A Handy Guide for Foreigners to Buy Residential Property in Malaysia
The Real Estate Laws Series. 17 January 2023
Have you ever dreamed of owning residential property abroad? Malaysia is an attractive destination for foreigners looking to purchase residential property. Situated between Indonesia and Thailand with some of the most beautiful beaches in the world and numerous modern cities, Malaysia also has a vibrant economy and an attractive property market. Here is a guide to buying residential property in Malaysia for foreigners.
2. Understanding Local Property Laws:
The first step in the buying process is to understand the local property laws. Many areas of Malaysia have restrictions on foreign ownership, depending on the location, but generally those who are not citizens or permanent residents of Malaysia can purchase residential property with up to two to three stories, up to certain sizes. Foreigners can also buy property in certain designated developments that are approved by the Malaysian government.
Additionally, foreigners are not allowed to buy certain types of land such as agricultural land, are required to obtain permission from the local authorities, and pay higher taxes and fees. It is important to familiarise yourself with the laws before investing in any property.
In recent years, the Malaysian government has introduced and promoted the social visa initiative named the MalaysiaMy2ndHome Programme. The terms and conditions could be reviewed at the official website of the related government agency tasked with promoting this initiative.
3. Setting a Budget:
Before you begin the property-buying process, it is important to set a budget for how much you are willing to spend. Consider the total cost of the transaction, including the purchase price, any taxes and fees, and closing costs. Some areas of Malaysia can be quite expensive and there is a minimum price threshold for residential properties to be sold to foreigners. Each state authority in Malaysia imposes its own cap and type of property allowed to be purchased by foreigners. Further, you would also find that the market pricing differs throughout the country. For example, the capital city of Kuala Lumpur is one of the most expensive real estate markets in the country while most foreigners also prefer the idyllic tropical island locations and settings in the northern part of Malaysia such as Penang.
4. Finding the Right Property:
The next step is to find a property that fits your budget. Fortunately, there are a number of ways to go about this. You can use online portals, real estate agents, and property developers to search for potential properties. If you are lucky enough to be in Malaysia at the time you are looking to buy, you may also want to visit the area you’re interested in to get a better sense of the property and neighborhood. Most Malaysians are friendly and are able to converse in conversational English (if English is your choice of language), so communication is generally easy to convey and understand.
5. Applying for a Loan:
If you are taking a loan to finance your purchase, you will need to apply for a mortgage in Malaysia. Generally, it is advisable to be able to prove that you have recurring income of at least MYR5,000/month and some other proof of eligibility. It is also important to keep in mind that banks in Malaysia may not offer high margin of loans to foreigners, so be sure to check with the bank before you apply. At the moment, unlike say Dubai, most Malaysian property developers do not accept cryptocurrency as tender, so cold hard cash is still very much welcomed.
6. Negotiating the Sale and Making an Offer:
Once you have found the property you want, the next step is to negotiate the sale and make an offer. The process can be complicated, so it is important to have a real estate agent to help you with the negotiations. Plus, having an experienced agent on your side can help you get a better deal.
7. Completing the Purchase:
The ext few steps is to appoint a good lawyer or solicitor to represent you to prepare or review the sale & purchase agreement and other related conveyancing documents; applying for the foreigner consent to purchase or consent to purchase AND charge from the state land authority; applying and obtaining a bank loan to finance your property, and other processes to complete the purchase which should take place roughly between 3 months to within a year. This involves paying the purchase price, any taxes or fees due, land stamp duty due and any closing costs. Finally, if all goes well , at the end of it all , You would be able to register the property in your name and make sure all the documents are in order.
These are the steps for buying residential property in Malaysia as a foreigner. The process can be complicated, but it is well worth it for the chance to own a piece of paradise.
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