A practical explainer of compensation under Malaysia’s Land Acquisition Act 1960—market value date, what’s included/excluded, and how objections and appeals work.
Land Acquisition Act (LAA 1960): Compensation Heads & Appeals
When land is compulsorily acquired in Malaysia, compensation is assessed under the Land Acquisition Act 1960 (LAA) according to the First Schedule principles. The key items below help owners, tenants and lenders plan their strategy and timelines.
1) Valuation Date (Market Value)
Market value is taken at: (a) the date of the section 4 Gazette notification if a section 8 declaration follows within 12 months; or (b) otherwise, the date of the section 8 declaration. The First Schedule also guides how sales evidence and partial acquisitions are treated.
2) What Goes Into Compensation (First Schedule, para 2)
| Head | What it means |
|---|---|
| Market value | Market value of the land at the applicable valuation date. |
| Betterment deduction | Any increase (to be deducted) in the value of the owner’s other land likely to accrue from the scheme/use for which the acquired land will be put. |
| Severance | Damage caused by severing the acquired land from the claimant’s other land. |
| Injurious affection | Damage to the claimant’s other property (movable/immovable) by reason of the acquisition. |
| Removal/Disturbance | Reasonable expenses from having to change residence or place of business. |
| Undertakings benefiting remainder | Where only part is acquired, any clear and enforceable authority undertaking (e.g., roads, drains, walls) benefiting the unacquired remainder may be considered. |
3) What’s Excluded From Compensation
- Recent improvements in contemplation of acquisition (within 2 years before the s.8 declaration), unless bona fide.
- Value increase due to illegal or harmful use of the land/premises.
- Value of buildings not permitted by the category of land use or title conditions.
4) Enquiry & Award
The Land Administrator holds an enquiry and makes a written award specifying market value, any deduction for betterment, and amounts for severance/injurious affection/disturbance.
5) Objections & Timelines (Reference to High Court)
If you made a timely claim and do not accept the award (or accept under protest), you may object to measurement, amount, person entitled, or apportionment. Time limits to lodge the objection (Form N) are generally six weeks from the award (if present at the enquiry) or six weeks from service of notice/six months from the award—whichever first expires.
6) Court Hearing: Judge & Assessors
The High Court sits with two assessors (one is a government valuer) to aid the Judge on compensation matters.
Important: The Federal Court in Semenyih Jaya held that the previous rule which made assessors’ figures final (LAA s.40D) was unconstitutional; the Judge retains judicial power.
7) Appeals (Section 49)
There is a limited right of appeal to the Court of Appeal/Federal Court. The proviso states no appeal lies where the decision comprises an award of compensation, but after Semenyih Jaya the courts accept appeals on questions of law (not pure quantum facts). Recent cases emphasise that “question of law” is read narrowly.
8) Payment, Withholding & Late Payment Charges
- The Act allows the Land Administrator to withhold 25% in certain cases pending final determination.
- If compensation isn’t paid/deposited by the due date (earlier of possession or 3 months after service of award notice), 8% p.a. late payment charges apply; similar rules govern Court-awarded shortfalls.
Practical Tips
- Document your claim early: land value, comparable sales, severance & injurious affection particulars, removal costs.
- Watch the six-week clock: object in time and on the correct grounds—new grounds later need the Court’s leave.
- Partial acquisition: consider whether official undertakings sufficiently mitigate severance before pressing for full-take.
FAQs
1) Do I get paid for business relocation costs?
Yes—reasonable expenses if you must change residence or place of business because of the acquisition (disturbance).
2) Can I appeal the High Court’s compensation figure?
Pure quantum findings are generally not appealable, but you may appeal on a question of law (post Semenyih Jaya) under s.49(1).
3) What if the authority pays late?
Statutory late payment charges at 8% p.a. may apply from the due date until payment/deposit (with special rules for withheld amounts and court-awarded excess).
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Disclaimer: General guidance only. Figures, processes and case law evolve. Obtain specific legal advice for your property and jurisdiction.
