MALAYSIA Law and Practice Contributed by: Natalie Ooi and Nicholas Ooi, Ooi & Ooi
6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time Tenancy/Lease (Recognised Under the NLC) A tenancy lasts for up to three years. It is enact - ed through a simple agreement, or even an oral agreement, and is not registerable. A lease lasts for more than three years and requires a written agreement to be concluded. A lease must be registered under the NLC. The key features are as follows: • right to exclusive possession; • can be for residential, commercial or indus - trial use; • can include renewal rights, rent reviews and maintenance obligations; and • leases give the tenant legal interest in the land (if registered). Licence to Occupy (Governed by Common Law/Contract Law) Licences to occupy have the following key fea - tures: • they do not confer legal interest in the land – they only grant permission to use the prem - ises, rather than possession; • they are revocable, and can typically be ter - minated more easily than leases; and • they are common for kiosks, short-term retail set-ups, concession stands and temporary offices. Licences to occupy are not registrable under the NLC.
Temporary Occupation Licence (TOL) (Governed by the NLC) The features are as follows: • granted by the state authority; • usually for a duration of one year, which is renewable; • for the temporary use of state land (eg, farm - ing, storage, parking, stalls): and • no proprietary interest – it is purely a licence, not a lease. Concession or Concession Agreement These are usually for public utilities, infrastruc - ture or government-linked developments, and have the following features: • they allow the use of land or assets for long- term operation (eg, toll roads, water supply systems); • they are contractual, not leasehold, and may involve land use but governed by contract and statute rather than the NLC alone; and • they involve significant obligations relating to construction, operation and eventual hando - ver (BOT model). 6.2 Types of Commercial Leases There are different types of commercial leas - es, and they can vary based on the duration, structure, purpose and terms of responsibility between the landlord and tenant. They are not rigidly defined in legislation but are commonly used in practice and guided by the NLC, con - tract law and commercial norms. Generally, a lease is the letting out of property or a part thereof for a period between three and 20 years, and must be registered upon the title of the land in question for it to be effective.
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