When If you are foreigners and want to buy property in Kuala Lumpur or especially other location in Malaysia, you need to careful on certain rules and regulation. Take note on the following information to avoid unnecessary losses.
What You Can Buy
Foreigners are allowed to purchase any kind of property with a minimum value of MYR 500,000 and can buy up to two residential properties (lawyer may advice the latest restriction) – two condominiums (max. 50% foreign ownership within a block) OR one condominium and one of the following:
- Terraced or linked houses above two storeys
- Land/bungalows and semi-detached houses
Should you wish to purchase a third property, you will need to apply to the Foreign Investment Committee of the Economic Planning Unit at the Prime Minister’s Department and provide a valid reason for the third purchase for permission to be granted. Property on Malay reserved land cannot be owned by overseas foreign investors. Other than these restrictions foreign owners of property are treated in the same way as Malaysian owners and both are protected by the same real estate laws.
The Buying Process
Once you have selected your property, a Letter of Offer and Acceptance is signed and a 3% deposit payment is normally expected from the purchaser. (Letter of Offer is the document you will sign with property agent)
Within 14 days, the buyer must pay a further 7%. Deposits paid are non-refundable if the buyer withdraws from the sale but are subject to obtaining finance and checking of title deeds. Make sure that there is a clause added to the standard agreement, stating that if the vendor pulls out, they must pay back the deposit plus an amount equal to that to the investor for the inconvenience. From the date of the signing, the buyer normally has a maximum of three months to complete the sale and make full payment (bank may involve). (This paragraph lawyer handles this process and Sales & Purchase agreement, S&P takes place).
On top, a foreigner must obtain state authority consent before the property can be transferred to him/her (this is the area prolong the process, the S&P got to state clearly on timing. To avoid interests charge during the S&P process, lawyer got to careful this part)
Upon signature, the Sale and Purchase Agreement must be stamped at the Stamp Office. After examination of the property by the valuation department, Stamp Duty must be paid to the Stamp Office. The Sale and Purchase Agreement is then sent to the land registry along with the Memorandum of Transfer form 14A to transfer the title deeds into your name.
Finance
As a foreigner, you are allowed to borrow up to 80% LTV from banks in Malaysia and they are eager to lend to overseas borrowers. With interest rates currently amongst the lowest in Asia, at 3.5%, property purchase in Malaysia is now an attractive option for many investors.
The mortgage application process takes longer than in many other countries and you would be well advised to extend the three month period (this is the area prolong the process, the S&P got to state clearly on timing. To avoid interests charge during the S&P process, lawyer got to careful this part) from your initial deposit payment to final signature of the Sale and Purchase Agreement, to allow for normal delays in obtaining your Malaysian loan.
Fees are associated
a. Legal fees.
b. Gov't Stamp duties
c. Loan agreement fee
d. Valuation fee
e. Agent's fee
Fees subject to 5% GST.
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