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A Foreigner’s Complete Guide - Buying a Property in Malaysia

November 29, 2021

The Possibility of  Purchasing Properties in Malaysia

We always welcome buyers outside of Malaysia grounds to look into our property market, whether an expat looking for a great new home or an investor looking for a fantastic investment opportunity.


The National Land Code 1965 defines a foreigner as any natural citizen who is not a permanent resident of Malaysia.


The legislation for foreign companies is slightly more complex, noting either:

  1. A company, corporation, society, association or other body incorporated outside Malaysia; 
  2. An unincorporated community, association or other body which under the law of its place of origin may sue or be sued, or hold property in the name of the secretary or other officer of the body or association duly appointed for that purpose and which does not have its head office or principal place of business in Malaysia;
  3. A company incorporated with 50% or more of voting shares held by non-citizen/foreign company or by both; OR 
  4. A company integrated with 50% of more of voting shares held by the company in (c);


Alongside the National Land Code 1965, Malaysia's Guidelines on the Acquisition of Properties covers the purchase of properties by foreign individuals.


The relevant state authorities must grant permission on property purchases for foreigners. However, the state is empowered to mandate individual requirements or payment terms at its discretion. That means although you can buy a property, you might have to pay a transaction sum for the privilege in some cases.


But before we delve deeper into the technical aspects of property purchase for you, let's check in with WHY you'd want to purchase one in Malaysia. 


Malaysia: Know All About Us!

It's essential to ensure that the new environment you plan to live in is personally a match for you and the lifestyle you wish to indulge.


Here are some quirky things about us Malaysian people and our culture that you will want to know about if you haven't already!


1) Food is love 

Well, we can't state this point enough! But, if you're a foodie, to begin with, then you're in for a treat. For one, 'Malaysian food' is a super broad umbrella term, where you get spoilt for choices with flavours of Malay, Chinese, Indian, Sabahan, Sarawakian, and even comfort food of your origin in our international cuisine scene. 


With 13 states under our nation, there are plenty of flavours to discover beyond the usual nasi lemak, laksa, and chicken rice!


2) We're friendly, alright? 

Malaysians are generally smiley, accommodating, and friendly people. You'll always get greeted with a "How are you?" upon your first encounter, and we'd be the last to penalise you for not knowing how to say a word in any of our local languages and dialects. And whenever you're in trouble, you can count on anyone to help you out!


We're also hilarious, and our jokes, biting. Why? The cultural nuances developed from our shared multifaceted demography provide entertaining banter and a good sense of humour.


3) Truly linguistically unique

Our ‘melting pot' culture does not end at mere food and social pleasantries. We also take pride in our command of daily Manglish, a mix of Malay, Chinese, Tamil, and English.


That's right! If you find yourself confused whenever we speak, it's because there are four (or more) languages used in our sentences. For example:


"Woi, macha! You want to makan here or tapau?’


The breakdown of this particular sentence is: 

"Woi, macha (Tamil for brother)! You want to makan (Malay for eat) here or tapau (Cantonese for takeaway)?"


That's not yet counting in the way we end our sentence with the Malay 'lah' or Sabahan' bah'. A couple of months here, and perhaps you'll find yourself eventually speaking Manglish as well!


Now that we've got the basics covered, let's talk about the kinds of properties you as a foreign resident can buy in Malaysia, should you decide to live here.


Properties You Can Buy

Given that the rules vary according to the different states, there is no single definition covering all of Peninsular Malaysia, Sabah, and Sarawak.


It's worth noting that Malaysia works on a federal system, whereas Sabah and Sarawak differ as they are empowered to introduce their legislation.


While there isn't a nationwide definition of properties you can buy, there are three essential types of property that foreigners are not eligible to purchase:


  1. Properties built on Malay reserved land
  2. Properties defined as low-cost or medium-cost affordable units as defined by the state
  3. Properties allocated to Bumiputera groups as part of a development project


Don't worry, though; there are many other property types you can still buy, from outstanding condominiums to luxury townhouses.  


Another thing worth mentioning is the local terminology around flats, apartments, and condominiums, which can sometimes catch people out if they're unfamiliar with Malaysia's property market.


Purchasing Under MM2H

*Editor's Note: MM2H temporarily suspended since Aug 2020


Malaysia also offers a particular avenue for property purchase via Malaysia My Second Home (MM2H) visa. The MM2H scheme provides a renewable ten-year maximum, multiple-entry permit.


Eligibility criteria vary between Peninsular Malaysia, Sabah, and Sarawak but require an applicant to demonstrate a certain level of financial liquidity, either through offshore income or cash in the bank.


You will need to be sponsored by a Malaysian citizen. In Peninsular Malaysia, a registered MM2H agent can replace a citizen sponsor.


MM2H visa holders also enjoy certain benefits when it comes to owning property in Malaysia. That includes discounts on certain types of properties available on the market.


Foreign Property Ownership Limits by State

If you're looking to buy KL properties, the rules are different from purchasing a property in Sarawak. To keep you up-to-date on the latest regulations, we've created a quick reference guide (for residential properties only), as well as how MM2H applies.


State

Minimum Price

MM2H Price

Johor 

  • RM2 million (landed property in designated international zones)
  • RM1 million (high-rise/strata title property within non-international zones, except for Medini)

RM1 million

Kedah 

  • RM600,000 (Kedah)
  • RM1 million (Langkawi)

RM1 million

Kelantan 

RM1 million

RM500,000

Malacca 

  • RM1 million (landed title)
  • RM500,000 (high-rise/strata title)
  • RM1 million (landed title)
  • RM500,000 (high-rise/strata title)

Negeri Sembilan

  • Overhang landed property: RM1.8 million (island)
  • RM750,000 (mainland)
  • Overhang strata/high-rise properties: RM800,000 (island)/RM400,000 (mainland)

RM500,000

Penang

  • Overhang landed property: RM1.8 million (island)
  • RM750,000 (mainland)
  • Overhang strata/high-rise properties: RM800,000 (island)/RM400,000 (mainland)

RM500,000

Perak 

RM1 million

RM350,000

Perlis 

RM500,000

RM1 million

Sabah

RM750,000 (overhang units)

RM500,000

Sarawak 

RM500,000

RM300,000

Selangor*

(Additional criteria: Foreign buyers in Selangor are limited to landed properties with landed strata titles. Therefore, foreigners cannot buy properties at auction or own agricultural land.)

RM2 million

  • RM2 million (for Zones 1 & 2)
  • RM1 million (for Zone 3)

Pahang, Terengganu

RM1 million

RM1 million

Putrajaya, Kuala Lumpur, Labuan*

RM1 million

RM1 million

*As reported by PropertyGuru Malaysia

*While there was an announcement in Budget 2020 for new price thresholds, the Malaysian government saw a sudden reshuffle in the leading party, which led to the thresholds remaining the same for now till there is an official announcement confirming it.


There are probably a few terms that are local to Malaysia in the table above, so let's pick them apart:


  1. Strata titles: Strata titles in Malaysia relate to properties where multiple units get built as part of shared development with shared amenities. In most cases, that means apartments or condos.
  2. Landed property: Means property where a unit is developed as part of a private parcel, with no shared ownership responsibility, with an individual property title. That often means a bungalow, semi-detached, or terraced house.
  3. Overhang: Refers to properties in Malaysia's real estate market where supply currently outstrips demand, such as luxury condos in significant developments. The state authorities will define these.


As well as minimum price eligibility, states can also charge levies for foreign residential property purchases.


The levy is currently 3% in Penang, while it is 2% in Melaka and Johor. That means, for example, if you buy a property for RM1 million in Johor, you'll need to pay a levy of RM20,000 to the state government.


Penang, Melaka, and Johor are the only states which impose levies at the time of writing.

Steps in Buying a House 

Here's a super-simple breakdown.


Step 1: Explore the thousands of properties for sale in Malaysia to find the right one for you.

Step 2: Submit intention to buy through a Letter of Offer or developer's sales form with the intent to purchase and agreed with upfront payment (usually 2-3%).

Step 3: Apply for the financing of property (if required). The margin of finance available with Malaysian banks varies depending on your circumstances. Under MM2H, it is usually 80% of the total purchase price. Without MM2H, the maximum is around 70%. Alternatively, sourcing your home loan overseas is another option.

Step 4: Provide your lawyer with the relevant documents — photocopy of passport, correspondence address and contact details, income tax details, as well as the location of tax payments for the purchase of secondary market properties.

Step 5: You sign a Sale and Purchase Agreement (SPA) that lays out the terms and conditions of the sale, including details covering the sale such as kitchen appliances etc., within 14 days of the offer letter. 10% down payment required. The 2-3% paid at Step 2 contributes towards this 10% deposit total.

Step 6: With the agreement made, your solicitor will apply for final state authority consent. It's essential to make sure your property meets the noted requirements by the state before this point. Submission documents include:

  • One true certified copy of SPA
  • One true certified copy of your passport
  • One true certified copy of the company constitution (if applicable)
  • Latest quit rent assessment receipt for the property
  • Application form as per section 433B of National Land Code

Step 7: Pay the remaining balance of 90% on the property purchase price defined under the SPA, or Schedule H Housing Development (Control and Licensing) (Amendment) Regulations 2015.

Step 8: Developer delivers vacant possession within 24 months for the individual title or 36 months for strata title properties under development. In subsale/secondary market purchases, the transfer date depends on the agreed timeframe per the SPA and signing of the Memorandum of Transfer.

Stamp Duty for Foreign Buyers

Let’s not forget about the costs! Residential property purchases in Malaysia are subject to payment of stamp duty at the point when the SPA gets stamped.


Residential Property Price

Stamp Duty

First RM100,000

1%

RM100,001 – RM500,000

2%

RM500,001 – RM1 million

3%

Over RM1 million

4%

*As reported by PropertyGuru Malaysia

Oh, and our lawyers would want to be paid for their hard work too. So don't overlook the legal costs, which are as follows:


Residential Property Price

Legal Cost

First RM500,000

1% (subject to min fee of RM500)

RM500,001 – RM1 million

0.8%

RM1,000,001 – RM3 million

0.7%

RM3,000,001 – RM5 million

0.6%

Over RM5 million

0.5%

Over RM7.5 million

Negotiable (will not exceed 0.5%)

*As reported by PropertyGuru Malaysia


With the process complete and the fees paid, you're just about ready to discover just why everyone gets so excited when they talk about "makan time" and why people keep saying "lah" at the end of their sentences! It's a beautiful country to explore, and we welcome you on your journey with us.

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About Rimbun

Rimbun is the flagship project of Amphil Corporation Sdn Bhd, which embodies their passion and philosophy of building well-designed green homes with unique features that will generate excellent investment value. It results from the close collaborative work between Amphil and a team of innovative, reputable and committed technical consultants who have decades of experience in a whole range of luxury projects.