This whole business of converting leasehold land to freehold appears to have been done without considering the long-term implications.

I know the state government, faced with budgetary constraints, is hoping to raise funds from land conversion. But has it considered the impact on the future price of land in Penang, which could put it beyond the reach of the lower-income group, and the future needs of the state for public land to build vital infrastructure and amenities? There is a good reason for some land to be classified as leasehold in the first place - though leasehold property owners may disagree.

Now, the Queensbay project is embroiled in controversy. Senior conveyancing lawyer Agatha Foo is quoted in theSun as pointing out a provision in the National Land Code which expressly prohibits the state from disposing “any part of the foreshore or sea-bed for a period exceeding 99 years”. Land commentator Prof Salleh Buang agrees: “The law says it very clearly. It is on record that you cannot make such land freehold.”

There’s another potential hot potato looming north of the island, where homes in a new property development scheme are apparently being sold to buyers on a freehold basis - but there’s a snag, the land in this development scheme is apparently still leasehold, though an application for conversion may have been made. Look out for this in coming weeks.

This is a report on Queensbay on page 2 of theSun today:

Crucial clause overlooked

Guan Eng missed proviso when defending land conversion

Himanshu Bhatt

GEORGE TOWN (Oct 8, 2008) : Chief Minister Lim Guan Eng had defended the controversial conversion of land housing the Queensbay project, reportedly worth RM3 billion to freehold, at the Penang state assembly in July, but had overlooked a vital clause in the National Land Code (NLC) 1965.

It is learnt that Lim (who is currently away in the United Arab Emirates on an investment mission) had in a written reply reasoned that the NLC allowed the state to convert the land from leasehold to freehold.

He made the reply to a question from Batu Uban assemblyman S Raveentharan who asked how reclaimed coastal land had been made freehold in Batu Uban and Pantai Jerjak.

In his reply, however, Lim missed a crucial proviso in the NLC.

He reasoned that the freehold status was given as an effort to revive the project after it was left unfinished.

(The project had been stalled as the original developer Eternal Resources Sdn Bhd was affected by the economic crisis of the late 1990s.)

Lim referred to section 76(aa)(iii) of the NLC which says land could be converted “where the State Authority is satisfied that there are special circumstances which render it appropriate to do so”.

It is now learnt that Lim was sent a letter by a senior conveyance lawyer in Aug, expressing concerns about his plan to convert residential leasehold land, including areas that had been reclaimed from the sea, to freehold.

In her letter, lawyer Agatha Foo pointed out a proviso in section 76 of the NLC, which Lim had overlooked in his assembly reply.

Foo noted that the proviso expressly prohibits the state from disposing of “any part of the foreshore or sea-bed for a period exceeding ninety-nine years”.

The proviso had been inserted when section 76 was amended in Parliament in 1985.

“Consequentially, the said proviso would also prohibit the state from re-alienating or converting any part of the reclaimed foreshore or sea-bed to freehold land.”

“Any subsequent attempt by the state to re-alienate or convert any part of the foreshore or sea-bed to freehold, notwithstanding that the foreshore or sea-bed have now been reclaimed, would tantamount to a circumvention of the prohibition in section 76 and hence be ultra vires the NLC.

When contacted, land commentator Prof Salleh Buang, who is currently a visiting professor at Universiti Teknologi Malaysia (UTM), said the NLC was very clear that the lease for state foreshore land cannot exceed 99 years.

“The law says it very clearly. It is on record that you cannot make such land freehold,” he said.

He stressed that the state should be careful to ensure public access remains in foreshore areas.
“If you allow seafront to be freehold, what would happen to open public access to the area?” he asked.