By Rahnama Haque
Buying a property can either be an exhilarating or a stressful phase of your life. This phase seems especially more puzzling to foreigners since they are not the citizens of the country. On top of that, the home buying process can vary from state to state, depending on local customs.
Buyers, especially foreign first-time home buyers, need a basic overview before stepping into the field. So, if you are a foreigner and willing to buy a property in Malaysia, here is a guide to help you along your path to becoming a homeowner.
Malaysia as a place to buy property
Malaysia is super affordable when it comes to buying properties in comparison to other countries in Southeast Asia. The country has seen high growth in the last two decades; and it has still managed to maintain its low buying costs. You can get considerable value for money if you are in the right place.
A foreigner can take out loans easily from banks and there are no restrictions to exchange funds from other countries. Having relatively low Real Property Gains Tax (RPGT) – mainly through holding the property for more than five years – makes Malaysia the right place to think about when buying properties as a foreign national.
Types of properties that foreigners can purchase
After fulfilling some minimum conditions, homeownership in Malaysia is comfortably easy for the foreigners. More so, since there is a chance of owning 100% of the property.
As per law, the only restricted properties that foreigners can’t own are:
- Properties on Malay Reserved Land
- Properties that cost less than RM1 million
- Properties that are of Bumiputera interest in any developmental project
- Properties like low and medium cost residential units
So, opportunities to own terraced houses, industrial and agricultural lands, bungalows, commercial property and more, are open.
Steps to purchase a property
According to PW Tan Associates, foreigners can buy their properties through the following steps:
- A form needs to be signed which is called the developer’s sales form or the offer purchase form. This form will be given by the seller for sub-sale transactions.
- If it is necessary, they can to apply for a loan.
- They have to submit some documents – passport’s photocopy, contact number, address, income tax number and the place where the tax is submitted (applicable for sub-sale purchase only) – to the legal representative.
- Within a couple of days from the date of form signing, they have to finish signing the SPA, mutual covenant (if needed) and other transactional documents.
- The 10% deposit to the vendor is also needed to be paid within these days.
- The solicitor will then ask for state authority consent, and the buyer has to provide some other documents in the meantime – a copy of the SPA, foreign purchaser’s passport, and more.
- Then it is time to pay the balance purchase price as per the rules.
How can foreigners buy at a lower price?
Foreign nationals who will stay in Malaysia for a long period of time, a 10-year visa to be specific, can get the chance of buying property at a lower price from a program named Malaysia My Second Home (MM2H). They just have to fulfill the following requirements –
- Foreigners under 50 years of age: Need to have a minimum balance of RM500, 000 in their accounts.
- Foreigners above 50 years of age: Need to have a minimum balance of RM350, 000 in their accounts.
Buying a property is, undoubtedly, one of the most emotionally charged purchases of one’s life. In the case of foreigners, the matter can be a sensitive one as they are making a transaction far away from home. However, to be honest, Malaysia is a suitable place for purchasing or living. Just be sure to do a little research about the place and property you want to buy; the rest will be a smooth ride.
If you have any questions about buying property in Malaysia, just fill out the form below and we will get back to you as soon as we can.