Depending on where you’re from in the world, as a foreigner buying a property in Malaysia, you might find that the system is either a total breeze, or a paperwork-filled slog. It’s all sort of down to what you’re used to;
What’s good to know is that Malaysia’s property market is well-regulated, with financial and practical oversight of everything, from the construction through to property loans;
Malaysia is a warm and welcoming country, and our property market is too!;
Sadly, that doesn’t mean you can sidestep the paperwork.
There’s a lot of regulation to keep you, and the industry as a whole, safe with your investment. So here’s everything you need to know as a foreigner buying a house in Malaysia.
Can Foreigners Buy Properties In Malaysia?In case the introduction hasn’t given the game away, foreigners can most definitely buy one in Malaysia, it's just a matter of deciding WHERE.
We welcome outside buyers into our property market, whether as an expat looking for a great new home, or an investor looking for a fantastic investment opportunity.
The definition of a foreigner is outlined in the National Land Code 1965. It is defined as any natural citizen who is not a permanent resident of Malaysia.
The legislation for foreign companies is slightly more complex, noting either:
- (a) A company, corporation, society, association or other body incorporated outside Malaysia;
- (b) An unincorporated society, association or other body which under the law of its place of origin may sue or be sued, or hold property in the name of the secretary or other officer of the body or association duly appointed for that purpose and which does not have its head office or principal place of business in Malaysia;
- (c) A company incorporated with 50% or more of voting shares held by non-citizen/foreign company or by both; OR;
- (d) A company incorporated with 50% of more of voting shares held by the company in (c);
Alongside the National Land Code 1965, purchase of properties by foreign individuals is covered by Malaysia’s Guidelines on the Acquisition of Properties.
Permission on property purchase for foreigners must be granted by the relevant state authorities.
The state is empowered to mandate individual requirements or payment terms at its own discretion. That means although you can buy property, you might have to pay a transaction sum for the privilege in some cases.
But before we delve deeper into the technical aspects of property purchase for you, let’s check in with WHY you’d want to purchase one in Malaysia;
They say, you're the environment you’re in. Below is a list of things you should know about Malaysians and our country, before you make your big decision. Who knows, you’re already well-versed with some of these facts (which is great!).
What Foreigners Coming To Malaysia Need To Know About Us!Settling down in a new place that’s not in your birth country is no small feat!;Therefore, it’s important to ensure that the new environment you plan live in is personally a match for you and the actual life you want to live.
With this in mind, here are some quirky things about us Malaysian people and our culture that you would want to know about, if you haven’t already!
1)We love foodDid we mention this already? Well, we can’t state this point enough! If you’re a foodie to begin with, then you’re in for a treat. For one, ‘Malaysian food’ is an umbrella term that’s super broad;
In other words, there's no such thing as one type of Malaysian food, simply because Malaysia is a melting pot of so many different racial and ethnic cultures!
Living here, you can have Chinese cuisine for lunch, Malay or Indian food for dinner, and then alternate the other days of your week with endless nuances of ethnic Sabahan and Sarawakan delights.
With 13 states under our nation, there are plenty of flavours to discover, beyond the usual nasi lemaks, laksas, and chicken rice!
And in case you feel homesick, you could easily find the comfort foods of your origin in many parts of our international cuisine scene.
2)We’re nice (and funny!) peopleMalaysians are evidently smiley, accommodating, and friendly people in general. You'll always be greeted with a “How are you?” upon your first encounter, and we'd be the last to penalise you for not knowing how to say a word in any of our local languages and dialects.
And whenever you’re faced with a car breakdown, you can count on your neighbours and random passers-by on the road to help you out!
We're also very funny, and our jokes, biting. Why? The cultural nuances that have developed from our shared multifaceted demography provide for entertaining banter and good sense of humour.
But, don’t just take our word for it; you’ve got to witness it for yourself, to love it! Of course, that’s not to say that we are always sunshine and daisies. For one...
3)There are many road ragers among usConsider yourself warned! The traffic in Kuala Lumpur and other major cities can be really bad, so it’s worth preparing yourself for the reality of hour-long drives (whether you own a car or take private car hire services such as Grabcar).
These road congestions are also why some Malaysians tend to release their pent-out frustrations while they're behind the wheel.
This is not to say that it’s okay (it’s not), but if you encounter some folks who would cut into your lane without warning despite it being against the law, then you already know why!
And don’t be alarmed when your Grab drivers will also curse to themselves when facing road ragers! Their reactions are a normal, impersonal part of facing the daily bustles on the highway.
Where we lack in self-control on the road, we make up for it with our pleasant chatting superpowers, which brings us to the fact that...
4)We’re linguistically uniqueOur ‘melting pot’ culture does not end at mere food and social pleasantries. We also take pride in our command of daily Manglish, which is a mix of Malay, Chinese, Tamil, and English.
That’s right, if you find yourself confused at first whenever we speak, it’s because there are four (or more!) languages used in our sentences. For example:
“Woi,macha! You want to makan here or tapau?’
The breakdown of this particular sentence is:
“Woi,macha(Tamil for brother)! You want to makan (Malay for eat) here or apau (Cantonese for takeaway)?”
That’s not yet counting in the way we end our sentence with the Malay ‘lah’ or Sabahan ‘bah’. A couple of months here, and perhaps you'll find yourself eventually speaking Manglish as well!
Now that we’ve got the basics covered, let’s talk about the kinds of properties you as a foreign resident can buy in Malaysia, should you decide to live here.
What Properties Can Foreigners Buy?Given the rules vary by state, there is no single definition that covers all of Peninsular Malaysia, Sabah, and Sarawak.
It’s worth noting that Malaysia works on a federal system, so the rules in states of Peninsular Malaysia differ from those of Sabah and Sarawak, which are empowered to introduce their own ownership legislation.
While there isn’t a nationwide definition of properties you can buy, there are three important types of property that foreigners are not eligible to purchase:
- Properties built on Malay reserved land
- Properties defined as low-cost or medium-cost affordable units as defined by the state
- Properties allocated to Bumiputera groups as part of a development project
Another thing worth mentioning for foreign buyers is the particular local terminology around flats, apartments, and condos, which can sometimes catch people out if they’re not familiar with Malaysia’s property market.
Buying Property In Malaysia Under MM2H*Editor's Note: MM2H is temporarily suspended since Aug 2020
Malaysia also offers a special avenue for property purchase via the Malaysia My Second Home (MM2H) visa. The MM2H scheme provides a renewable ten-year maximum, multiple-entry visa.
Eligibility criteria vary between Peninsular Malaysia, Sabah, and Sarawak, but requires an applicant to demonstrate a certain level of financial liquidity, either through offshore income or cash in the bank.
You will need to be sponsored by a Malaysian citizen. In Peninsular Malaysia, a registered MM2H agent can replace a citizen sponsor.
MM2H visa holders also enjoy certain benefits when it comes to owning property in Malaysia. That includes discounts on certain types of properties available on the market.
Foreign Property Ownership Limits By StateIf you’re looking to buy KL property, the rules are different than if you’re buying property in Sarawak. To keep you up-to-date on the latest rules, we’ve created a quick reference guide (for residential properties only), as well as how MM2H applies.
There are probably a few terms that are local to Malaysia in here, so let’s pick it apart:
- Strata titles: Strata titles in Malaysia relate to properties where multiple units are built as part of a shared development with shared amenities. In most cases that means apartments or condos.
- Landed property: Means property where a unit is developed as part of a private parcel, with no shared ownership responsibility, with an individual property title. That often means a bungalow, semi-detached, or terraced house.
- Overhang: Refers to properties in Malaysia’s real estate market where supply currently outstrips demand, such as luxury condos in large developments. These will be defined by the state authorities.
As well as minimum price eligibility, states are also allowed to charge levies for foreign residential property purchases.
In Penang, the levy is currently 3%, while it is 2% in Melaka and Johor. That means for example if you buy a property for RM1 million in Johor, you’ll need to pay RM20,000 levy to the state government.
Penang, Melaka, and Johor are the only states which impose levies at the time of writing.
I’m From Singapore, Can I Buy Property In Malaysia?Singapore and Malaysia have a close relationship, and not just because of that border we share. This buying guide from our counterparts at PropertyGuru.com.sg is a good place to start.
While you don’t get any preferential treatment (sorry!), there IS one point of importance to note for our friends over the border.
If you own a Housing & Development Board (HDB) flat in Singapore, you will need to meet your minimum occupation period before you are allowed to buy a second home — even if it’s in Malaysia.
That means you have to wait five years after purchasing an HDB flat to buy a property in Malaysia.
How To Buy A House In Malaysia As A ForeignerOk, we’ve been through the rules and regulations, as well as the eligibility for certain homes. So what about the process? Here’s a super simple breakdown.
Step 1: Explore the thousands of properties for sale in Malaysia to find the right one for you.
Step 2: Submit intention to buy through a Letter of Offer or developer’s sales form with intent to purchase, and agreed upfront payment (usually 2-3%).
Step 3: Apply for financing of property if required. The margin of finance available with Malaysian banks varies depending on your circumstances. Under MM2H, it is usually 80% of the total purchase price. Without MM2H, the maximum is around 70%. Alternatively, sourcing your home loan overseas is another option.
Step 4: Provide your lawyer with the relevant documents — photocopy of passport, correspondence address and contact details, income tax details, as well as location of tax payments for purchase of secondary market properties.
Step 5:Within 14 days of letter of offer, a Sale and Purchase Agreement (SPA) should be signed. This lays out the terms and conditions of the sale, including details of what is covered in the sale such as kitchen appliances etc. At this stage, a 10% down payment is required. The 2-3% paid at Step 2 contributes towards this 10% deposit total.
Step 6: With the agreement made, your solicitor will apply for final state authority consent. It’s important to make sure your property meets the noted requirements by state prior to this point. Submission documents include:
- 1 certified true copy of SPA
- 1 certified true copy of your passport
- 1 certified true copy of company constitution (if applicable)
- Latest quit rent assessment receipt for the property
- Application form as per section 433B of National Land Code
Step 8: Developer delivers vacant possession within 24 months for individual title, or 36 months for strata title properties under development. In subsale/secondary market purchases, the transfer date is based on the agreed timeframe as per the SPA, and signing of the Memorandum of Transfer.
Stamp Duty For Foreign Buyers
Wait a minute, don’t forget about the costs! Residential property purchases in Malaysia are subject to payment of stamp duty at the point when the SPA is stamped.
Residential Property Price
RM100,001 – RM500,000
RM500,001 – RM1 million
Over RM1 million
Oh, and our lawyers would want to be paid for their hard work too. So don’t overlook the legal costs, which are as follows:
Residential Property Price
1% (subject to min fee of RM500)
RM500,001 – RM1 million
RM1,000,001 – RM3 million
RM3,000,001 – RM5 million
Over RM5 million
Over RM7.5 million
Negotiable (will not exceed 0.5%)
With the process complete, and the fees paid, you’re just about ready to discover just why everyone gets so excited when they talk about "makan time", and why people keep saying "lah"at the end of sentences! It’s an amazing country to explore, and we welcome you on your journey with us.