All You Need To Know To Buy A Property In Malaysia As A Foreigner

Buying property in Malaysia is never just a dream for a foreigner as the country has a rather foreigner-friendly property buying policy as compared to many other ASEAN countries. For instance, factors such as affordable property prices and cost, reasonable taxation, freehold property available, highly accessible financial assistance, stable capital appreciation growth record and easy market exit are the factors which draws expats to Malaysia.

Besides that, Malaysia is one of a few countries in the world that is free from natural disasters. It offers both a modern city and laid-back small-town lifestyle. It is no wonder that Malaysia has always been one of the world’s top destinations for retirement.

Tempted to know more about buying a property in Malaysia? Here are some must-know and guidelines that you cannot afford to miss.

What are the choices and price thresholds?

Almost all kinds of residential, industrial and commercial properties in the open market that a Malaysian can buy, the foreigner can buy, too, except the following:

Malay reserved land
Bumiputera (Native Malay) quota property
Auction property
Government’s people housing projects
Private property that priced at RM600,00 and below (from 2020 onwards for properties in Kuala Lumpur, Labuan and Putrajaya)

Do take note that every state and special economic zones of Malaysia have different property price thresholds for foreign buyers. The price ranges from RM500,000 to RM2 million.

Foreigner property buying threshold for popular states in Malaysia:

State	Threshold
Kuala Lumpur	RM1 million
Putrajaya	RM1 million
Selangor	• RM2 million for Zone 1 (Petaling, Gombak, Hulu Langat, Sepang and Klang) • RM2 million for Zone 2 (Kuala Selangor and Kuala Langat) • RM1 million for Zone 3 (Hulu Selangor and Sabak Bernam)
Penang	• RM1 million for mainland • RM2 million for island
Johor	• No threshold for Medini Iskandar in Iskandar Malaysia • RM500,000 for Forest City, the Malaysia-China joint venture development • RM2 million for landed property located in Tanjung Bin, Tanjung Pelepas, Iskandar Puteri, Johor Bahru city centre, Pasir Gudang, Tanjung Piai, Sungai Sekudai and Sungai Tebrau. • RM1 million threshold for landed residences in the rest of the state
Melaka	• RM500,000 for strata property • RM1 million for landed property
Perak (Ipoh)	RM1 million
Kedah (Langkawi island)	RM1 million
Sabah	RM600,000
Sarawak	RM500,000

What is the cost?

Just like many other countries, buying a property in Malaysia generally requires a 10% of down payment. What else does one have to account for after paying the down payment?

Here are some costs that you may need to take into your investment budget consideration:

Legal fees and disbursement for Housing Loan Agreement and Sales and Purchase Agreement
Stamp duty
Mortgage insurance
Home insurance
Quit rent
Assessment fees
Maintenance fees and sinking fund
Real Property Gain Tax
Property agent fees
Home renovations

Stamp duty rate for citizen and foreigner:

Price Tier	Stamp duty (% of property price)
First RM100,000	1%
Next RM400,000 (RM100,000 – RM500,000)	2%
The following amount up to RM1 million (RM500,000 – RM 1 million)	3%
Thereafter (> RM 1 million)	4%

Real Property Gain Tax for foreigner:

It is a form of capital gains tax that homeowners and businesses have to pay when disposing of their property in Malaysia.

Disposal year	Foreigner tax rate
Less or equal to 3 years	30%
Less or equal to 4 years	20%
Less or equal to 5 years	15%
More than 5 years	10%

Step by step process to owning a home in Malaysia

The procedure of buying a property in Malaysia as a foreign usually takes two to three months. However, it is a rather straightforward process. Here are the steps:

Pick and confirm a property choice. Lock down the unit with a small booking fee of usually 2% to 3% of the purchase price
Prepare the relevant documents to apply for a housing loan such as your income statement and tax files. Different bank may require different documents
Sign the Housing Loan Agreement
Sign the Sales and Purchase Agreement
Get a lawyer to process the stamp agreement and do all the necessary registration
Start serving your loan

[Image source: Vintage photo created by freestockcenter; People photo created by pressfoto; Sale photo created by xb100]