The Penang state government has defended its decision to revise quit rent rates effective Jan 1, 2026, alongside the gazettement of 25 additional townships, describing the move as necessary to correct long-standing imbalances that have persisted for decades.
Penang Chief Minister Chow Kon Yeow said the review was carried out under Section 101 of the National Land Code. He noted that quit rent rates were last revised in 1994, while the classification of urban areas had not been updated since 1966.
According to the state government, the prolonged absence of revisions led to disparities between rural and urban land categories. Areas such as Seberang Jaya, Bertam and Bandar Cassia have undergone substantial development over the years and now function similarly to urban centres. As a result, the state considers their reclassification and corresponding rate adjustments to be justified.
The statement was issued in response to concerns raised by the Penang Ratepayers Association. The state clarified that under Section 101(3)(b) of the National Land Code, it has the authority to determine quit rent rates based on land classification and usage.
Chow highlighted a case in Seberang Perai Selatan involving first grade land measuring 16,035.64 sq m. The land had been paying only RM48 annually under an agricultural (coconut) category, despite being used for commercial purposes.
With the revised structure, the applicable commercial rate of RM3.25 per sq m would result in an annual quit rent of RM44,900, reflecting the land’s current usage and size. The state argued that such cases demonstrate how certain landowners had benefited from significantly lower rates for nearly three decades compared to others.
To cushion the financial impact, the Penang government has introduced mitigation measures, including an automatic 50% rebate for affected landowners.
Although this policy shift applies to Penang, it offers insight into how state authorities may periodically realign land classifications and taxation frameworks to reflect actual usage and development intensity.
For investors and business owners focused on industrial land in Selangor or commercial property in KL, land classification plays a critical role in cost planning and long-term yield calculations. As townships mature — whether in Bukit Jalil, Puchong, the Subang area, or other growth corridors — reclassification risks and revised land-related charges should be factored into acquisition strategies.
In high-demand zones across the Klang Valley, securing a factory in Puchong or strategically located industrial property in Subang area requires not only evaluating market pricing but also understanding land tenure, usage category, and potential future revisions in quit rent or assessment rates.
Similarly, occupiers considering office space in Bukit Jalil or other decentralised business hubs should assess municipal frameworks and potential cost adjustments as areas transition from suburban to fully urbanised classifications.
Penang’s latest move underscores a broader principle in property investment: as development intensifies and land use evolves, regulatory and fiscal frameworks may eventually be updated to reflect current realities — a factor that remains relevant for stakeholders across Kuala Lumpur and Selangor’s industrial and commercial markets.
Yao Mu Realty, based in Kuala Lumpur, Malaysia, specializes in industrial real estate for factories and land, delivering professional and efficient solutions.
Posted by Yao Mu Realty Sdn Bhd on 21 Feb 26
Malaysia