Dealing in property in Malaysia can be easy. Malaysia is one of the friendliest and hassle-free countries in Asia for foreigners who want to buy or sell property within the country. It is also one of the most flexible countries when it comes to legal issues regarding buying of property.
Presently, there is no limit to the number of residential properties a foreigner can purchase. There are certain regulations and restrictions, however, despite this the buying process for a foreigner is and a local buyer a fairly similar.
Here, we will provide with a comprehensive guide on dealing with properties as an Expat in Malaysia. Please bear in mind that these are just general guidelines to help you stay informed. We advice that you seek the advice of real estate expert before you begin any property dealings for any property in Malaysia.
Welcome to your one-stop guide to buying property in Malaysia as an expatriate.
Presently the Economic Planning Unit (EPU) has set comprehensive guidelines on the property acquisition by foreigners in Malaysia. Although the Federal Government (i.e. the EPU) sets the bar, each state within the country is free to decide on whether they wish to follow this as land is a state matter. Most property purchases by foreigners do not require approval from EPU; however they are still required to obtain approval for the acquisition of a property from the respective state authorities.
The minimum purchase price for foreign buyers depends on:
- Where the property is located (the state which it’s in)
- The title of the property – Strata or Individual
- Whether the buyer holds a Malaysia My Second Home (MM2H) visa or not
Property titles typically refer to the ownership rights. There are three types of titles in Malaysia you need to be familiar with:
This refers to the ‘top-level’ title held by a property developer. This gives a developer full control and rights over the land they own. You typically hear about the master title when new properties are being constructed
This is usually granted to owners of property that are part of a shared building such as condominiums, apartments, flats and so on.
This typically refers to landed properties like houses, bungalows, semi-detached houses and so-on.
Here is a table showing the minimum purchase price for foreigners in each state in Malaysia.
|State/Area||Minimum Purchase Price (Individual Title)||Minimum Purchase Price (Strata Title)|
|Selangor (Zone 1)*||Not permitted - only landed properties with strata titles||RM2,000,000|
|Selangor (Zone 2)*||Not permitted - only landed properties with strata titles||RM2,000,000|
|Selangor (Zone 3)*||Not permitted - only landed properties with strata titles||RM1,000,000|
* Zones in Selangor
Zone 1 - Districts of Petaling, Gombak, Hulu Langat, Sepang and Klang
Zone 2 - Districts of Kuala Selangor & Kuala Langat
Zone 3 - Districts of Hulu Selangor and Sabak Bernam
Penang, Selangor and Melaka are more strict in regards to the minimum purchase prices, particularly for landed properties (or those on individual titles).
Penang, Melaka and Johor impose a ‘state levy’ with Penang imposing a levy of 3% while Melaka and Johor impose a levy of 2%.
Selangor is considered the most strict when it comes to foreigners acquiring property. They do not impose a ‘state levy;’ however they only allow foreigners to buy landed properties if they have strata titles.
When it comes to new developments in Selangor, foreigners are not allowed to purchase more than 10% of the total number of properties set aside for non-Bumiputera. They are also unable to buy property at an auction or buy agricultural land in Selangor.
- Sign the developer’s sales form or the offer-to-purchase form with the vendor, for sub-sale transactions.
- Get the finances ready (Apply for a loan, get the money for down-payment, etc.)
- Provide the following documents to your solicitor:
- Photocopy of passport
- Correspondence address and contact numbers
- Income tax number and the place of submission of the income tax (applicable for sub-sale purchase only)
- Sign the sales-and-purchase-agreement (SPA), deed of mutual covenant and other transactional documents within 14 days of the signing of the sales form, or offer to purchase.
- Now your solicitor must apply for the State Authority consent. As the purchaser, you must provide them with the following documents:
- One certified true copy of the SPA
- One certified true copy of the Foreign Purchaser’s passport
- One certified true copy of the constitution in the case that the purchaser is a foreign company
- Latest quit rent and assessment receipt of the property
- Application form under the Section 433B of the NLC
- Pay the balance purchase price.
- At this point the developer shall deliver the vacant possession of the property within 36 months from the date of the SPA, or at a later date as may be approved by the relevant authority. Once the vacant possession has been delivered, the developer shall deliver the strata title and certificate of completion-and-compliance to the foreign purchaser. In the case of a sub-sale transaction, the vendor shall deliver vacant possession to the purchaser in accordance with the terms of the SPA.
Getting financing as an expat for residential property in Malaysia
Both local and foreign banks within the country provide loans for expats. They can pay for up-to 70% to 80% of the property price. These loans are given to expats who work in Malaysia with a valid working permit.
However, there are also banks who provide loans to non-resident foreigners or those who have retired in Malaysia under the Malaysia My Second Home (MM2H) programme.
The Malaysia My Second Home programme is a government endorsed program, created to allow foreigners, who fulfil certain criteria, to stay in Malaysia for extended periods of time on a multiple-entry social visit pass. This pass lasts for a period of 10 years initially and is renewable. The terms and conditions of application for MM2H are as follows:
Applicants are expected to be financially capable of supporting themselves before applying for this programme Malaysia.
Conditions for application:
- Applicants aged below 50 years are required to show proof of liquid assets worth a minimum of RM500,000 and offshore income of RM10,000 per month. For certified copy(s) of Current Account submitted as financial proof, applicants must provide the latest 3 months’ statement with each month’s credit balance of RM 500,000.
- Applicants aged 50 and above may comply with the financial proof of RM350, 000 in liquid assets and offshore income of RM10,000 per month. For certified copy(s) of Current Account submitted as financial proof, applicants must provide the latest 3 months’ statement with each month’s credit balance of RM350,000. For government pensioners, they can show proof of receiving a pension of at least RM10,000 per month.
Aged Below 50 years old
- Open a fixed deposit account of RM300, 000.
- After a period of one year, the participant can withdraw up to RM150, 000 for approved expenses relating to house purchase, education for children in Malaysia and medical purposes.
- Must maintain a minimum balance of RM150, 000.00 from second year onwards and throughout their stay in Malaysia under this programme.
Aged 50 years and above
- Open a fixed deposit account of RM 150,000.
- After a period of one year, a participant who fulfils the fixed deposit criterion can withdraw up to RM50,000.00 for approved expenses relating to house purchase, education for children in Malaysia and medical purposes.
- Participant must maintain a minimum balance of RM100, 000 from the second year onwards and throughout his/her stay in Malaysia under this programme.
All applicants and their dependents are required to submit a medical report from any private hospital or clinic in Malaysia.
Approved participants and their dependents must possess valid medical insurance coverage that is applicable in Malaysia from any insurance company. However, exemptions may be given for participants who face difficulty in obtaining a medical insurance due to their age or medical condition.
Security bond (Direct application only):
Applicants applying directly are required to fulfil the security bond condition. Security Bond per person varies by nationality, ranging from RM200 to RM2000.
Personal bond (Application through an agent):
Licensed companies are required to provide a personal bond for their clients who have been approved under the MM2H Program.
The programme is open to citizens of all countries recognised by Malaysia regardless of race, religion, gender or age. Applicants are allowed to bring their spouses and unmarried children below the age of 21 as dependants. Log on to the official portal https://www.mm2h.gov.my/index.php/en/ for more info.
Are you looking to sell your property? Read on.
There are no restrictions for foreigners to sell a property in Malaysia. The selling procedure is similar to selling as a local; however there are costs and the process is lengthy.
The property selling procedure for foreigners and expats is as follows:
- Check and find out how long you have kept your property. This will determine how much you will have to pay as Real Property Gains Tax (RPGT) which will also affect the net proceeds of the sale.
- Get your finances in order. Clear any outstanding fees applicable to the property, such as quit rent" (cukai tanah) and "assessment tax" (cukai pintu).
- Set an acceptable price for your property. You should work with a reliable real estate agent to help you research similar properties around the area and their price estimates.
- Get any necessary documents ready and hand them to your agent. This includes a copy of the title to the property, renovation plans and copies of the quit rent and assessment receipts for the property.
- Find a buyer. Work with your agent to help you target the right buyers who will help you achieve your financial goals. Note that selling to a foreign buyer may be more complicated than selling to a local buyer, a point you should keep in mind when looking for potential buyers.
- Pay the legal fees. Aside from disbursements, legal fees are standardised by the country's Solicitors Remuneration Order. The rates are as follows: 1 per cent for the first RM150, 000 of the sale price, 0.7 per cent for the next RM850, 000, 0.6 per cent for the next RM2 million, 0.5 per cent for the next RM2 million and 0.4 per cent for the next RM2.5 million. The legal fee rate for any sale amount above RM7.5 million is negotiable; however, it cannot be more than 0.4 per cent.
- Get the documents ready for your lawyer. These documents are same as the ones you would have given your agent mentioned in the previous points. Along with these, you must also provide your agent with the latest bank mortgage statement, identity card and passport. If the passport number stated in the title deed or purchase agreement differs from your present passport then you should give both your current and old passport.
- Negotiate a final price with your buyer.
- Sign the “Letter of Offer.” An estate agent will normally ask a buyer to pay an earnest deposit of between 2-3% of the offered sum when they create the letter; and they normally keep the earnest deposit in their client's account as stakeholders from the date the offer is made until the execution of the Sales & Purchase Agreement.
A letter of offer usually contains the following information:
- The legal names of the vendor (seller) and buyer
- The legal address of the property
- The price that has been agreed upon
- The deposit amount
- Any items such as fittings included in the sale
- The date before which the sale and purchase agreement must be signed
- After accepting the “Letter of Offer” either you or your agent need to give your lawyer the information they need to begin legal preparations for the sale. At this stage the buyer's lawyer sorts out the SPA's terms with the seller's lawyer. When the buyer implements the SPA they will pay the balance of the first 10% of the purchase price. The documents will be sent to you for implementation and will then be stamped. All this must be done within 14 days (2 weeks) of the signing of the “Letter of Offer”.
- Finally the time comes to complete the transaction. Normally the buyer’s bank will disburse the loan in two stages. In stage one, they give the "redemption amount", which goes towards redeeming the property from the seller's bank, assuming the seller still owes money on the property. The second stage happens after the seller's bank releases to the buyer's lawyer all security documents. The buyer's lawyer can then register the title in the buyer's name and the buyer's bank can create the charge or mortgage over the property. If the seller's property has no outstanding loans at the point of sale, then disbursement of the buyer’s loan takes place in just one stage.
Properties That Foreigners and Expats cannot own
While Malaysian law is fairly lenient when it comes to foreigners buying and selling Malaysian property, there are some restrictions, i.e. some properties foreigners cannot invest in. These are:
- Properties valued less than the minimum purchase price as prescribed under the State Land Rules varying from state to state
- Residential units under the category of low-medium cost as determined by the State Authority
- Properties Built on Malay Reserved Land
- Agricultural land (unless above 5 acres and for commercial purpose)
- Properties and property development projects allocated to Bumiputra as determined by the State Authority
One of the best countries for property investment
In recent years, Malaysia’s property market has grown steadily and continues to grow even now. There is a great demand for new properties, which creates ample opportunities for buyers and sellers.
Malaysian properties are still amongst the most affordable in Asia and thus amongst the top choices for investment.
Please bear in mind though that the above information is subject to change in accordance with government policies, rules and regulations. So before you start the property buying or selling process, be sure to consult an expert like a real estate agent.
Want to know more about buying and selling property? We want to hear from you, send us a message at email@example.com or call us at 012-299-6155 or 03-7450-6655.
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