Guide to Purchase Under Construction Property in Malaysia- Overview
For under construction property, a purchaser will deal directly with the developer. The process is the same, except the payment made by you or your banker (if your property is being financed) will be in stages according to the development progress of the property. All developments in Malaysia are subject to Housing Board Act. Most shop houses are not under HDA provision.
Always select a reputable developer with good record of past performances on delivery of their projects. Most projects will have a timeline of 36 months to deliver the property from the date of Sale and Purchase Agreement (SPA) signed. Any delay of delivery, developer will be liable and the reimbursement as per agreed terms and conditions in your SPA.
For purchase done directly with developers, they will have their panel lawyers and bankers assigned to their property. Most projects launched by developers usually permit purchasers to apply for a bank loan. Your eligibility for the loan is solely at the discretion of the bankers, the approval will be based on the property development profile as well as your personal profile.
For most properties under construction, developers will not allow purchasers to sell their property before the handover of keys. The transfer of ownership of individual title will be made after the handover extracting from the Master/Strata Title. At this stage, the purchaser has to pay the application fees to Land Office only.
On your purchase, some developers may offer free legal fee on SPA or full refund of your booking fee if your loan is not obtained from the panel bankers assigned by developers.
Guide to Purchase Under Construction Property in Malaysia- The steps involved
1. Sign the letter of offer/intent. You will pay an earnest deposit which forms part of the purchase price.
2. You are then required to execute the SPA, often within 14 days of signing the letter of offer/intent.
3. The developer will execute a memorandum to transfer the title to you. If there is no title, deed of assignment will executed assigning all developer’s rights and benefits under the principal sale and purchase agreement to you.
4. You must also execute land office forms for the application of the state government’s approval of your purchase.
5. Upon signing the SPA, you will have to pay up the 10% of the purchase price. The balance payment of 90% will be progress based on the construction works to perform from time-to-time. All billings to you can only be affected after each stage of construction work done must be certified by the panel of surveyor and architect.
Note: Any delay payment by you will be charged late-payment interest. View a typical Payment Instalment Schedule of under construction property in Malaysia!
Guide to Purchase Under Construction Property in Malaysia- Fees To Pay
Malaysia Bar Council has a stipulated legal fee table as follows adopted by lawyers handling their services in property purchase transaction under HDA:
From MYR100,000 to MYR 500,000 – 70% of Scale Fees
More than MYR 500,000 – 65% of Scale Fees
Stamp Duty charged by Malaysia Land Office on your property purchase price will be as follows:
On the first MYR 100,000 – 1 %
On the next MYR 400,000 – 2%
On the reminder – 3%
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