Residential Title and Commercial Title refer to different types of land titles in Malaysia, each with its own set of permitted uses and regulations. Here are the main differences between the two:
- Permitted Use:
- Residential Title: Land with a residential title is typically designated for residential purposes, such as building houses, apartments, or condominiums for occupation by individuals or families.
- Commercial Title: Land with a commercial title is intended for commercial or business activities, including the construction of shops, offices, retail outlets, hotels, or industrial buildings.
- Zoning Regulations:
- Residential Title: Properties with residential titles are subject to zoning regulations that govern residential neighborhoods. These regulations often include restrictions on the type and size of structures, as well as guidelines for maintaining a certain quality of life for residents.
- Commercial Title: Properties with commercial titles are governed by zoning regulations tailored to commercial activities. These regulations may permit higher building densities, different setback requirements, and other considerations specific to commercial developments.
- Land Use Restrictions:
- Residential Title: Land with a residential title typically cannot be used for commercial purposes without obtaining the necessary approvals or rezoning from the local authorities.
- Commercial Title: Land with a commercial title allows for a wide range of commercial activities and may have fewer restrictions on the types of businesses that can operate on the premises.
- Value and Investment Potential:
- Residential Title: Properties with residential titles are often sought after for residential purposes, such as living accommodations, and may be subject to different market dynamics and pricing compared to commercial properties.
- Commercial Title: Properties with commercial titles may have higher investment potential due to the potential for rental income from commercial tenants and the typically higher returns associated with commercial real estate investments.
- Taxation and Regulations:
- Residential Title: Taxation and regulatory requirements for properties with residential titles may differ from those with commercial titles. This includes considerations such as property tax rates, assessment rules, and compliance with residential building codes.
- Commercial Title: Properties with commercial titles may be subject to different tax rates and regulations, including taxes on rental income, business licenses, and compliance with commercial building codes and safety standards.
How Does It Affect You?
SPA – Residential properties are protected under the Housing Developers (Control and Licensing) Act 1966 (HDA). The SPA for properties under commercial title is not regulated under the HDA. Hence, in the case of any disputes, case will be brought to Strata Management Tribunal.
Loan – Instead of 90% for the residential, commercial title allows a maximum of 80% loan, therefore higher amount of downpayments is required.
Utilities – Utility such as electricity will be subject to commercial tariffs which is generally 20%-50% higher than the residential rates. The commercial properties include those under SoHo, SoVo, and SoFo will be under commercial title and therefore subjected to higher rates.
Refer to the tariff below by Tenaga Nasional Berhad. The difference rates for residential and commercial.
Residential Rates
Commercial Rates
Land Title Conversion from Commercial to Residential
The conversion can be done by the owner at the Land Office/Land and Mines Office by complying to the requirements and provide the information required as follows:
- Copy of the title
- Address of the property (if any)
- Site plan
- Location plan
- Development proposal
- Feasibility study (if any)
- Valuation report (if any)
Choosing commercial title property has become popular in today younger generation. Business activities is prohibited in residential properties and therefore commercial title properties become a good option such as setting up an office. Its appeal in terms of lifestyle and convenience become one of the of main reasons people choose commercial titled properties.