Guide to Purchase Completed Property in Malaysia
In Malaysia, property purchase process is lengthy and complicated as it involves many parties in which if any party unable to fulfill their obligations within the time frame, the whole process will be delayed. [Check out the the 2014 Latest Changes in Property Investment by Foreigners!]
Property Purchase Procedure for Foreigners Complete in An Average of 4 to 5 months!
Once you have confirmed and booked the property, the whole legal proceeding will take an average of 2-3 months for local Malaysians and average 4-6 months to complete for foreigners. There are instances where the deal can be delayed up to 6 – 8 months.
A Standard Purchase Procedure Property in Malaysia
Once you selected the property, acting as your Independent Investment Consultant, we will negotiate the right terms, timeline and vet the booking form to protect the earnest deposit, usually 3% of the purchase price with the real estate agency or seller’s lawyer. For purchase directly with developers, the booking fee amount will be determined by them. It is advisable to pay the booking fee after final terms and conditions agreed by both buyer and seller. The major terms and conditions in the booking document will be translated in the Sales and Purchase Agreement(SPA).
We then appoint a lawyer for you to start the legal proceeding. Usually within 14 days, the appointed lawyer and seller’s lawyer will discuss and agree with the terms and conditions to generate the Sales and Purchase agreement (SPA) for you and seller to sign. At this stage, you will need to pay the 7% of the purchase price.
Your appointed lawyer will then send the stamped SPA together other required documents of the property to the Land Office to apply for consent of transfer ownership. With the Land Office’s consent average within 1 1/2 to 2 months depend on the property profile. After the Land Office’s approval has been obtained, you will be given 90 days to pay up your differential sum of 90% together with the stamp duty.
If your purchase is with bank facilities, you are required to pay your differential sum prior to the bank release the loan amount. Both payments of your cash and bank loan made of total 90% have to be completed within 90 days after Land Office’s consent is obtained.
The stages to pay the differential sum, legal fee, valuation report, disbursement to respective parties, we will provide you with an Estimate Payment Schedule align with each approval obtain for each stage of the legal process with the time-line recommendation and manage by us as your Independent Investment Consultant throughout the legal process. It is advisable that you observe our recommended you follow the given timeline throughout for making of payments to avoid penalty charges for being late. The usual standard penalty clause will have interest charged range from 8% to 10% per annum on the outstanding sum.
Other standard clauses in the Purchase Agreement will also include all payments paid by the buyer will be refunded if land office consent is not obtained. Approval is solely at the discretion of the State Government (Land Office).
Legal Fee for preparing and handling of Sales and Purchase Agreement for completed (secondary) property:
For the first MYR 150,000 – 1% (minimum MYR300)
For the next MYR 850,000 – 0.7%
For the next MYR 2,000,000 – 0.6%
For the next MYR 2,500,000 – 0.4%
Stamp Duty charged by Land Office on your property purchase price:
On the first MYR 100,000 – 1 %
On the next MYR 400,000 – 2%
On the reminder – 3%
Property bought under bank financing would require you to pay the loan agreement fee as well as stamp duty. Please refer to bank financing for the fees involved.
In general, a property purchaser under property financing would require to pay a total of approximate 4% to 5% of the purchase price for Sales and Purchase Agreement (SPA), Loan Agreement, stamp duty and valuation reporting.
For property cash purchaser, the total fees would be approximate 2% to 2.5% of the purchase price for legal fee and stamp duty. For purchase directly from Developer for uncompleted properties, find out more here...
[Read: Latest Malaysia Property Gain Tax on Disposal]
FAQ on Property Ownership
1. Are there any restrictions on my purchase?
The Economic Planning Unit’s Guideline on Acquisition of Properties (updated January 2010) state that foreigner is not allowed to purchase any types of properties below MYR500,000 from 1 January 2010. Foreigners also not allowed to purchase (i) low or low-medium cost properties, (ii) properties built on Malay reserve land, and (iii) properties allocated to the Malay. More information can be obtained at www.epu.gov.my.
2. Do I need to obtain any special approvals?
You are required under Section 433B of the National Land Code to obtain the respective state government’s (Land Office) consent. With this approval, the transfer of ownership title of the property is allowed to your name.
3. Do I need to engage a Lawyer for the Purchase?
Yes, we will appoint the lawyer to represent you to coordinate with seller’s lawyer, banker, land office, valuer, etc. In addition to this, we will ensure the lawyer to conduct a search on the property to confirm ownership and perform a bankruptcy/winding-up search on the vendor before you make any commitments. Under our guidance with the booking conditions in placed, the lawyer will prepare the necessary legal documentations best to protect your interest throughout the legal proceeding.
4. As a foreigner, is my property buyer’s interest being protected under Malaysian law?
The Housing Development (Control and Licensing) Act 1966 regulates properties under construction and the housing developers. It also protects the interests of all house buyers including foreigners.
5. In the event of my death, who will inherit my property?
If you are a non-Muslim, your property may be distributed according to your will or the Distribution Act 1958 if you do not have a will. A Muslim’s estate will be distributed according to Syariah law. No inheritance tax is levied in Malaysia.
6. Are there any restrictions on selling my property?
No, there isn’t, unless your state government’s approval contains such conditions. To-date, there is none of such conditions on selling have been imposed for foreigners.
7. Can I transfer my earnings from this property out of Malaysia?
The Central Bank of Malaysia does not impose any restriction on the repatriation of profits, rental or proceeds from divestment of investments in Malaysia by foreigners.
Feel free to contact us to find out more on our hassle-free services to assist you to purchase Malaysia’s property. We ‘simplify your property investment” in Malaysia.