Land JV with a Developer: How It Works

You have land, but not the capital, time or experience to develop it. A developer offers a joint venture (JV). What exactly are you agreeing to? This article explains a land JV from start to finish: who contributes what, the forms a landowner’s share can take, every approval the law requires, the clauses the agreement should contain, the risks, and how to check a developer.

General information only, not legal, financial or tax advice. Every piece of land and every agreement is different. Get advice from your own lawyer before signing anything.

Summary

• A JV is not a sale. You contribute the land; the developer contributes capital, expertise and work. You receive the share agreed from the start.
• The landowner’s share usually takes the form of completed units, cash or a share of sales proceeds, or a combination of both.
• Many approvals are involved: change of land-use condition and subdivision under the National Land Code 1965 (KTN), planning permission, building plans, a developer’s licence and the CCC.
• Protections are negotiated and can be included in the agreement: a final date, a performance bond, termination and return of the land, limits on the power of attorney, and withdrawal of the caveat.
• Check the developer with SSM, KPKT’s TEDUH portal and CIDB before signing.

What is a land JV with a developer?

A land JV (joint venture, or usaha sama) is a written agreement between a landowner and a housing developer. The landowner contributes the land, while the developer contributes expertise, capital and work, including approvals, construction and sales. When the project is complete, the landowner receives the share agreed from the start.

Picture it this way: you bring the raw material, which is the land. The developer brings everything else: the money, the consultants (land surveyors, town planners, architects, engineers), dealings with the authorities, the builders, marketing, sales and the handover of the homes.

Key terms

• Housing developer: under the Housing Development (Control and Licensing) Act 1966 [Act 118], a housing development means building more than four units of housing accommodation. Section 5 of the Act says a housing development may only be carried on by a developer holding a licence.
• APDL: the Advertising Permit and Developer’s Licence. A developer may not advertise or sell the homes in a project without it.
• Change of land-use condition (tukar syarat): an application under section 124 of the KTN to alter the category of land use, for example from agriculture to building.
• Subdivision (pecah sempadan): dividing one lot into several lots, each with its own separate title (KTN section 135).
• Planning permission (KM, kebenaran merancang): permission from the local planning authority before any development (section 19 of the Town and Country Planning Act 1976 [Act 172]).
• Power of attorney (PA): a document that lets another party sign certain documents on your behalf.
• Caveat: a note on the land register that stops the land being dealt with without the caveator’s knowledge (KTN section 322 onwards).
• CCC: the Certificate of Completion and Compliance, confirming the building is complete and complies with the approved plans.
• VP: vacant possession, the day the finished home is handed over with the keys.

Leave it, sell it or JV?

Before choosing a JV, compare it with the two other options.

A JV gives more meaningful value, but you wait longer and depend on the developer’s performance. That is why the agreement, and the choice of developer, matter so much.

Common JV structures in Malaysia

Forms of the landowner’s share

Some JVs also give the landowner an upfront cash payment when the agreement is formalised. In a unit-based JV, the landowner’s share is usually calculated from the built-up area and the projected market value of the units.

Legal forms of a JV

• Contractual JV: the landowner and the developer sign an agreement without forming a new company. This is the most common form for a single piece of land.
• Joint company (SPV): both parties hold shares in a new company in proportion to their contributions. It suits large or phased projects but involves more company administration.
• Development rights agreement: the landowner keeps ownership and gives the developer the right to plan, build and sell, with costs and revenue shared in agreed proportions.

Example: the same share, three ways

The full JV process, step by step

The actual order can differ between states and local authorities, and some approvals run at the same time.

1. Enquiry and preliminary report The developer visits the land and prepares a preliminary feasibility study: layout, estimated number of homes and a JV versus sale comparison.
2. Detailed study Survey, soil investigation, checking the zoning in the local plan, road access, utilities and demand.
3. Due diligence An official title search: owners, charges, caveats, restrictions in interest, express conditions and outstanding quit rent. You also check the developer.
4. Letter of intent (LOI) The main terms agreed on a non-binding basis.
5. JV agreement Prepared by lawyers. Appoint your own lawyer to review it.
6. Limited power of attorney Lets the developer sign specified applications on your behalf.
7. Change of land-use condition and subdivision Applications under KTN sections 124 and 135, which may be made simultaneously (section 124A), or surrender and re-alienation (section 204B).
8. Planning permission A development proposal report (section 21A) and layout plan (section 21B) go to the local planning authority.
9. Building plans Approved by the local authority under Act 133 and the UBBL 1984, together with the engineering plans.
10. Developer's licence and APDL Needed before the homes can be advertised and sold.
11. Sales and construction Regular progress reports to the landowner.
12. CCC Issued by the Principal Submitting Person (PSP) once forms G1 to G21 are complete.
13. Handover (VP) Keys go to the buyers, and to the landowner for the landowner's units.
14. Separate titles Each lot receives its own title and is transferred to its owner.

Who approves what

For agricultural land, note two points. First, KTN section 136 does not allow a subdivision to be approved without any necessary planning approval. Second, for land in the “agriculture” category, each subdivided lot may not be smaller than two-fifths of a hectare. That is why homes on agricultural land usually need a change of land-use condition first, or at the same time.

Documents the landowner should prepare

• A copy of the land title (geran).
• The latest quit rent (cukai tanah) receipt. The KTN does not allow an application to change conditions to be entertained, or a subdivision to be approved, while rent or land revenue is outstanding.
• A copy of the identity card (MyKad) of every registered owner.
• For inherited land: the list of heirs and any estate distribution documents.
• A loan statement if the land is charged. Subdivision needs the written consent of the chargee.
• A survey plan or land plan, if you have one.
• Any earlier approval letters or offers.
• Photos of the land and the access road.

Keep the original title and hand over copies only. If an original document must be handed over, ask for a written acknowledgement of receipt.

Key clauses that can be included in the agreement

Risks and how to reduce them

Common mistakes

1. Signing without your own lawyer.
2. Giving a general power of attorney that is far too wide.
3. Handing over the original title without an acknowledgement.
4. No final date for approvals.
5. Relying on verbal promises.
6. Not checking the developer’s licence and past projects.

How to check a developer

1. SSM Check the company profile, directors and financial statements on MyDATA SSM.
2. KPKT licence Find the company in TEDUH's list of licensed developers and its licence and permit search.
3. Problem projects Check TEDUH's list of ailing and abandoned projects.
4. CIDB Check the builder's registration and grade in the CIMS contractor search.
5. Track record Visit completed projects and talk to buyers and landowners.

Official links: KPKT’s TEDUH portal, MyDATA SSM and the CIDB CIMS contractor search.

Costs and tax

The KTN allows the State Authority to make approval of a change of land-use condition conditional on a further premium, and survey fees and fees for preparing the titles must be paid once a subdivision is approved. Who bears these costs should be written in the agreement.

On tax, lawyers and tax advisers usually refer to the Income Tax Act 1967 and the Real Property Gains Tax Act 1976 to work out how a JV is taxed. The effect depends on the structure and your circumstances, so get tax advice before signing.

Next steps

If you own land in Selangor, start with clear information. Read the landowner page for JV structures and the protections that can be included in the agreement, download the Complete Land JV Guide, or request a free preliminary feasibility report. No fee and no obligation.