Whether you’re looking to invest in real estate or planning your retirement, you might want to consider doing so in Malaysia. Between its relatively hassle-free way of living and vast array of scrumptious local delicacies, Malaysia has become an ideal location for foreigners to acquire property.
Before jumping into it, you should probably look into the rules and restrictions that comes with foreign property ownership in Malaysia. Here are some of the basic guidelines you need to abide by before purchasing a property in Malaysia:
- Types of properties that are eligible for purchase
When it comes to purchasing properties in Malaysia, foreigners are usually granted quite a fair amount of flexibility. Previously, the general rule would have been to abide by the minimum property value of RM1 million. However, as announced in the Malaysia Budget 2020, the minimum amount for high-rise properties specifically has now been reduced to RM600, 000 in urban areas. This is to aid in overcoming the property overhang that is currently faced in Malaysia.
Interested buyers would also have to consider the ruling of individual state authorities. For example, the property value in majority states and federal territories in Malaysia practice a minimum rate of RM1 million, while in Penang the minimum value stands at RM2 million. While there are numerous types of properties for foreigners to choose from, there are also some specific categories that are unavailable for purchase by a foreigner. Among them are:
- Malaysia My Second Home (MM2H)
Under the Malaysia My Second Home (MM2H) scheme, foreigners are allowed to purchase homes via a 10-year visa programme, allowing for properties to be purchased at a lower price in certain states. This programme caters to those who are looking to reside for a longer period or retire in Malaysia. To qualify for the MM2H scheme, foreigners below the age of 50 years old are required to have at least RM500,000 in their bank accounts, whereas those above 50 years of age are required to have a minimum of RM350,000 in their bank accounts. Through the MM2H scheme, foreigners are able to invest in properties located in Kelantan, Melaka and Sabah for only Sabah for only RM500,000 and RM300,000 for properties located in states such as Perak and Sarawak.
Generally, the minimum purchase price for properties in based on three aspects:
● The location (state) of the property
● Does the property have an individual or strata title
● Is the buyer an existing MM2H applicant
In terms of Margin of Finance (MOF), the MOF usually increases to 80% for MM2H holders, on the other hand non-MM2H holders is eligible to receive 70% MOF. However, should the foreigner marry a Malaysian citizen, the MOF will increase to 90%. Foreigners are also advised to seek loans from foreign banks in Malaysia to get a better MOF.
When you’re ready to purchase:
- Hire a Property Lawyer
Getting help from a qualified local real estate lawyer could potentially ease the transaction process, as the lawyer would be well aware of the rules and regulations that need to be abided by. Furthermore, upon agreeing on an offer, the lawyer could draft a Letter of Offer/Acceptance. Apart from drafting contracts, a real estate lawyer should also research the property to confirm its ownerships, as well as ensure that the property will not be affected by any major infrastructure projects that could potentially decrease the property value. Most importantly, the lawyer liaises directly with the developer’s lawyer; hence you are highly unlikely to be susceptible to being scammed.
- Securing the property
To secure your property, you’ll need to either sign the developer’s sale form, or the offer to purchase form provided by the seller should the property be a sub-sale property. Upon signing either form respectively, you will then be required to sign the Sales and Purchase Agreement (SPA) with the seller, deed of the mutual covenant (if applicable) and other transactional documents within 14 days. The purchase agreement is then stamped by the Stamp Office, followed by the verification of the purchase price. A 10% deposit will then be paid to the developer or seller. Do note that you are also liable pay up to 3% – 4% stamp duty.
- Completing the sale
Upon signing the respective forms, you will then have up to three months to complete the balance purchase payment as stated according to the Third Schedule of Schedule H Housing Development (Control and Licensing) (Amendment) Regulations 2015 (“Schedule H”) or the SPA. After the change of ownership is registered at the Land Office Registry, the developer must ensure the property becomes vacant within 3 years from the date of the SPA, unless stated otherwise by the relevant authority. Once the property becomes vacant, the developer will hand over the strata title along with the certificate of completion and compliance to the foreign buyer. Should the property be a sub-sale purchase, the seller will deliver vacant possession to the foreign buyer according to terms agreed upon in the SPA.
Whether your interest is to purchase for investment purposes or you’re looking to migrate to Malaysia, 2020 would be the perfect opportunity for you to do so, especially since the Malaysia Budget 2020 caters to decrease the minimum amount required for foreigners to purchase high-rise properties in Malaysia’s urban areas. Get in contact with our property managers at +6019-2758200 and find out how you can own properties in Malaysia, today!