Buying Property in Malaysia

Some Facts 

The Malaysian government encourages foreign investment in property by offering various incentives and tax benefits. A stable economy, boosted by a rapidly growing tourism industry and low property prices (on account of the currency, which is far below the dollar and the euro thereby giving an investor more) are some of the reasons why investing in real estate in Malaysia makes a lot of sense.

Earlier, the government had certain restrictions on ownership of property by foreigners but has more recently permitted foreign ownership of freehold properties. The only restriction that remains in force is that foreigners can only buy property valued not less than RM 500,000 for most states except Sarawak or Teranggan, which have higher starting prices.  

Real Estate Market in Malaysia 

With the numerous investment options available, investing in Malaysian real estate is in fact quite challenging. It is mainly because more often than not buyers are spoilt for choice. Before zeroing in on a property, it would be best to decide the purpose for which it is being purchased; residential, letting or as a holiday home. Once this is determined, you would be able to choose a suitable region depending on your budget and types of property available. Ideally you should begin your search for Malaysian properties on the internet even before you move there. Once you arrive do not venture to do things on your own; instead, consult a real estate agent or scour the classifieds in the local newspapers. Always opt for a property that has a certificate and when buying from a developer ensure that he has a valid selling permit and a license issued by the Ministry of Housing.  

Costs Likely To Be Incurred

1. Stamp duty on the purchase documents @1%-3% of the declared value of the property.

2. Lawyer's fees @ 0.4% - 3%.

3. Estate agent's fees @ 2% - 3%.

4. Other fees such as registration fee that is currently around RM 100, adjudication fee of around RM 10 together the additional costs and other fees add up to RM 180.

5. Insurance is mandatory for property financed by a bank. There are three types property insurance in Malaysia: House owner's insurance, Fire insurance and Householder's Insurance/content insurance. You may opt for one depending on the type of property you buy. 

Capital gains tax is no longer applicable in Malaysia.    

Procedure

Once you have selected a property, you will have to sign a Letter of Offer/Acceptance and pay a deposit of 3% of the total property price. After another 14 days have passed, you will sign the Sale and Purchase Agreement and pay another deposit of 7%.

Subsequently you have 3 months to complete the transaction and pay the amount due in full. 

The Sale and Purchase Agreement should be stamped at the Stamp Office to make it a valid document. The title deeds are transferred to the buyer only after survey of the property by the valuation department, registration at the Land Office Registry and payment of Stamp Duty at the Stamp Office. 

Hiring a real estate lawyer to assist you with compliances and the purchase procedure is highly recommended. English is widely spoken, and you will be able to get documents and contracts in English.  

Mortgages

Most Malaysian banks offer loans/mortgages to foreigners who hold a work visa or are in the country under the "Malaysia My Second Home Programme" though there are some banks that extend loans to foreigners without a visa. The loans extended usually cover up to 80% of the purchase price. Applying for a loan at a Malaysian local or national bank is highly recommended. Shop around and check to see if the bank is an Islamic or secular bank as terms would differ. 

The documents necessary would be passport or ID card, a copy of the latest bank statements and income tax returns, contract of sale or letter of offer, last 3 months salary slip and photocopy of land title (if available). Banks may ask for other additional documents depending on their individual policy requirements.  

Prime Property Locations 

Kuala Lumpur offers the highest potential for investment in property. Besides this Penang with its touristy feel is a hot bed for holiday properties and so is Port Dickson with its picturesque beaches and sea facing properties.