Before you buy or sell property in Malaysia, you should consult with a qualified real estate attorney. An experienced real estate attorney can not only guide you through the buying and selling process legally, but also put you in touch with reputable real estate agents and lenders.
Because of their extensive history of collaboration with the lawyer, you can rest assured that they will get the job done.
Buying property in Malaysia might be subject to different regulations depending on the state you’re interested in. While the federal government may enact sweeping property restrictions, individual states are free to apply these rules (or not) as they see fit.
Limiting the purchase price of real estate by non-citizens is one example. Penang Island and MM2H visa holders have additional requirements, thus it’s important to keep up with the ever-changing rules of each individual state.
Approvals
Getting the okay from the Foreign Investment Committee (FIC) isn’t necessary for most out-of-country buyers of real estate nowadays. Approval from the state authorities is still necessary for out-of-country buyers; these officials look at things including the property’s location, the type of property, and, for new projects, what proportion of the units are purchased by foreigners.
Your lawyer will likely be responsible for submitting the necessary paperwork to obtain this type of clearance. A wait of up to six months for approval from a state is not uncommon. All foreigners would need FIC clearance to make property purchases of less than RM20 million per unit.
Rights to Real Estate
There are two types of titles that can be held by a foreigner in Malaysia. Both freehold (where the owner has undivided, perpetual ownership) and leasehold (where the tenant has only a temporary interest in the property) are legal forms of property ownership (which allows the owner to stay in possession for a limited period). Leases typically begin with a term of 99 years and may be renewed for a fee.
A “title” is issued for a finished single-family home, whereas a “strata title” is issued for a multi-unit building. It is possible that the issuance of the strata title will be delayed in the case of newly constructed residential complexes.
In a business transaction, the contract is the binding legal document.
The “Sale & Transaction Agreement” is the legal document that formalises the terms of property purchase (SPA or S&P). Although they are pretty typical, you should always have an attorney look through any contract you are about to sign to protect your rights.
The transfer of ownership from seller to buyer also requires the execution of a memorandum of transfer. If the property is part of a new development and the developer does not yet own full title, the SPA will specify that the seller will provide complete title as soon as possible.
Restrictions
Subject to the aforementioned requirements, foreigners may purchase an unlimited number of properties in Malaysia. Any property in Malaysia, with a few exceptions, can be owned by a foreigner.
First, any and all buildings constructed on Bumiputra*-reserved territory.
Two, Bumiputra are given preference in purchasing real estate.
Properties at moderate and low prices (subject to approval by State Authority)
The majority of farmable land 4
Any person who is a Malay or aboriginal to Peninsular Malaysia, as defined in Article 160(2) of the Federal Constitution of Malaysia; any person who is a Sarawakian or Sabahian, as described in Article 161A (6)(a) or (b) of the Federal Constitution of Malaysia.
Buying and Selling Process
Getting a real estate lawyer on board to help you out with your purchase is the first order of business when looking to buy property in Malaysia. After settling on a piece of real estate, the buyer and seller will sign a letter of offer and acceptance and the buyer will be required to put down an earnest money deposit of 1% to 3%.
The signing of the Sale and Purchase Agreement occurs within 14-30 days. To reach the required 10% down payment, the buyer needs put down an additional 7% to 9%. Once the buyer has obtained approval from the Land Office, he or she has three months from the date of signing to make the final payment.
In order to be legally binding, the Sale and Purchase Agreement must be stamped by the Stamp Office. Stamp Duty is paid to the Stamp Office following the valuation department’s review of the property. The Land Office Registry is responsible for recording the transfer. All of these tasks are handled by your real estate attorney after you sign the Sale and Purchase Agreement but before the transaction is finalised. Contact us today to buy or sell property in Malaysia fast.
