Malaysia Property Investment Guide for Foreign & Hong Kong Buyers
Below is a general procedure of buying a Malaysia Property as a non-resident. This guide is applicable to buying properties in Kuala Lumpur, Penang, Johor etc.
1. Reserve Unit
First, select the property and unit type. Then, the buyer would need to prepare his/her personal document (ID or passport copy) and a reservation fee is payable to hold the unit.
2. Pay First Instalment and Apply for Mortgage
Normally, 10% of the purchase price is payable by the buyer to the developer after reservation. If the buyer intends to apply for a mortgage, they will have to apply from the bank right after they paid the 10% deposit.
3. Contract Exchange
The developer will then send the Sales & Purchase agreement to the buyer. The buyer will sign the Sales & Purchase Agreement in Hong Kong.
4. Seek approval from Foreign Investment Committee
For non-Malaysian citizen, they are required to seek approval from Foreign Investment Committee (if applicable) and Consent from the State Authority after exchange of contract.
5. Settle the remaining balance of purchase price
The remaining balance of purchase price will be payable according to the developer's contruction progress schedule. If the buyer will settle by mortgage, the bank will disburse the loan amount at this stage.
6. Handover and Settlement
When the Malaysia property has been completed, the solicitor will notify the foreign buyer to check the unit. After checking the unit, the solicitor will confirm the handover date.
7. Rent Out the Property in Malaysia
When the foreign buyer has got the key, you can assign a property management company in Malaysia to manage your property. They can provide services such as tenant recruitment, checking and maintaining the property, paying taxes for the owner etc.
Q: Is there any restrictions for foreign buyers to buy properties in Malaysia?
A: Foreign buyers are not allowed to buy properties valued less than the minimum purchase price as prescribed under the State Land Rules which varies from State to State.
JOHOR (Min. RM1,000,000 and above)
• Medini – No minimum purchase for foreigners
KUALA LUMPUR (Min. RM1,000,000 and above)
• Selangor – RM2,000,000 and above
• No landed for foreigners in Selangor
PENANG (Min. RM1,000,000 and above for Strata Condominiums)
• Landed properties in Penang – RM3,000,000 and above
Q: Can foreign buyers purchase Malaysia property through a company?
A: Yes, foreign buyers are allowed to purchase either through peronal or company in Malaysia.
Q: Is Malaysia property freehold or leasehold?
A: Most of the Malaysia properties are freehold. Some of them are 99 year leashold though.
Q: Will the buyer get a title deed?
A: Yes. The buyer will receive a strata title.
Q: What happens if the buyer cannot get the consent from the state authority?
A: If the consent is not approved by the state authority, the developer will terminate the contract and arrange a refund to the buyer.
Q: Is there any fee/tax we need to pay when foreign investors BUY a Malaysia property?
1. Legal Fees for Sales & Purchase Agreement and Loan Agreement
|Value of Property (RM)||Rate|
|For the first RM500,000||1% (subject to a minimum fee of RM500)|
|For the next RM500,000||0.80%|
|For the next RM2,000,000||0.70%|
|For the next RM2,000,000||0.60%|
Some developers might offer free legal fees for the buyers.
2. Residental Consent Fees
|JOHOR||Residential Consent Fees of 2% of the Purchase Price or RM20,000.00 whichever is higher + applicable charges RM500.00 + costs and expenses approximately RM500.00 (if any)|
|KUALA LUMPUR||Residential Consent Fees of RM200.00 + applicable fees and expense|
|PENANG||Residential Consent Fees of 3% of Purchase Price PLUS RM10,000.00 (Individual) or RM20,000 (Company) + applicable fees and expenses approximately RM600.00|
3. Stamp Duty on Memorandum of Transfer (MOT)
Stamp Duty is payable based on the purchase price or the existing market price determined by the valuation department of the Stamping Office. They will be tagged on whichever is higher.
Memorandum of Transfer (MOT) will need to be signed in order to fully take effect the Title Transfer from developer to the buyer. Stamp Duty on MOT is payable upon the vacant possession of the unit purchased.
Scale of the Stamp Duty on MOT as below;
1% on the 1stRM100,000
2% on RM100,001 to RM500,000
3% on RM500,001 and above
Q: Is there any fee/tax we need to pay when foreign investors OWN a Malaysia property?
1. Quit Rent
This is a Land Tax Levy known as “Quit Rent” or “CukaiTanah” . It is a minimal sum that does not exceed RM100 annually & is charged by the state government on owners of freehold or leasehold land.
2. Assessment Tax
Properties within local authorities boundaries are required to pay an “Assessment” or “CukaiPintu”. This tax is calculated based on the Estimated Annual Rental Value X 4%, payable in two Instalments per annum.
3. Maintenance Fees + Sinking Fund
This is the maintenance of your building, charges by the management company. This fee varies from time to time but the usual Maintenance Fee ranges from RM0.55 –RM1.00/sqft + 10% (Sinking Fund) and is payable quarterly to the management company.
Q: Is there any fee/tax we need to pay when foreign investors SELL a Malaysia property?
1. Real Property Gain Tax (RPGT)
|Disposal Period||Companies||Individual (Citizen)||Individual (Foreigner)|
|Within 3 Years||30%||30%||30%|
|In the 4thYear||20%||20%||30%|
|In the 5thYear||15%||15%||30%|
|On the 6thand subsequent years||5%||10%||10%|
2. Income Tax
|Chargeable Income Bands (MYR)||Tax Rates %|
|0 - 5,000||0|
|5,001 - 20,000||1|
|20,001 - 35,000||3|
|35,001 - 50,000||8|
|50,001 - 70,000||14|
|70,001 - 100,000||21|
|101,001 - 250,000||24|
|250,001 - 400,000||24.5|
|400,001 - 600,000||25|
|600,001 - 1million||26|