Guidelines:Can Foreigners Buy Property in Malaysia?

Foreigners may purchase property in Malaysia but there are various rules and regulations to follow, which we've outlined below.

Minimum Malaysia Property Purchase Price for Foreigners

Malaysia has some of the most liberal regulations in the region when it comes to foreigners buying residential property, particularly landed homes. Unfortunately the rules have been changed a number of times over the last few years and there is still some confusion over the current policies particularly governing the minimum price at which foreigners can buy.

The latest decision, by the Federal Government was to raise the minimum property price to RM1 million, effective 1 January 2014. In fact, over half the properties purchased by foreigners were in the RM250,000 to RM500,000 bracket so this hit the industry quite hard. Many foreigners do not know that property is actually a State matter which means individual States have the power to overrule the Federal policies. It is often quite difficult to obtain the latest ruling although visits to the State Land Offices will usually produce an answer.

Many foreign property buyers found this out the hard way when they read that the government no longer required them to get FIC (Foreign Investment Committee) approval for the purchase. However, FIC approval was not the problem. Usually it was given quickly. It is the State approval which can take many months to obtain.

As of 1st September 2014, the Selangor Land Office changed the minimum purchase price regulations for foreigners to RM2 million. Foreigners will now have to pay double the amount to purchase property in the following districts:
- Petaling
- Gombak
- Hulu Langat
- Sepang
- Klang
- Kuala Selangor
- Kuala Langat

Also, foreigners can't buy landed properties (in Selangor) unless it's in a gated community, which has a Landed Strata title.

Penang used to allow people with Malaysia My Second Home visas to buy property priced over RM250,000. But the latest update from the Penang State Government (as of 1 February 2014) is that MM2H participants can only purchase a residential property at a minimum of Rm500,000 (limited to 2 units only). However, for foreigners there is no limit in units to purchasing a landed property on the Island (minimum RM2 million) and in Seberang Perai (minimum RM1 million). For stratified properties, it is a minimum of Rm1 million for Seberang Perai and on the Island.

Rules and Regulations for Purchasing Property in Malaysia

Malaysian Property Legal Issues
The following article is intended to give a general overview of some common legal issues regarding the purchase of property. We strongly recommend you obtain the services of a good lawyer when you buy property in Malaysia.

Malaysia property comes under the control of the various Malaysian State Governments, so rules can vary depending on which part of Malaysia you buy in. Although the Federal Government passes national regulations, the States have the option of implementing these or not when it comes to property matters. One example is setting the minimum price at which foreigners can buy property, where the Federal Government raised the price and initially some States chose not to follow.

Legal Fees for Malaysian Property Transactions

Value of property Rate
1st RM150,000 1.00%
Next RM850,000 0.70%
Next RM2,000,000 0.60%
Next RM2,000,000 0.50%
Next RM2,000,000 0.40%
Over RM7,500,000 (negotiable) >0.40%

Malaysian Property Titles

There are two categories of titles in Malaysia available for foreigners. Freehold (which gives the owner full, permanent ownership of the property) and leasehold (which allows the owner to stay in possession for a limited period). Most leaseholds titles are originally for 99 years and can be extended on paying a further sum.

A house receives a "title" once completed and an apartment or condominium is given a "strata title". In the case of new apartment buildings, the strata title may not be issued for some time after the building is completed.

Sale & Purchase Agreement in Malaysia

The purchase agreement for a property is called the "Sale & Purchase Agreement" (SPA or S&P). These are fairly standard, but it is best to have a lawyer representing your interests before signing any agreements.

A memorandum of transfer also has to be signed to transfer the title from the seller to the purchaser. In the case of a new development where the developer does not yet have full title, the seller will state in the SPA that this will be given as soon as they have the properties.

Malaysian Property Purchase Approvals

For most property purchases, foreigners are no longer required to obtain Foreign Investment Committee (FIC) approval. Foreign purchasers are still required to obtain approval from the State Authorities who will consider factors such as the location of the property, the type of property and in new developments, the percentage of total units sold owned by foreigners. State consent can often take six months and in some cases longer.

Find out Malaysia's property gains tax here.

Special Note for Malaysia My Second Home Visa Holders

Home visa holders: If you are planning to move here under the Malaysia My Second Home programme, you will be eligible to make a lower Fixed Deposit if you have already (before applying for the MM2H visa) purchased a property in Malaysia over RM1 million and do not have any outstanding loan on it. If you make a purchase after getting the visa, then you can have your Fixed Deposit reduced after 12 months on showing evidence that you have bought and paid for a house in Malaysia. In this latter case, the value of the property is not a factor relevant and you can have a loan on the property as long as the cash amount you have paid exceeds the amount you wish to withdraw from your FD.