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How do foreigners invest in Malaysian properties in 2021?

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Ranked as the best country in the world to invest or do business for in 2019, Malaysia is a foreign investor favorite due to its steady economy, geographically benefited areas with easy access, tax-free zones, and more.

Before you commit to purchasing real estate in Malaysia, you must learn about the following:


Can foreigners buy property in Malaysia?

There is no restriction on the number of properties that a foreigner can own in Malaysia, whether the purpose is of living in or for other investments.

A foreign national can purchase any property in this country!

Malaysian investors have to select from some types of investment according to their requirements, like their own needs, risks, and future aspects.

Cash investments, fixed assets, growth investments, and defensive investments are some investment categories to be chosen from.


Types of property foreigners can purchase

If the requirements are met, foreigners’ homeownership in Malaysia is comparably easy than in other countries. Furthermore, there is a chance of owning 100% of the property!

According to the law, foreigners can own any type of properties EXCEPT

  • Properties that cost less than RM1 million
  • Properties standing on Malay Reserved land
  • Low and medium cost residential units (As explained by state authority)
  • Properties distributed to Bumiputera interest in any property development project (As determined by state authority)

So, foreigners can easily own a bungalow, condominium, flat, terrace house, landed property, studio unit, commercial property, industrial property, agricultural land (except Malay Reserved Land), industrial land (except Malay Reserved Land).

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Step-by-step process when buying a house in Malaysia

Step 1: Look for the properties for sale in Malaysia

If you are a foreigner and want to buy a property in Malaysia, you would need to understand the scenario of Malaysia’s property market before making any decisions.

So, first and foremost, get some ideas by exploring properties for sale. Browsing is definitely a very good option in today’s tech-friendly world. You can check out juwai.asia, a platform to empower Asians to be global residents.

Step 2: Submit your application to purchase

A form, which is called the developer’s sales form, the offer purchase form, or a Letter of Offer, needs to be signed and submitted.

The form will be given by the seller for sub-sale transactions. It is to show that you are clear about buying a property and agreeing to the upfront payment (usually 2-3%).

Step 3: Apply for the financing of property (if required)

If it is necessary, you can apply for a loan. The accessible margin of financing with Malaysian banks will vary depending on your circumstances.

Usually, MM2H provides 80% financing of the total purchase price. It will be at a maximum of around 70% without MM2H. You can also avail an alternative option of sourcing your home loan overseas.

Read more about MM2H here.

Step 4: Submit the necessary documents

You have to provide your lawyer with the relevant documents:

  • A photocopy of your passport
  • Contact details
  • Address
  • Income tax details
  • Location of tax payments for the purchase of secondary market properties

Step 5: Sign a Sale and Purchase Agreement (SPA)

Within a couple of days (usually 14 days) of signing the letter of offer, a Sale and Purchase Agreement (SPA) needs to be signed.

SPA covers all the terms and conditions of the sale. This phase includes a 10% down payment.

The 2-3% you have previously paid during the initial steps contributes towards this 10% deposit total.

At this stage, you may also have to come across mutual covenants (if needed) and other transactional documents.

SALE AND PURCHASE AGREEMENT

Sample sub-sale SPA from company to company. Image credits: Slideshare

Step 6: Provide the state authority consent

When the agreement is made, your legal executive will then ask for final state authority consent. This consent is necessary since you have to ensure your property fulfills the noted requirements by the state prior to this point.

You have to provide some other documents in the meantime. The documents include –

  • A copy of SPA
  • A copy of your passport
  • A copy of the company constitution (if required)
  • Latest quit rent assessment receipt for the property
  • Application form as per section 433B of National Land Code

Step 7: Pay the remaining balance

In this step, you have to pay the remaining balance of 90% as per the property purchase price.

It is explained under the SPA, or Schedule H Housing Development (Control And Licensing) (Amendment) Regulations 2015.

Step 8: Seal the deal

At last, the developer will deliver the vacant property at the announced date.

For individual titles, it will be done within 24 months. It will take 36 months for strata title properties under development.

The transfer date is based on the negotiated time frame in accordance with the SPA and the signing of the Memorandum of Transfer in sub-sale/secondary market purchases.

Let the professionals take care of every step of the process. Contact us now.

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Minimum property purchase price for foreigners

In general, a minimum value of RM1 million is applied to all kinds of property in almost every state of Malaysia.

Nevertheless, the government has lowered the price level for foreign property ownership from RM1 million to RM600k in urban areas that began in January 2020. *This is only applicable to unsold units and remaining stock in the condominium and apartment categories.

However, there are exceptions for four states – Penang, Selangor, Negeri Sembilan, and Sabah. These states’ authorities remain in power to revise the minimum value.

Penang's Minimum Purchase Price

Island Mainland
Stratified properties RM800,000 RM400,000
Landed properties RM1.8 million RM750,000

 

Selangor's Minimum Purchase Price

Strata properties (including strata landed homes): RM1.5 million

 

Negeri Sembilan's Minimum Purchase Price

Landed home (included landed strata) RM1 million
High-rise strata property Exceeding RM600,000

 

Sabah's Minimum Purchase Price

Overhang residential properties: RM750,0000

Source: iProperty


Owning a property as a foreigner will be a completely new ride, and engaging with a real estate agent will definitely quicken the process without a hassle. 

Leave your details below for our seasoned agents to reach out and assist you!

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