Malaysia Property Buying Guide for Foreigners

Buying Guide

Malaysia Property Buying Guide for Foreigners

What kind of properties can foreigners own?

Foreign ownership of property is liberal (foreigners can even own 100% of the property) in Malaysia as long as minimum requirements are met. In law, foreigners can own any type of properties with the exception of:

  1. Properties valued less than RM1 million in most of the major states.
  2. Properties built on Malay Reserved land.
  3. Low and medium cost residential units as defined by the state authority
  4. Properties distributed to Bumiputera interest in any development project as determined by the state authority.

Having said that, foreigners can easily own a studio unit, condominium, landed properties including terrace houses and bungalows, commercial property, industrial property, agricultural land and industrial land (except Malay Reserved Land).

 

 


What is the minimum requirement for the property value?

Generally speaking, a minimum value of RM1,000,000 is applied to all kinds of property in every state. However, state authorities remain in power to amend the minimum value in the states that they control.

 


How can foreigners buy at a lower price?

Malaysia My Second Home (MM2H) programme is a programme tailored to foreigners who wish to stay in Malaysia for a long time (10-year visa). A large number of foreigners who used to work in Malaysia have already applied for this programme for their retirement in Malaysia.

Before putting in an application, foreigners below 50 years of age are required to prepare a minimum of RM500,000 in their Savings Account / Current Account / Fixed Deposit whereas those aged above 50 years of age need to have at least RM350,000 in similar accounts.

Despite the relatively high requirement, one clear advantage is that MM2H gives foreigners access to the property with a lower value. For Detail, please refer below tables:

 

STATE
THE MINIMUM THRESHOLD FOR FOREIGN RESIDENTIAL PROPERTY PURCHASE
WITH MM2H
Terengganu, Pahang, WPKL, Putrajaya and Negeri Sembilan RM1 million RM1 million
Selangor RM2 million (for Zones 1 & 2); RM1 million (for Zone 3) RM2 million (for Zones 1 & 2); RM1 million (for Zone 3)
Johor RM2 million (landed property in international zones); RM1 million (strata title & landed properties within non-international zones, except for Medini) RM 1 million
Kelantan & Sabah RM1 million RM500,000
Perak RM1 million RM350,000
Kedah RM600,000 (Kedah); RM1 million (Langkawi) No minimum
Perlis RM500,000 RM1 million
Sarawak RM500,000 RM300,000
Penang RM2 million (island); RM1 million (mainland) RM350,000
Malacca RM1 million (landed title); RM500,000 (strata title) RM1 million (landed title); RM500,000 (strata title)

*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

 


Financing with a home loan

The Margin of Finance (MOF) can go up to 80% for MM2H holders, while non-MM2H holders would generally get 50-70% MOF (*subject to the Bank finial approval). In this matter, foreigners are usually better off taking loans from foreign banks in Malaysia. However, all these come with an exception when they are married to a Malaysian citizen. In this case, the spouse will be required to take part in loan financing to enjoy MOF as high as 90%.

The Purchase Process for First-Time Home Buyers

Purchasing your own property is generally an exciting time. However, it could prove to be a daunting affair as there are likely to be many questions in your mind. Here, DPG expertise will try the best to help you out with a simplified but important step-by-step guide towards your property purchase.

  • #1

    Set the Goal with DPG Consultant

    To discuss with our expertise, to understand the basics of residential property in Malaysia such as the various types of homes and land types available, type of loans and lending guidelines as well as the qualities of a good developer.

  • #2

    Select a Property

    Ensuring you purchase the right home that fits all your requirements, some of the factors you should be analyzed include the property’s location, accessibility, surrounding infrastructure/amenities and pricing analysis.

  • #3

    Sign Letter of Offer/ Acceptance

  • #4

    Pay 2-3% earnest deposit of the purchase price.

  • #5

    Owner/ Seller Signs Letter of Offer

  • #6

    Sign the Sales & Purchase Agreement (SPA)

  • #7

    Hire a Solicitor

    Foreign Purchaser to provide the following documents to the solicitor:- (i) photocopy of the Foreign Purchaser’s passport (ii) correspondence address and contact number(s) of the Foreign Purchaser (iii) income tax number of the Foreign Purchaser and the place of submission of the income tax (applicable for sub-sale purchase only)

  • #8

    Pay the remaining 7-8% to make up the required 10% downpayment

  • #9

    Get SPA stamped & pay stamp duty

    Within fourteen (14) days from the date of signing of the sales form (or offer to purchase), the Foreign Purchaser to sign the SPA, deed of the mutual covenant (if applicable) and other transactional documents. Foreign Purchaser to pay the deposit of 10% of the purchase price to the developer or vendor.

  • #10

    Register transfer at the land office registry

    (i) One (1) certified true copy of the SPA (ii) One (1) certified true copy of the Foreign Purchaser’s passport (iii) One (1) certified true copy of the constitution (if the Foreign Purchaser is a foreign company) (iv) Latest quit rent and assessment receipt of the property (v) Application form under Section 433B of the

 What are the costs should involved?

 

Sale & Purchase Agreement Costs
Rate
SPA Stamp Duties 1% – 3%
SPA Legal Fee 0.4% – 1%
Loan Documentation Costs
Rate
Stamp Duties on a loan agreement 0.50%
Loan agreement legal fees 0.5% -1%

 


Example for Foreigners Purchaser major initial costs:

 

Type
Information
Purchase Price  RM 1,500,000
Margin of Finance 55%
Interest Rate p.a. 30 Years
Total Loan RM 825,000
Monthly Installment RM 4180.15

 

Sale & Purchase Agreement Costs Cost
SPA Stamp Duties RM 44,000
SPA Legal Fee RM 12,500
Loan Documentation Costs Cost
Loan Documentation Stamp Duties: RM 4,125
Loan Documentation Legal Fees: RM 7,600
Others: Cost
Downpayment: RM 675,000
  TOTAL = RM 743,225

 


Stamp Duties:

It is pertinent for a Foreign Purchaser to note that every conveyance of any property in Malaysia shall be subject to the following stamp duties:

 

Property Value Rate Example of Purchase Price of RM1,500,000
First RM100,000 1% 1% x RM100,000 = RM1,000
The next RM400,000 2% 2% x RM400,000 = RM8,000
The next RM500,000 3% 3% x RM500,000 = RM15,000
The Subsequent amount 4% 4% x RM500,000 = RM20,000
    TOTAL = RM44,000

*Stamp duty rates for properties valued more than RM1 million will be increased from 3% to 4% from January 1, 2019 onwards.

 


SPA Legal Fee:

Further, a Foreign Purchaser may also be subject to the payment of legal fees based on the Solicitors’ Remuneration (Amendment) Order 2017 as stated in the scaled table below:

 

Property Value Rate Example of Purchase Price of RM1,500,000
For the first RM 500,000 1% (subject to a minimum fee of RM 500) 1% x RM 500,000 = RM 5,000
For the next RM 500,000 0.80% 0.80% x RM 500,000 = RM 4,000
For the next RM 2,000,000 0.70% 0.70% x RM 500,000 = RM 3,500
For the next RM 2,000,000 0.60%
For the next RM 2,500,000 0.50%
Where the adjudicated value exceeds RM 7,500,000 Negotiable, but shall not exceed 0.50%
    TOTAL = RM 12,500

 


Stamp Duties on a loan agreement: 

If the Foreign Purchaser is a cash buyer, then they will only involve in one agreement which is Sale and Purchase Agreement (SPA). But, if a Purchaser need a bank housing loan, they will need to sign an agreement with the bank which call Loan Agreement. So, that requirement to pay Stamp Duties on a loan agreement: 

 

Property Value
Rate
Example of Loan Agreement of RM 825,000
The Subsequent amount 0.50% 0.5% x RM 825,000 = RM 4,125
    TOTAL = RM 4,125

 

 


Loan agreement legal fees:

If the Foreign Purchaser is a cash buyer, then they will only involve in one agreement which is Sale and Purchase Agreement (SPA). But, if a Purchaser need a bank housing loan, they will need to sign an agreement with the bank which call Loan Agreement. So, that requirement to pay Loan agreement legal fees:

 

Property Value
Rate
Example of Loan agreement value of RM 825,000
For the first RM 500,000 1% (subject to a minimum fee of RM 500) 1% x RM 500,000 = RM 5,000
For the next RM 500,000 0.80% 0.80% x RM 325,000 = RM 2,600
For the next RM 2,000,000 0.70%
For the next RM 2,000,000 0.60%
For the next RM 2,500,000 0.50%
Where the adjudicated value exceeds RM 7,500,000 Negotiable, but shall not exceed 0.50%
    TOTAL = RM 7,600

 


Other Fees:

 

OTHER FEES
COST
Stamping fee (per document) RM10
Adjudication fee RM10
Search fee RM60
Registration fee RM100
   TOTAL = RM180

Valuation and Property Services Department of Malaysia : https://www.jpph.gov.my/

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