Country Guides Country Guide: Malaysia

Date Published:

30/05/2008

Unlike some of its neighbours, Malaysia has made the property buying process pretty easy.

"Besides promoting itself as a top tourism destination, the 'Malaysia My Second Home Program" or MM2H is a government approach to actively attract retirees with a long term Social Visit Pass secured by a renewable 10-year multiple-entry visas and a streamlined way to buy property," says Chintan Mahida, international property expert of the Overseas Property Blog. "Participants must maintain a minimum balance of RM60,000.00 (£9,000) or £30,000 from the second year onwards and throughout their stay in Malaysia under this programme and must possess a valid medical insurance policy which is applicable in Malaysia."

Unlike some of its neighbours, Malaysia has made the property buying process pretty easy. Foreigners can purchase any kind of property with a minimum value of MYR250,000 (£37,000), limited to two residential properties- though these rules may be relaxed in the future.

A lot of beachfront land in Malaysia is Malay reserve land, which means only Malays are entitled to own the property. If you are planning to build your own home make sure you have retained a good lawyer to ensure you have proper title to the land.

With the large number of condominium projects underway, it is standard practice to buy new properties off-plan. Developers often include extra transaction costs which normally tend to come to 5% of the property price. Check when buying unfinished property from a developer that they hold a valid Developer's License and a valid Sales & Advertising permit.

If you decide to use an estate agent to help you find a property for sale in Malaysia, agency fees of up to 3% of the property's purchase price are usual; it is wise to withhold this payment until the whole property purchase transaction has been completed. In all other aspects of purchasing property, foreigners are treated in the same way as Malays, and are equally protected by the same real estate laws.

The standard process starts with a signed offer letter from the buyer being submitted to the vendor for acceptance, upon which an option to purchase contract will be signed by the vendor and purchaser and usually a 10% deposit non-refundable is payable, a non-completion clause should apply to both parties. From this point, you will have three months to find finance, perform a title deed check and move towards signing the Sale and Purchase Agreement. Be aware this process might be time consuming and the extended deadline may incur you interest on the outstanding amount left to pay. Malaysian banks are eager to issue mortgages to overseas citizens and tend to be liberal, you can often obtain up to 90% finance at interest rates of around 6.75%.

Upon completion, the balance of the property to pay transferred to the vendor and the Sale and Purchase Agreement is signed and sent to the land registry along with the memorandum of transfer form 14A of the National Land Code to transfer the title deeds into the name of the property investor. The Sale and Purchase Agreement must be stamped at the Stamp Office where Stamp Duty is paid subject to a property examination by the valuation department up to a maximum of 3%. Legal fees start at 1% subject to a minimum of MYR300 (£44.50). Other fees amount to around £25.

Non-resident individuals earning rental income in the country are liable to pay tax at a rate of 28% on net income with no personal relief being applicable, although income-generating expenses are deductible. Local authorities apply an assessment tax generally levied at a flat rate of 6% for residential properties and payable in two instalments along with another local tax quit rent levied on all landed properties generally estimated to be less than RM100 (£14) per year. No capital gains tax is payable, and no inheritance or gift taxes are levied in Malaysia.