Landed Property Or Apartment?

Landed property or apartment, this is the question always surround property investment scene or homebuyers. It is also the most common asked question. Landed property usually has a piece of own land in the front entrance while apartment building has no land for the house owner. Some says apartment is inconvenient because it is high rise and far away from car park. Some argues that landed property is not as safe as apartment because it is easier to access. Some might also say that maintenance of apartment is higher. There are some truths to these statements but these are not all of the truth. Depend on what do you want in return. Let us look at it one by one from perspective of property investor.

Note: In Malaysian term, apartment and condominium is usually high rise with more than 10 stories tall, while landed house as it implies, has a piece of land and it is usually 1 to 3 story tall only.

Freedom of land - Landed property is usually associated with owning a land and the freedom to do anything you want at anytime on your own land. However as investor, through capital appreciation or rental income, you need to think if these factors could contribute to the rate of return? Probably this is best explained in the third point.

Not an ideal rental property - Landed property is always higher in price and monthly installment. For a decent terrace house in a good area can cost up to half a million - take Bandar Puteri as example (a township name in Malaysia). The monthly installment could be as high as RM2.5K. In order to generate positive cash flow, you need to at least rent out in RM3K. Probably you don't think this is too much if the tenant has family and children and they need bigger space to live in. But do you think they would rather rent the place instead of buying it on their own? Again, a small family will opt for smaller living space such as an apartment or condominium with 3-bedroom that only cost them around RM1.5k per month.

Note: RM stands for Ringgit Malaysia, mean Malaysian currency.

Landed properties tend to appreciate more in long term - this is not new, if your grandparents owned some land back since 60s, you would have seen the price gone up a few hundred times from the time they bought it. Same as landed property, as the land get scarcer, and population grows, the land price will go up as well. The faster the population grows, the faster the appreciation. In contrast, apartment or condominium unit doesn't appreciate as much as land properties simply because the "land" is divided into so many smaller parcels. The appreciation, if any, is simply spread out to all the unit owners. Another factor probably has to do with land reuse cost. More cost is involved in reusing the land with apartment built on compared with landed property that is usually 2-3 storys tall.

Since landed properties have always being associated with higher capital appreciation, it is also very common being used in flipping. For example the landed terrace house in Bandar Puteri (township name) was sold at RM350K+ 4 years ago pre-constructed has recently appreciated to nearly RM600k. Without factoring in the other cost, we see a whopping 72% capital appreciation. The costs are anything involved during the time you purchased the property until it is sold off, which includes total installment paid plus interest, cost of rectification not covered by developer, furnishing and improvement, legal fees, middle man charges, other processing fee, etc.

Low entry cost for apartment compare to landed property - It's easier for people to make decision if the entry cost is low. For rental property, usually the tenant will need to come out with 1 month of rental deposit, 1 month advance rental and 3 months of utility deposit. If an apartment's rental cost is RM1.5k, then the initial cost tenant needs to come up is around RM1.5K x 2 + 750 (Let say 3 months utility deposit is roughly half month rental) = RM3.75K. However for landed property, tenant is required to come up to around RM3K x 2 + 1.5k (Let say 3 months utility deposit is roughly half month rental) = RM 7.5K as initial entry cost. In this case, an apartment's initial entry cost is only half of the landed.

Visible maintenance cost for apartment - Usually maintenance cost of apartment is proportion to the size of the unit. The larger the apartment unit, the higher the maintenance cost. Depending on variety of facilities provided and the quality, usually maintenance cost per square feet is around 15 to 20 cents, which is RM150 to RM200 for a 1000sqf unit. Landed property owner does not pay maintenance cost but they do need to pay for whatever exterior maintenances required such as paintings, roof repair, ducts, lawn mowing and miscellaneous efforts to keep the surrounding in proper condition. However, with some due diligent, maintenance of a landed property can be much lower than of apartments'.

Security problem - one of the reason people like apartment or condominium is because of security. For a very basic apartment there are two tiers of security system at minimum; one is the apartment compound fencing with electronic gate and security guard post and another is the security enforced entrance to the elevator area. Since apartment consists of many units in a building block it makes it harder for targeted attack or robbery. If apartment is high rise building, it will be quite rare for casual break-ins as well. In contrast, landed property owners need to invest quite amount of money into home security system such as auto gate, alarm system, window/door grill, etc. Even fully equipped, landed property still risk higher possibility of casual/targeted break-ins and robbery. However apartment security is not fool-proof as well, one example lies in security personnel being not scrutinized enough or too lenient to stranger visitors.

Property life expectancy - A well built landed property can last for twenty to thirty years or more without a question, however due to young age of Malaysia and shallow high rise living experience, no one can tell exactly how long can an apartment or condominium will last. In common sense, the value of apartment building will start to depreciate only after certain age, this usually happens when the building is deemed unsafe to live in.

Written by Zen Foo
The Author of Future Money (http://super-tanker-money.blogspot.com).

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Real Estate, Real Property and Leased Land; Definitions, Discussion and Explanations

Delaware, and the rest of the original British Colonies, has some land that is leased rather than owned by the residents of that land. Much of it is not evident to the casual observer.

The land on Lewes Beach is leased, not owned by the home owners. The land of Lewes Beach is owned by the Town of Lewes. The lands of Rehoboth by the Sea and Dewey Beach include leased land too. Most of the leases on that land will NOT be renewed but will return to the owners and the homes on top of that land will be removed by the home owners at their expense. Much of the land in Riverdale, on Indian River Bay, adjacent to Oak Orchard is leased as well. In Riverdale the leased land is owned by Chief Clark of the Nanticoke Indians.

We have about half the inhabitants of Sussex County living on leased land; most of that leased land is found in what people call mobile home parks or communities. However, in those communities there are seldom any homes that are truly mobile and there are even two story stick built homes on some of the leased lands in those communities. Condominiums and town houses are sometimes found on leased land as well. Some folks find all this rather difficult to understand.

We Realtors and Attorneys use the term fee simple to describe land that is being sold as real property; that is real estate. We used the term leased land or leasehold interest to describe land that is not transferring as real estate.

This rather lengthy text is regarding Leased Land, Real Estate, Private Property, Chattels, Mobile Homes, Homes on Leased Land and a legal dissertation to define, describe and determine the differences.

Terminology is important when discussing Real Estate, i.e. real property.

Black’s Law Dictionary is the recognized, definitive source for legal definitions under our American Law; which is derived from English Law

PROPERTY: In the strict legal sense, an aggregate of rights which are guaranteed and protected by government. BL6, p. 1216.

PERSONALTY: Personal property; movable property; chattels; property that is not attached to real estate. BL6, p. 1144

PROPERTY: (personal property) - In broad and general sense, everything that is the subject of ownership, not coming under the denomination of real estate. A right or interest less than a freehold in realty, or any right or interest which one has in things movable. BL6, p. 1217

Therefore personal property, is that which can be easily removed from the real estate, and is not real estate. Personal property includes crops, trees, shrubs, trailers, sheds, cars, mobile homes, manufactured homes that have a Department of Motor Vehicle title instead of a deed, and the contents of a home or building. In a home or business the personal property includes drapes, lighting fixtures, rugs (not installed carpeting) free-standing cabinets and cupboards, furniture, and all the contents of closets, drawers and buildings. Buildings without a foundation, that is sheds that are just supported by blocks are chattel property, that is personal property, and not part of the real estate. Such chattel includes dog houses and particularly the little storage buildings that are so common outside of homes today.

LANDS: In the most general sense, comprehends any ground, soil or earth whatsoever... Black's Law dictionary 6th Ed. (BL6), p.877

PRIVATE PROPERTY: As protected from being taken for public uses, is such property as belongs absolutely to an individual, and of which he has the exclusive right of disposition. Property of a specific, fixed and tangible nature, capable of being in possession and transmitted to another, such as houses, lands, and chattels. BL6, p. 1217. Private property is land, houses, and chattels. Private property is protected from being taken for public uses. Private property is owned absolutely.

REAL ESTATE synonymous with real property" and p.1218 REAL PROPERTY ... A general term for lands, tenements, hereditaments (those things which are hereditary); which on the death of the owner intestate, passes to his heir." BL6, p1263

ESTATE: The degree, quantity, nature and extent of interest which a person has in REAL and PERSONAL property. An ESTATE in lands, tenements, and hereditaments signifies such interest as the tenant has therein. BL6, p.547 The definitions here all refer to: real estate = real property = estate = lands, tenements, and hereditaments. At first, one might think that ‘real property' is the proper term for 'all lands'. But it doesn't state the manner of ownership as clearly as the definition of estate. We just had a huge instance of this when the thousands of leased land lots under the homes of several thousand people, in Angola, Pots Nets, and Long Neck areas owned by the Robert Tunnel family was inherited by the children.

IN OUR AREA THERE ARE NUMEROUS LEASED LAND PROPERTIES AND THOSE PROPERTIES ARE THE REAL ESTATE OF THE OWNER OF THE LAND – NOT THE OWNER OF THE HOME WHICH IS UPON THAT LAND. If you examine the definition for ESTATE it refers to an interest in the same articles defined in real property and real estate.

What is this LAND and WHO owns it and HOW is it owned? Land can be private property OR estate, i.e. real estate. Estate is an interest in “real property" by a person or a tenant. Private property is owned absolutely by an individual.

INTEREST: More particularly it means a right to have the advantage of accruing from anything; any right in the nature of property, but less than title. - BL6, p.812. By this definition it's clear that INTEREST cannot be TITLE, since it is less than title. Interest may be a property right to land, but it's not a right to absolute ownership of land. Those who live on leased land, thus, have only an interest in the land; and that interest is a lease-hold interest. Is there a definition of property that says it's land held in absolute ownership, as does private property's definition? We can delve into this more.

ABSOLUTE TITLE - As applied to title to land, an exclusive title, or at least a title which excludes all others not compatible with it. An absolute title to land cannot exist at the same time in different persons or in different governments. BL6, p.1485

PRIVATE PROPERTY - ... is such property as belongs absolutely to an individual, and of which he has the exclusive right of disposition. BL6, p.1217

OWN - To have a good legal title; to hold as property; to have a legal or rightful title to; to have; to possess. BL6, p. 1105. To "own" is to have title. An interest is LESS THAN TITLE.

ESTATE: The degree, quantity, nature and extent of interest which a person has in real and personal property. An estate in lands, tenements, and hereditaments signifies such interest as the tenant has therein. - - BL6, p.547 From these definitions, it's plain that we can't absolutely "own" real estate. We can only have a qualified ownership of qualified and described ownership of Real Estate. Thus, we need that Deed Description to describe it and qualify it. That ownership is also qualified by various government rights, decrees and laws, from antiquity, such as rights against trespass. That ownership is qualified by taxation, zoning, rights of way, and a myriad of other entailments. We need, therefore, a title search to determine those entailments, some of which are invisible.

Therefore there is NOT as much difference in the rights and privileges of ownership and interest as one is led to believe. I have no problem with those who live on leased land instead of owning the land. Usually they are paying far less than it would cost them to own the same property. However, they don’t often get any appreciation of the land; the landlord gets the appreciation in real value, while the resident can appreciate the lifestyle for less cost per month or year.

However, since an interest in leased land is not automatically transferable and is NOT Real Estate and since the chattel property upon it, the mobile home is personal property, without a deed but instead has a title – Realtors are not by law supposed to be involved in the sale of such – but we are. We are supposed to only be selling real property. It gets all cloudy and foggy doesn’t it. That is why there are people and companies who sell mobile homes on leased land who are not realtors and don’t need to be. In fact, although no one will discuss it, Realtors are not supposed to sell mobile homes on leased land. We don’t need to engage in that battle any more than I just did by describing it.

OWNERSHIP: The complete dominion, title, or proprietary, including right in a thing or claim... Ownership of property is either absolute or qualified. The ownership of property is absolute when a single person has dominion over it, and may use it or dispose of it according to his pleasure, subject only to general laws. The ownership is qualified when it is shared with one or more persons, when the time of enjoyment is deferred or limited, or when the use is restricted. - BL6, p. 1106 Such sharing is common with husband and wife, partners, families and corporations, etc.

DOMINION - Generally accepted definition of "dominion" is perfect control in right of ownership. The word implies both title and possession and appears to require a complete retention of control over disposition. - - -BL6, p. 486 I think you'd agree that zoning, building codes, home owners association covenants, condominium documents of use and business licensing is a restriction on the use of land (if it's Real Estate). And there is obviously the fact that failure to pay property taxes on real estate will result in loss of said property. That's definitely not absolute ownership. But private property is defined as ABSOLUTE OWNERSHIP, not qualified (interest).

PROPERTY (tangible) - All property that is touchable and has real existence (physical) whether it is real or personal. - - BL6, p. 1218 In summation, it takes a good attorney, and one well versed and experienced in real estate to understand the complex definitions, rights, liabilities, and privileges of real estate ownership. I have been buying and selling real estate for myself and assisting others in the buying and selling of real estate for thirty years. I have taught courses on real estate and real estate law. And, I would NOT consider purchasing a property, or purchasing property on leased land without the professional and paid assistance of an attorney who is a real estate specialist in the exact county in which the property is located. Other attorneys from other areas are not valid choices at all.

Copyright © 2001 - 2005 by www.JodyHudson.com>

Jody Hudson has been a Realtor for 35 years.

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The Impact of the World Food Demand in Africa - Addressing the Land Property Issue

Various factors have contributed to the negative impact of the World Food Demand in Africa. It is important, however, that I first outline the key issues affecting food demand.

Factors such as population growth, increased demand in more resource intensive food and the impact of petroleum prices have conspired in creating the food crises

While food production increased by 1 to 2 per cent in 2008 it was outpaced by a 4 per cent population growth and the trend has not changed. Also the gradual change in diet by so-called newly prosperous populations is regarded by some as the most important factor underpinning the rise in global food crisis.

We also have the situation where the rise in the price of oil has heightened the costs of fertilizers in some instances doubling the price within the six months before April 2008.

Financial speculation including indiscriminate lending and real estate speculation led to a crises two years ago, eroding investment in food commodities. This is coupled with the impact of trade liberalisation, which has ensured that many developing countries have gone from being food independent to being net food importing economies since the 1980s. Africa and other countries are also over time losing out through the use of food crops for producing bio fuels with maize being a good example as well as producing huge amounts of food crops for export rather than local consumption. This is further motivated by the subsidies on bio fuel by the United States and the EU.

The problem as you can see is not necessarily an African creation but more of the effect of globalisation. The global food crisis has renewed calls for the removal of distorting agricultural subsidies in developed countries. Support to farmers in OECD countries totals 280 billion USD annually, which compares to official development assistance of just 80 billion USD in 2004, and farm support distorts food prices leading to higher global food prices, according to OECD estimates.

There is also the issue of a distorted global rice market - Japan is forced to import more than 767,000 tonnes of rice annually from the United States, Thailand, and other countries due to WTO rules. This is despite the fact that Japan produces over 100 per cent of domestic rice consumption needs with 11 million tonnes produced in 2005 while 8.7 million tonnes were consumed in 2003-2004 period. Japan was not allowed to re-export this rice to other countries without approval, but it seems as if this problem is now being addressed.

Can you believe that this rice is generally left to rot and then used for animal feed?

You may call it climate change, but significant crop shortfalls have emanated from natural disasters. Several distinct weather and climate-related incidents have caused major disruptions in crop production in the past few years. This has also led to soil and productivity losses as large areas of croplands are lost year after year, due mainly to soil erosion, water depletion and urbanisation.

Issues of large scale land acquisition

Large-scale acquisition of land has become an issue affecting the availability of land for the development of food crops for local consumption. According to an estimate from the International Food Policy Research Institute IFPRI, between 15 and 20 million hectares of farmland in developing countries have been subject to transactions or negotiations involving foreign investors since 2006.

Developing countries in general, and Sub-Saharan Africa specifically, are targeted because of the perception that there is plenty of land available, because its climate is favourable to the production of crops, because the local labour is inexpensive and because the land is still relatively cheap.

In 2003, the FAO estimated that an additional 120 million ha - an area twice the size of France or one-third that of India - will be needed to support the traditional growth in food production by 2030. Since about 95% of the cropland in Asia has already been utilized, it is in Latin America and in Africa where most of the demand for increased arable land will concentrate.

The development of large-scale land leases or acquisitions can be explained by

The rush towards the production of agro fuels as an alternative to fossil fuels, a development encouraged by fiscal incentives and subsidies in developed countries;
The growth of population and urbanization, combined with the exhaustion of natural resources, in certain countries, who therefore see large-scale land acquisitions as a means to achieve long-term food security;
Increased concerns of certain countries about the availability of freshwater, which in a number of regions is becoming a scarce commodity;
Increased demand for certain raw commodities from tropical countries, particularly fibre and other wood products;
Expected subsidies for carbon storage through plantation.

It is clear the food crisis is not just an issue of land and property rights. Many issues have to be looked at, especially the waste in developed countries, subsidisations, and trade restrictions.

The need for more land is obvious, and it seems the world is focusing on Africa and Latin America and every effort has to be made to stem the frightening trend where Africa's land is targeted by the rest of the world in its new found quest to acquire land for production of crops that do not end up feeding our hungry people but serve as raw material for new technologies such a bio fuels.

There is no doubt that land tenure and property rights in Africa are complicated. In an address at the African Presidential Roundtable in Berlin last year I mentioned that "during my time as President in Ghana we had a rude awakening". Despite all the debates we realised that land issues and land tenure circumstances in Ghana was in a terrible mess. We found that a plurality of land tenure and management systems (i.e. state and customary) prevailed in the country, but that these systems were poorly articulated and increasingly caused problems of contradiction and conflict.

We furthermore found that, in spite of some positive achievements - including the introduction of maps, deeds and registry systems, and the release of land for public infrastructure purposes like schools, hospitals and roads - the practical benefits of the Lands Commission and other delegated authorities to the silent majority (i.e. the rural, peri-urban and urban poor, the disabled, the unemployed, the low and middle-income earners, etc.) were not evident.

It also became evident that interventions by the Lands Commission, such as compulsory acquisition of land and non-payment of compensation, have resulted in social unrest, displacement of villagers, and landlessness in affected communities.

Land administration in Ghana is bedeviled with the multiple sale of parcels of land by different parties claiming ownership of the same parcel of land, the poor use of compulsory acquisition powers by government agencies to acquire various tracts of land for which they are unable to pay compensation, weak management, both public and customary, and quite recently, the menace of land guards. As of July 2004, there were about 66,000 land disputes before the courts, resulting from the inability of traditional or customary authorities to identify the extent of land boundaries.

The foundation for reform - National Land Policy

Against the background of these problems the NDC government began the process of developing a comprehensive land policy for Ghana in 1994, which culminated in the launch of the National Land Policy document, the recommendations of which were to be implemented over a period of 15 years, in three, five-year phases. The implementation of the recommended policy actions in the National Land Policy led to the development of the Land Administration Project (LAP).

Land Administration Project (LAP) and other developments since 1999 The NDC government envisaged a 15-year programme to sort out the mess of land tenure in Ghana. When the NPP took control in 2001 they either did not realise the severity of the problem or ignored the reform initially because it was NDC initiated. Nevertheless, the following developments en route to sorting out the mess have taken place, and the initial timeframe has now moved to 15 - 25 years.

Land Administration Project (LAP)

The Land Administration Project (LAP-1) is the first phase of a commitment by the Government of Ghana to use the Land Administration Programme to reduce poverty and enhance economic/social growth by improving security of tenure, simplifying the process of acquiring land by the populace, developing the land market and fostering prudent land management by establishing an efficient system of land administration, both state and customary based on clear, coherent polices and laws supported by appropriate institutional structures.

The project has multi-donor support with development partners including the International Development Association, Nordic Development Fund (NDF), Canadian International Development Agency (CIDA) and the UK Department for International Development (DFID). The rest are German Bank for Reconstruction (KFW).

The successful implementation of LAP is anticipated to lead to the establishment of a sustainable system of land administration that would ensure:

A clear, coherent and consistent set of land administration policies and laws;
An efficient and decentralized land administration system operating throughout Ghana in accordance with Government policy and compatible with cultural usage and responsive to the needs of the people, within a self financial mechanism;
The attainment of high-level confidence of the community, based on a culture of transparency, responsiveness and services;
A disciplined, efficient and transparent land market;
All land rights are unambiguously recognised, adequately demarcated and securely registered;
An environment where land disputes are managed and minimized by open and rapid resolution processes;
That land sector agencies and traditional authorities are fully integrated, appropriately structured and resourced, accessible and self-financing;
That access to land and settlement is orderly, economical and transparent, and based on a fully coordinated process of land development;
That land related information is current, accurate, universally available and shared. This is of great significance to the country, and
That traditional authority has the capacity to manage their lands in a very efficient manner and is accountable to their communities as trustees of the land.

We live in a global world and the fortunes of our continent are inextricably linked to developments in other parts of the world, but it is becoming increasingly clear that our continent's vulnerability has been worsened by the attractions of 'quick money' and sharp practices where the sale of lands for the production of newly found industrial crops is killing our ability to sustain food crop production.

As in the Ghana example land security has been tackled to a significant degree even though there have been distortions in the recent past with the wanton sale of lands for fancy and luxury residential accommodation, which have led to open disputes between traditional authority and government.

It is important that African countries legislate urgently on the mode of acquisition of land and address concerns on what such land purchases are meant for. If we continue to maintain the antiquated status quo where purchases of large tracts of land are not queried, sooner than later the allure of easy money will see all our prime and arable lands sold either for property development, as is the craze in Ghana or for the production of crops to satisfy the developed world's demand.

The allure of capital from such land sales is surely a difficult one to ignore but like the developed world we need to employ some protectionist policies to save our continent from a new form of colonization.

Thank you.

Jerry John Rawlings is a Former President of Ghana who is still actively involved in promoting probity, accountability and transparency on the African continent. http://jjrawlings.wordpress.com/

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