CommonQuestions

AnsweredforExpats
InvestinginMalaysian
Property
ExpatGoStaff
March24,2015

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WrittenbyK.C.LauandDr.OngKianLeong.

AirAsiasCEOSays
thatKLIA2isSinking

10ThingsYouDidnt
KnowAboutMalaysias
CarNumberPlates
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TryinMalaysia

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Photocredit:Raffaell/Foter/CCBYNCND

Initsnewreport,entitledDoingBusiness2015:GoingBeyond

8BadmintonPlayers
YouShouldKnowin
Malaysia

Efficiency,theWorldBankhasfoundthatMalaysiaranksfirstoutof
theemergingeconomiesinEastAsiaandranksfourthoutofallthe
countriesinAsia.
Malaysiaseaseofdoingbusinessrankinghasalsoimprovedtwo
positionsoverlastyear,movingfrom20thto18thplace.Oneofthe
mainreasonsfortheclimbinthecountrysstandingshasbeenthe
ongoingimprovementswithrespecttodealingwithconstruction

10Interesting
SandwichesinAsiato
Try

WhatYouShould
KnowaboutKLs
PetronasGallery

ongoingimprovementswithrespecttodealingwithconstruction
permits.Malaysiaiscontinuouslyonitstrackofeconomy
transformationtoprovideabetterplaceofinvestmentwelcoming
foreigners.
Thetransformationhasbecomeagravitationalforcethatattractsmore
andmoreexpatriatesconsiderinvestinginMalaysianproperties.
Inthisarticle,wereviewsomeofthepopularreasonswhyexpatriates
areinvestinginMalaysianproperty.Wealsoprovidedetailedanswers
tothosequestionscommonlyaskedbymostexpats.Thepointsinthis
articlearemainlyfocusedonforeignindividualinvestorsinsteadof
corporateinvestmentbyforeigners.

WhydoforeignersinvestinMalaysian
property?
Intermsofpropertymarket,Malaysiapropertypricesarestillamong
thecheapestinAsiawithgoodgrowthamidstaresilienteconomy.
RegionalpropertymarketslikeHongKongandSingaporehave
actuallyrisentoomuchinthepastfewyearsandarenowtakinga
breather,asshownbytheRegional1and5yearHousePrice
Changesbelow.Thishasdeterredtheappetiteofforeigninvestorsin
thetwopopularAsiancities.

Sourceofdate:www.globalpropertyguide.com

Ontheotherhand,Malaysianpropertyoffersstablerentalyield
between4%to5%perannumforthelast2years.Onaverage,
Malaysianrentalreturntakesonly16years,whichisoneofthebetter
returnsascomparedtoothercountriesintheregion.

Sourceofdata:NationalPropertyInformationCenter(NAPIC)

WatchthisFreeRunner
PerformHeart
StoppingStuntson
MalaysianBridges
UniFiServicesto
ArriveinTerengganu
byAugustThisYear

ThelocaldemandforpropertybyMalaysiansishugewithupgraders
andyoungfamiliesgettingricher.Thefundamentalsdrivingthe
propertymarketsgrowthinrecentyearshavenotchangedwherethe
youngerpopulationisstillleadingtonewhouseholdformation,arising
middleincomegroupandstableemploymentinMalaysia.Themajority
of93%ofthetotalpropertiesinvestmentinMalaysiaarestillbythe
localMalaysians,andonly3%arefromtheforeigners.Thus,
Malaysiaspropertypriceindexhasbeensteadyovertheyears
despiteconstanthiccupsofworldcrisisduetosteadilyincreasing
demandforproperties.Thelocaldemandfuelsthewealthand
prosperitygrowthovertheyearsinMalaysia.
OtherattractivesocioeconomicadvantagesofMalaysia:
1.A.T.KearneyhasrankedMalaysiainthethirdplaceafterIndiaand
Chinainthe2014GlobalServicesLocationIndex(GSLI)foroff
shoringdestinationofchoice.
2.Malaysiamaintainslowunemploymentrateoflessthan3%yearly
withtheinflationrateataverage2.5%.Livingcostisrelativelylowin
theregion.
3.Malaysiaexperiencesincreasingvisitorarrivalsfor2013Top10th
TouristDestinationintheWorld.
4.Aplaceofpeacefullivingfreefrommajornaturaldisasterssuchas
volcanoes,floods,tsunamiandearthquakes.
5.Harmoniousmulticulturalsociety.
6.Englishlanguageiswidelyusedthusitiseasytocommunicatewith
locals.
7.Malaysiaisranked3rdBestPlacetoRetirebyInternationalLiving
Inc.in2014foritsretirementresidencyprogramMalaysiaMy
SecondHomeprogram(MM2H).
8.Easyandaffordableconnectivitytoothercountrieswithwell
developedinfrastructureofairports,highwaysandseaports.
9.Privatehospitalsandhealthcaresystemattractingforeignersfor
qualityserviceswithworldclasshealthcarefacilities.

SaleAndPurchase

Photocredit:varfolomeev/Foter/CCBYNC

Whatmustyoudofirst?
Westronglyrecommendyoutofindagoodrealestatelawyerfirst
beforeyoubuyanypropertyinMalaysia.Alawyerspecialisinginreal
estatewillnotonlybeabletoprovideyouvaluableinformationand
legaladviceofsaleandpurchaseprocedures,butalsocontactsof
somereliableprofessionalsintheindustry,suchasrealestateagents
andbankers.Youcantrustthemandsaveyourtimetolookforothers
astheyhavebeenworkingtogetherwiththelawyerinmanyprevious
successfultransactions.
WhatmustyouknowaboutpropertytitlesinMalaysia?
TherearetwocategoriesoftitlesinMalaysiaavailableforforeigners.
Freehold(whichgivestheownerfull,permanentownershipofthe
property)andleasehold(whichallowstheownertostayinpossession
foralimitedperiod).Mostleaseholdstitlesareoriginallyfor99years
andcanbeextendedonpayingafurthersum.
Ahousereceivesatitleoncecompletedandanapartmentor
condominiumisgivenastratatitle.Inthecaseofnewapartment
buildings,thestratatitlemaynotbeissuedforsometimeafterthe
buildingiscompleted.
Whatarethecontracts/agreementsinvolvedinatransaction?
ThepurchaseagreementforapropertyiscalledtheSale&Purchase
Agreement(SPAorS&P).Thesearefairlystandard,butitisbestto
havealawyerrepresentingyourinterestsbeforesigningany
agreement.
Amemorandumoftransferalsohastobesignedtotransferthetitle
fromthesellertothepurchaser.Inthecaseofanewdevelopment
wherethedeveloperdoesnotyethavefulltitle,thesellerwillstatein
theSPAthatthiswillbegivenassoonastheyhavetheproperties.
WhataretheprocedurestobuyapropertyinMalaysia?
ThefirststeptopurchasingapropertyinMalaysiaistohireareal
estatelawyertoassistinthetransaction.Oncepropertyisselected,a

estatelawyertoassistinthetransaction.Oncepropertyisselected,a
LetterofOffer/Acceptanceissignedbetweenbuyerandseller,anda
1%3%earnestdepositisexpectedfromthebuyer.
Within14to30days,theSaleandPurchaseAgreementissigned.The
buyermustpayanother7%9%deposittomakeupa10%down
payment.Fromthedateofthesigning,thebuyerhasamaximumof
threemonthstoaccomplishfullpaymentuponreceivingLandOffice
consent.
TheSaleandPurchaseAgreementmustbestampedattheStamp
Office.Aftertheexaminationonthepropertybythevaluation
department,StampDutyispaidtotheStampOffice.Thetransfermust
beregisteredattheLandOfficeRegistry.Thesearealldonebyyour
realestatelawyeraftersigningtheSaleandPurchaseAgreementand
beforethecompletionoftransaction.
HowcanforeignpropertybuyersgetfinancedinMalaysia?
Therearegenerallytwowaystofinancethepurchaseofpropertiesin
Malaysia.Thefirstwayistobringinyourownmoneyfromyourhome
countrytofinancethepurchase.Thisisthemostdirectapproachand
theeasiest,asnonMalaysiansareallowedtomaintainaccountswith
banksinMalaysiawithoutrestrictionontheamountofRinggitheldin
theaccounts.
ThesecondistotakealoanwithabankinMalaysia.Withsoundcredit
ratings,mostforeignersshouldhavenoproblemobtainingMarginof
Financingof70%withbanksinMalaysia.Thiscouldbeevenhigher
dependingonthebanksandfinancialstandingsoftheapplicants.For
thoseseekingtopurchasearesidentialpropertyinMalaysiabytaking
upahomeloan,youareadvisedtouseanonlinecomparisontoolwith
thevariousbanksastheymaydifferslightlyfrombanktobank.
SomebankssuchasCIMBandUOBoffercategoriesofhomeloans
specificallycateredforforeignerswhichmakethemagreatplaceto
startwhenshoppingaroundforahomeloan.Butgenerally,most
banksinMalaysiaareeagertoprovidehomeloansforforeignersso
findingoneshouldberelativelysimple.
Theaverageinterestrateofmortgageloanshereiscurrentlybetween
4%and5%.
Whatistheadvantageinbuyingaresidentialpropertyunderthe
MalaysiaMySecondHomeProgramme(MM2H)?
MM2HisaprogrammepromotedbytheMalaysiangovernmentto
allowforeignersfulfillingcertaincriteriatoresideandtraveltoandfrom
Malaysiaunrestrictedforanextendedperiodoftime.Generally,MM2H
isvalidforaperiodof10years,andisrenewable.

ForthosestayinginMalaysiausingtheMM2Hvisa,buyingaproperty
inMalaysiaisanaddedincentiveasitallowsyoutowithdrawpartof
themoneyyouneedtoplaceinafixeddepositaccountinMalaysia,
whichisanMM2Hrequirement.Youcandothisstartingfromthe
secondyearofstayinginMalaysia:
ForMM2Hparticipantbelowtheageof50,youcanwithdrawupto
RM150,000fromyourfixeddepositcommitmentofRM300,000for
approvedexpenses,includingthoserelatedtohomepurchase.
ForMM2Hparticipantaged50andabove,youcanwithdrawupto
RM50,000fromyourfixeddepositcommitmentofRM150,000for
approvedexpenses,includingthoserelatedtohomepurchase.
Additionally,shouldyoupurchaseapropertyinMalaysiaworthRM1
millionandaboveinMalaysia,youareallowedtoreducetheamount
ofmoneyyouneedtoplaceintheaforementionedfixeddeposit
account,inthefollowingway:
ForMM2Hparticipantbelowtheageof50,yourfixeddeposit
commitmentisreducedfromRM300,000toRM150,000.
ForMM2Hparticipantaged50andabove,yourfixeddeposit
commitmentisreducedfrom
RM150,000toRM100,000.
Needlesstosay,purchasingapropertyishighlyrecommendedif
youreanMM2Hparticipant.TofindoutmoreaboutMM2H,youcan
visitwww.mm2h.comorwww.mm2h.gov.my.

CostsofPropertyPurchase

Source:GlobalPropertyGuide

Theroundtriptransactioncostsincludeallcostsofbuyingandthenre
sellingapropertylawyersfees,notariesfees,registrationfees,

sellingapropertylawyersfees,notariesfees,registrationfees,
taxes,agentsfees,etc.

RealestateagentsfeeinMalaysia

Photocredit:UweBKK(77on )/Foter/CCBYNCSA

RealestateagentsfeesareregulatedbytheBoardofValuers,
AppraisersandEstateAgentsMalaysia(LLPEH).Amaximum
commissionofupto3%ispaideitherbybuyerorseller,subjecttoa
minimumfeeofRM1,000percase.

Rules&Regulations
DoforeignersneedtoapplyforapprovaltobuypropertyinMalaysia?
Formostpropertypurchases,foreignersarenolongerrequiredto
obtainForeignInvestmentCommittee(FIC)approval.Therewillbe
FICapprovalrequiredforpropertypurchasebelowRM20millionper
unitforallforeigners.

unitforallforeigners.
However,foreignpurchasersarestillrequiredtoobtainapprovalfrom
theStateAuthoritieswhowillconsiderfactorssuchasthelocationof
theproperty,thetypeofpropertyandinnewdevelopments,the
percentageoftotalunitssoldownedbyforeigners.Applicationofsuch
approvalisnormallypartofthejobofyourlawyer.
Whataretherestrictionsonminimumpurchasepricefor
foreigners?
MalaysiapropertycomesunderthecontrolofthevariousMalaysian
StateGovernments,sorulescanvarydependingonwhichpartof
Malaysiayoubuyin.AlthoughtheFederalGovernmentpasses
nationalregulations,theStateshavetheoptionofimplementingthese
ornotwhenitcomestopropertymatters.Oneexampleissettingthe
minimumpriceatwhichforeignerscanbuyproperty.
ThelatestdecisionbytheFederalGovernmentwastoraisethe
minimumpropertypricetoRM1million,effective1May2014,forall
foreignersincludingMM2Hparticipants.However,asof1stSeptember
2014,theSelangorStateLandOfficechangedtheminimumpurchase
priceregulationsforforeignerstoRM2million.Also,foreignerscant
buylandedpropertiesinSelangorstateunlessitsinagated
community,whichhasaLandedStratatitle.Thesamerestrictionof
minimumRM2millionisalsoapplicabletoforeignersbuyinglanded
propertyinPenangIsland.
Therefore,itsvitalthatyoudoublecheckontheprevailingminimum
purchasepriceaswellasotherconditionsimposedbytheState
Authoritypriortotakinganyactions,assuchconditionstendtochange
fromtimetotimeandarenotstandardizedbetweenthedifferent
StatesofMalaysia.Yourlawyershouldbeabletoprovideyouwiththe
latestinformationofthismatter.
Whatarethetypesofpropertythatforeignerscannotbuyin
Malaysia?
ForeignerscanownalltypesofpropertyinMalaysiaexceptthe
following:
1.AllpropertiesbuiltonBumiputra*reservedlands.
2.PropertiesallocatedtoBumiputra.
3.Lowandmediumcostproperties(subjecttoapprovalbyState
Authority)
4.Mostagriculturelands
*BumiputrareferstoanyMalayindividualoraborigineinPeninsular
MalaysiaasdefinedinArticle160(2)oftheFederalConstitutionof
MalaysiaaswellasanyindividualasdefinedinArticle161A(6)(a)
andArticle161A(6)(b)inSarawakandSabah,respectively.

andArticle161A(6)(b)inSarawakandSabah,respectively.
Isthereanylimittothenumberofpropertyaforeignercanownin
Malaysia?
Foreignersareallowedtobuyasmanypropertiesastheywishin
Malaysiaprovidedthattheycomplywiththeabovementioned
conditions.

Taxation
WhatisRealPropertyGainsTax?
Realpropertygainstax(RGPT)ischargedonchargeablegainsarising
fromthedisposalofrealpropertyaswellassharesintherealproperty
companiesbasedonfollowingguidelines:

[*IndividualofnoncitizenincludesallexpatriatesworkinginMalaysia
andMM2Hvisaholders]
ThereareafewexemptionsofRealPropertyGainsTax:
i.Gainsderivedfromdisposalofpropertybetweenparentsand
children,husbandandwife,grandparentsandgrandchildren
ii.ExemptionofuptoRM10,000or10%ofthenetgains,whicheveris
higher,isgiventoanindividual.
Thechargeablegainisonlyapplicableonnetgains,afterdeductingall
relatedcostssuchasrenovationcosts,commissionandincidentalcost
suchaslegalfeesandexemption.
IsrentalincomeofforeignerssubjecttotaxinMalaysia?
AllrentalincomesderivedfromMalaysiaaresubjecttotax.Whilealot
offoreignersfindMalaysianpropertiesattractive,itisveryimportantto
knowthetaxratetoavoidanyunpleasantmomentwhentheInland
Revenueslamsyouwithaheftytaxbilltopay.
TaxonrentalincomeforforeignerschargedbyMalaysiaInland
RevenuediffersbythestatusofresidentornonresidentinMalaysia.
ResidentstatusisforsomeonewhostayedinMalaysiaformorethan
182days(aboutsixmonths)inacalendaryear.Currently,Malaysia
Taxationonrentalincomeunderthepersonalnamewillbeasfollows:
Residentstatusforforeigners:0to25%
Nonresidentstatusforforeigners:flatat25%
Malaysiataxrateonrentalincomeforforeignersdoesnottake
accountofthetypeofvisapass.Thereisnospecialadvantagefora
holderofMM2HvisacomparedtotheExpatriateWorkVisagroup.

holderofMM2HvisacomparedtotheExpatriateWorkVisagroup.

ThingstobeAwareof

Photocredit:potomo/Foter/CCBYNCSA

Location
Choosingtherightlocationmightseemdauntingatfirst,but,asitis
generallyacceptedthatforeignersarehappieriftheysettleinanarea
thatoffersthesafetynetofanexpatcommunity.Thisnarrowsdown
thechoiceoflocationconsiderably.
TherearetwolargeexpatcommunitiesinMalaysia:oneisinthe
capital,KualaLumpur(KL),andtheotherisinPenang.Whilethe
expatcommunityinKLisconsiderablylargerthanthecommunityin
Penang,themajorityoftheexpatcommunityinKLareherein
Malaysiaonaworkpermit,whilethemajorityofexpatsinPenangare
hereasretireesunderMM2H.Itseemslogicalforaretiree(whoisnot
working)toretiretoanoncapitalcity,wherepricesarelower,traffic
congestionless,andthepaceoflifemoreintunewithretirement.
However,theusualadvicetoretirees,givenbythosewhohavelived
hereforseveralyears,isnottobuyatfirst,buttorent,andthenonlyto
buywhentheyareabsolutelyhappyaboutthechosenarea.
Landedpropertyvs.condominium
Landedpropertyisnoticeablymoreexpensivetobuy,thoughcheaper
torent,thancondominiumapartmentsofequalsize.Inthelongterm,
inspiteofthevagariesoftheeconomiccycle,landedpropertyhas
continuedtoappreciate,whilethevalueofcertainrangesofapartment
fluctuatesaccordingtosupplyanddemand.
Otherthanamenities,anotheradvantageofacondominiumunitisthat
thereisgoodsecurityandthatanownerortenantcanjustlockthe
doorandthentakeoff,travellingeitheraroundAsiaorevenbackto
thehomelandtovisitfamilyandfriendswithnoworriesaboutthe
property.Securityofahousecanbeaproblem,whichisnormally

property.Securityofahousecanbeaproblem,whichisnormally
overcomebyfittingsecurityalarmsandleavingamaidlivinginthe
propertywhiletheownersortenantsareaway.Anothersolutiontothe
securityproblemoflandedpropertyistochoosegatedandguarded
(G&G)residenceaclusterofhouseswhereentryisrestrictedby
gates(boomgates,chainsorlocks)acrosstheroadways,resultingin
thecreationofanenclaveandsecureprivatecommunity.
Condominiumsareeasytomaintainandclean,andcanberunwithout
theservicesofafulltimemaid.Houseswithgardensseemgreat,but,
unlessagardenerisemployed,gardeningcanbeverytiringinthe
heatoftheday.Duealsotothehightemperatureandhighrainfall,the
outerfabricofahouseneedsconstantattention,whereasina
condominiumtheouterfabricofthebuildingandthegardensare
maintainedbythemanagement.Thecostofmaintenanceiscovered
bythemonthlymanagementfee,whichistypicallypaidbytheowner
ofthecondominiumunit,notthetenant.
Newproperty
Becautiouswhenbuyingnewpropertyinunfinishedcondominium
projects.Buyersmaynotbefullyprotectedagainstdefault,anissue
vigorouslyraisedbytheMalaysianHouseBuyersAssociation,which
haspointedtoflawsinTheHousingDevelopment(Control&
Licensing)Act2002,andtheStrataTitlesAct.Thosebuyingunfinished
propertyfromdevelopersshouldensurethatthedeveloperhasavalid
DevelopersLicenseandavalidSalesandAdvertisingpermit.
Malaysiapropertymarketfavoursinvestors,notflippers
Malaysianpropertyisnotgoodforhouseflipperswhoarelookingfor
fastandhighresalegains.Itisbetterforlandlordsbecauseof
historicallyhighrentalyieldsinareaslikeKualaLumpur,Penang,and
JohorBahru.IfyouexpectittobelikeoverseaspropertiesintheWest,
whereyoucanbuyatlowcost,doitup,andsellithighthenextyear,
youmaybeheadingtothewrongbattlefield.Onereasonismorethan
90%ofthedemandisfromMalaysians.Anotherreasonisbecauseof
thehighesteverRealPropertyGainsTaxnowinforceinMalaysia.
Dealingwithrealestateagents
HOME MALAYSIAGUIDE ARTICLES EVENTS
Itisprudenttoalwaysagreeuponthetermsandconditionsfirstbefore
youengageanyrealestateagentinMalaysia.Forexample,whileitis
thesellerwhoshouldbepayingthecommissionforasuccessfulsale
transaction,theamounttobepaidisdependentonthequantumofthe
transaction.Similarly,forleaseagreements,thelandlordpaysa
monthsrentforthetransactionofasuccessfultenancyterm(anything
fromoneyearandabove)butnegotiationsarerequiredifthelease
termislessthanayear.Suchdetailsshouldbeironedoutandagreed
uponbeforeworkproceedstoavoidanymisunderstandings.

uponbeforeworkproceedstoavoidanymisunderstandings.
HigherHomeLoanInterest
InMalaysia,theaverageinterestrateofmortgageloanisbetween4%
and5%forthepast10years.Itmaybeoneofthelowestrate
countriesamongotherdevelopingcountriesintheregion,butitisstill
consideredhighascomparedtomostofthedevelopedcountries.For
thisreason,someforeignersprefertotakeupaloanfromtheiroriginal
countrywithalowerrate,insteadofborrowingfrombanksinMalaysia.
SafetyIssues
AccordingtotheGlobalPeaceIndex(GPI)2014releasedby
independentresearchhouseInstituteforEconomicsandPeace(IEP),
Malaysiawasamongthe30countriesinwhichlevelsofpeace
deteriorated.However,Malaysiawasstillrankedsixthinthewholeof
AsiaPacific,behindNewZealand,Japan,Australia,Singapore,and
Taiwan.Ontheotherhand,theadvicegivenbysomeexpatsliving
hereforyearsistobevigilantontheroadsandinpublicplaces
againstsnatchthieves.Also,foreignerswhodriveinMalaysiahaveto
bemorealertandcarefulbecausethetrafficsystemhereisyettobe
assafeascomparedtodevelopedcountries.
K.C.Lau,havingworkedinthefinancialindustrysince2003,isa
personalfinancialadviserandhasauthoredseveralbooksandrunsa
numberofonlinefinancialcourses.Youmayvisithispersonalfinance
siteatwww.kclau.comorfollowhimonFacebookat
www.facebook.com/kclaumoney.
Dr.OngKianLeongisthecreatorofGoFinanceTM,aninvestment
evaluationtool,andthemanbehindthepopularRealEstate
InvestmentBlogatwww.REIJB.com.

ReadThis:PlannedSeafrontProjectinPenang
DrawsProtests
Source:TheExpatPropertyGuide2015
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MoHalim
Expats?Ohyoumeanglorifiedforeignersorglorifiedforeign
workers?Justsayso,lah.
April5,2015at11:11am

BobbySoram
RomiSharma
April1,2015at10:53am

JackH.Kindsvatter
Thanks,WB.
March31,2015at10:23am

AlanCole
Badlybuilt,badlyfittedout,overpricedrubbish.
March30,2015at5:53am

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Stayaway!
March28,2015at10:14am

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