Ask any Malaysian agent whether you should buy freehold or leasehold and they'll almost always say freehold. The conventional wisdom is simple: freehold holds its value, leasehold decays. But what does the actual transaction data say — and does the freehold price premium translate into better investment returns? We crunched 10,829 apartment and condo transactions to find out.
Methodology
- Sales data: JPPH government property transaction records · Kuala Lumpur only · 2023–2024 · Condominium / Apartment / Flat types only
- Rental data: Mudah.my listings scraped Dec 2024 · KL only · IQR outlier removal applied
- Net yield formula: (effective rent − mortgage − maintenance − stamp duty − letting fee) ÷ sale price × 100
- Financing: 10% down · 90% loan at 3% p.a. over 25 years · 8% vacancy · 0.75% maintenance · stamp duty amortised over 10 yrs
- Note: The overall premium reflects both tenure and location differences; per-mukim breakdowns provide like-for-like comparisons
The Price Gap Is Real — But Location Explains Most of It
Across all KL apartment and condo transactions in 2023–2024, freehold properties sold at a median of RM 605,000 versus RM 330,000 for leasehold — an 83.3% gap. But this headline figure is largely a location effect, not a pure tenure premium. Freehold apartments dominate KL's premium corridors (Mont Kiara, KLCC, Bangsar), while leasehold stock is concentrated in more affordable areas (Setapak, Wangsa Maju, Petaling).
| Tenure | Median Price | IQR Range | Transactions |
|---|---|---|---|
| Freehold | RM 605,000 | RM 388k – RM 1.2M | 6,076 |
| Leasehold | RM 330,000 | RM 223k – RM 499k | 4,753 |
Like-for-Like: Freehold Premium by Neighbourhood
To isolate the true tenure premium — separate from location effects — we compared freehold and leasehold prices within the same mukim (administrative sub-district). The results are more nuanced than the headline suggests.
| Area | Leasehold Median | Freehold Median | Premium |
|---|---|---|---|
Mukim Batu (Mont Kiara / Segambut) | RM 262,500(634 txns) | RM 950,000(2,058 txns) | +261.9% |
KL Town Centre (KLCC / Chow Kit) | RM 325,000(403 txns) | RM 835,000(1,192 txns) | +156.9% |
Mukim Petaling (Desa Petaling / OUG) | RM 300,000(1,136 txns) | RM 470,000(1,064 txns) | +56.7% |
Mukim Kuala Lumpur (Bangsar / Desa Pantai) | RM 400,000(1,300 txns) | RM 500,000(936 txns) | +25.0% |
Mukim Setapak (Wangsa Maju / Gombak) | RM 300,000(984 txns) | RM 380,000(777 txns) | +26.7% |
Mukim Ampang (Ampang / Pandan) | RM 350,000(170 txns) | RM 500,000(9 txns) | +42.9% |
The pattern is clear: in affordable, mixed-tenure corridors like Mukim Kuala Lumpur (Bangsar–Desa Pantai) and Mukim Setapak (Wangsa Maju–Gombak), the genuine freehold premium is 25–27%. In higher-end areas like Mukim Petaling, it rises to ~57%. The extreme 157–262% premiums in KLCC and Mukim Batu (Mont Kiara) reflect entirely different property types, not just tenure — luxury towers versus affordable flats.
The Yield Verdict: Leasehold Wins on Cash Flow
Higher purchase price means a larger mortgage — and that eats directly into net rental yield. When we matched transaction records with rental listing data and calculated net yield (after mortgage, maintenance, vacancy, stamp duty, and letting fee), the gap is striking.
Freehold
-2.10%
median net rental yield
Negative — you top up monthly even before maintenance surprises
Leasehold
+1.07%
median net rental yield
Positive cash flow — rent covers mortgage + costs
The 3.17 percentage point gap exists because tenants pay for location, size, and condition — not for tenure type. A leasehold apartment in Wangsa Maju and a freehold apartment in the same street command virtually identical monthly rents. But the freehold buyer paid 25–27% more, resulting in a proportionally higher mortgage.
This doesn't mean freehold is a bad investment — capital appreciation is a separate return driver. But investors who need positive monthly cash flow from day one should look at leasehold properties in the affordable corridors, where the rent-to-price ratio is most favourable.
The Risk Freehold Avoids: Lease Decay
Leasehold's yield advantage comes with one significant caveat: lease decay. As the remaining tenure on a 99-year leasehold falls, property values and loan eligibility can decline sharply.
99-year leasehold — watch the remaining years
Malaysian banks typically restrict loans for properties with <70 years remaining. Resale becomes difficult when tenure falls below 60 years, and valuation discounts kick in much earlier. For a 99-year property purchased in 2010, you're already at ~85 years remaining.
999-year leasehold — practically equivalent to freehold
Many older Malaysian developments (particularly in Petaling, Setapak, and parts of Kuala Lumpur mukim) carry 999-year leases. On a 30-year investment horizon, a 999-year leasehold is functionally indistinguishable from freehold. Check the remaining tenure before discounting a leasehold property.
Which Is Right for You?
Cash-flow yield is your priority
→ Leasehold (if 999yr or long remaining tenure)
Long-term capital preservation / estate planning
→ Freehold — no tenure risk for future generations
Short to medium hold (5–10 years)
→ Either — check remaining lease years and exit financing eligibility
Buying a 99yr leasehold with <70 years remaining
→ Avoid for investment — very limited exit options
The Data's Verdict
KL's freehold premium is real — roughly 25–57% in comparable neighbourhoods — but it is not compensated by higher rents. Leasehold properties consistently deliver better net rental yields because tenants pay for location and condition, not legal tenure.
That doesn't make leasehold automatically superior. Freehold offers peace of mind on tenure risk, better long-term capital preservation, and easier resale eligibility. The right choice depends on your investment goal: if positive monthly cash flow matters, leasehold in affordable corridors wins. If you're building a generational asset and can absorb a lower yield, freehold earns its premium.
Always verify the remaining lease tenure for any leasehold property, and run your own numbers with current financing rates before committing.
Explore KL Rental Data by Neighbourhood
See net rental yields mapped across every KL neighbourhood on an interactive hex map — filter by bedrooms and property type.
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