The two main ways for the foreigner to acquire property in Malaysia
There are two main ways for foreigner to buy property in Malaysia:
-buying new launch properties; or
-buying sub-sale properties
Buying new launch properties
- New launch properties are new properties that are sold directly by the developer.
- When you buy a new property, you typically pay for the property in ‘instalment’ based on pre-agreed milestones.
- This is typically standardized and developers usually use the installment money to fund the construction.
- Unbuilt new launch properties can be ‘brought’ with a relatively small amount of down payment (in this case, usually a reservation fee or booking fee).
- This is why they are usually popular with investors, but also subject to speculation.
Buying sub-sale properties
- If you are not buying a property directly from a developer, then there is a good chance you are buying a ‘sub-sale’ property.
- Sub-sale properties are basically properties which have been owned previously, being resold in the secondary market.
- Despite all the hype about new launch properties, agents love marketing these ‘hot sale’.
- The sub-sale market in Malaysia is significantly bigger.
Procedures for acquiring a property by a foreigner
- Sign the developer’s sales form or the offer to purchase from with the vendor, for sub-sale transaction.
- Apply for financing to purchase the property (if necessary)
- Provide the following documents to the solicitor:
-photocopy of passport
-correspondence address and contact number
-income tax number and the place of submission of the income tax (applicable for sub-0sale purchase only) - Within 14 days from the date of signing of the sales form (or offer to purchase), sign the SPA, deed of mutual covenant (if applicable) and other transactional documents.
- Pay the 10% deposit to developer/vendor.
- Solicitor to apply for state authority consent. Purchaser to provide the following documents to the solicitor:
-one certified true copy of the SPA
-one certified true copy of the Foreigner Purchaser’s passport
-one certified true copy of constitution (if the purchaser is a foreign company)
-latest quit rent and assessment receipt of the property
-application form under Section 433B of the National Land Code - Pay the balance purchase price in accordance with the Third Schedule of Schedule H Housing Development (Control And Licensing) (Amendment) Regulations 2015 (‘Schedule H’) or the SPA
- Pursuant to Schedule H, the developer shall deliver vacant possession of the property within 36 months from the date of the SPA (or such later date as may be approved by the relevant authority).
- Upon delivery of vacant possession, the developer shall deliver the strata title and certificate of completion and compliance to the foreign purchaser.
- In the case of sub-sale transaction, the vendor shall deliver vacant possession to the purchaser in accordance to the terms of the SPA.
The property buying restrictions that foreign investor should know about
One of the tricky things about buying property in Malaysia is that Government imposes a minimum purchase price for foreign property buyers.
Since 2014, the minimum property purchase price that the Malaysian government has imposed on the foreign buyer is RM1,000,000 (or about USD 225,000). It was increased from RM500,000, partially in an effort to curb speculation from foreign investors.
This is generally based on three things:
-where the property is located
-the title of the property (strata or individual title)
-whether the buyer holds a Malaysia My Second Home (MM2H) visa or not
The properties that foreigners cannot buy
In addition to the minimum price thresholds mentioned above, there are a few more types of properties that foreigners cannot buy.
There are as follow:
- Malay Reserve Land. Malay Reserve Land is exclusive land that cannot be sold to any race except for Bumiputras.
- Bumi Lots. Often confused with Malay Reserve Land. Each property development has a specific quote for Bumiputras called ‘Bumi Lots’. Whilst occasionally cases can be made for non-Bumis to buy them, they are off-bounds for foreign buyers.
- Low to Medium Cost Properties. Foreigners are not allowed to purchase low to medium cost housing. This is determined by State authorities but these are usually flats.
- Agricultural land. Most agricultural land in Malaysia is off limits for foreigners.
