federal laws, federal laws take precedence in pursuant to Article 75 of the Federal Constitution.


At the federal level, laws such as the National Land Code 1965 (NLC) provide a nationwide framework for land transactions, land-use conversion, and ownership security.


Meanwhile, state governments retain some autonomy in setting land-use planning policies (residential, commercial, industrial) and foreign land ownership regulations.

As a result, different states may have varying regulations on:


  • Land transactions and sales

  • Development planning

  • Minimum property purchase prices for foreign investors


Therefore, investors and developers must familiarize themselves with and be aware of state-specific land policies to ensure full compliance when conducting real estate transactions or undertaking property development projects.


2.2 Key Government Agencies

Malaysia’s land administration and real estate sector are governed by both federal and state authorities, each with distinct roles and responsibilities:


Federal Level:

  • Department of the Director General of Lands and Mines (JKPTG): Oversees national land policies, ensures compliance with federal land laws, and manages land-related affairs at the federal level.


  • National Land Council (NLC): Functions as a coordinating body between the federal and state governments under Article 91 of the Constitution. While it provides policy guidance, it does not directly interfere in state-level land administration.


State Level:

  • State Land Offices (Pejabat Tanah dan Galian, PTG): Responsible for land registration, transactions, title management, land-use changes, and other land matters within each state.


  • Independent Operations: Since land matters fall under state jurisdiction, each State Land Office operates independently, meaning investors and developers must engage directly with the relevant state authorities for land transactions and approvals.


Local Government Level:

  • Local Authorities (Pihak Berkuasa Tempatan, PBT): Handle urban planning, building permits, zoning approvals, and infrastructure development to ensure compliance with local development regulations.


Foreign Investment Oversight:

  • Malaysian Investment Development Authority (MIDA): Oversees foreign investments in industrial and commercial real estate, ensuring compliance with national economic policies and investment regulations.


 

3. Key Land Laws in Malaysia

Malaysia’s land administration system is governed by several key laws including:


3.1 National Land Code 1965 (NLC)

The NLC provides a comprehensive framework for land ownership, transactions, and land-use regulation in Peninsular Malaysia. Key areas covered under the NLC include:


  • Land Ownership: Defines freehold and leasehold properties, along with registration procedures.


  • Land Transactions: Regulates buying, selling, transferring, and mortgaging processes.


  • Land-Use Changes: Outlines the process for converting agricultural land to residential or commercial use.


  • Land Acquisition: Allows the government to acquire land for public purposes with fair compensation.


3.2 Sarawak Land Code

The Sarawak Land Code is specific to Sarawak, with provisions that differ from the National Land Code 1965.


Key features:

  • Native Customary Rights (NCR): Protects indigenous communities, restricting land sales and transfers.


  • Foreign Land Ownership: Requires additional approvals for non-Malaysians


3.3 Sabah Land Ordinance

Similar to Sarawak, Sabah’s land laws are governed by the Sabah Land Ordinance, including:


  • Native Titles: Certain lands are reserved for Sabah natives, restricting foreign ownership.


  • Land-Use Regulations: Requires special approval for converting land for industrial, commercial, or residential use.


3.4 National Land Code (Penang & Malacca Titles) Act 1963

This Act transitioned Penang and Malacca from the Deed System to the Torrens System, ensuring indefeasibility of title (legal certainty of ownership).


 

4. Other Real Estate-Related Laws


4.1 Urban Planning & Development Laws

  • Town and Country Planning Act 1976: Ensures that all land development projects align with national and local urban planning policies.


  • Local Government Act 1976: Governs building approvals, drainage systems, and waste management.


4.2 Building & Safety Regulations

  • Street, Drainage and Building Act 1974: Ensures compliance with infrastructure and safety standards.


  • Fire Services Act 1984: Requires fire safety certification for new buildings.


  • Occupational Safety and Health in Construction Industry Act 2014: Ensures construction site safety standards.


4.3 Strata Property & Property Management Laws

  • Strata Titles Act 1976: Governs ownership of apartments and condominiums.


  • Strata Management Act 2013: Regulates property maintenance, management fees, and owners’ responsibilities.


 

5. Conclusion


Malaysian real estate market is governed by various laws, including land management, urban planning, building standards, property management, real estate transactions, and foreign investment regulations. These laws help maintain transparency, sustainability, and legal protection for both investors and consumers.


For investors and developers, understanding these laws is crucial before entering the market. Ensuring that all transactions, developments, and leases comply with legal requirements can prevent future issues. It is strongly advised to consult professionals such as lawyers, surveyors, and valuers before buying or developing property to ensure compliance and minimize legal risks.

 
 

Copyright © Woon Wee Yuen & Partners. All rights reserved.

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