Can Foreigners Buy Property in Malaysia?

Possibilities of property ownership in Malaysia for foreigners

In our interconnected world, investing in foreign real estate has become an enticing prospect for property buyers. Malaysia, with its breathtaking landscapes, bustling cities, and rich culture, has captivated the interest of international investors. The burning question for many is, "Can foreigners buy property for sale in Malaysia?"

We welcome outside buyers into our property market, whether as an expat looking for a great new home, or an investor looking for a fantastic investment opportunity.

In this article, we will explore the possibilities of property ownership in Malaysia for foreigners, providing valuable insights to assist you in making informed decisions for your real estate investment journey.

Malaysia's Guidelines on the Acquisition of Properties govern foreign buyers of real estate in addition to the National Land Code of 1965.

Foreign buyers need permission from the appropriate state authorities before they may purchase real estate.

The state has the authority to impose specific conditions or terms for payment at its own discretion. This implies that while it is possible to purchase real estate, there may be circumstances in which you must pay a transaction fee.

Understanding Foreign Property Ownership in Malaysia

Freehold vs. Leasehold Properties

Malaysia has two main types of properties which are freehold and leasehold. Freehold properties come with indefinite ownership, while leasehold properties have a fixed lease period, typically 99 years.

Foreigners can usually acquire both property types, with potential restrictions in specific states. Foreigners are generally allowed to purchase both types of properties, although certain restrictions may apply in specific states.

But don't worry, in terms of foreign ownership of property in Malaysia is liberal, which means as long as the necessary conditions are fulfilled, foreigners are allowed to possess 100% of real estate in Malaysia and foreigners are allowed to possess any kind of property, with the exception of: 

• In majority of the main states, properties valued at less than RM1 million.
• Properties developed on Malay Reserved land
• As determined by the state government, low- and medium-cost residential units
• In every development project, properties assigned to Bumiputera interest as decided by the governmental authority.

Property Price Thresholds

Malaysia's government has set minimum property price thresholds that foreigners must meet to buy real estate in the country. Keep in mind that these thresholds vary from state to state.

For example, in Penang, the minimum property price for foreign buyers is higher than in other states or in Selangor, foreign buyers are prohibited from purchasing auction properties and buying landed residential properties unless the property is issued with a landed strata title, such as in a gated community.

Therefore, to make an informed decision, you should research the specific requirements for the state in which you are interested in purchasing property.

Special Schemes for Foreign Buyers

Malaysia welcomes foreign property investors with open arms through various home loan financing options available to them.

One of it is the Malaysia My Second Home (MM2H), the program allows foreigners buying property and to stay in Malaysia on a long-term basis. This program offers numerous benefits, including tax exemptions, flexibility in property ownership and the MM2H scheme provides a renewable ten-year maximum, multiple-entry visa such as:

• MM2H holders can obtain a loan as high as 80% margin from banks, while non-MM2H holders can obtain a loan margin close to 50%.
• The loan tenure can be extended up to 30 years, as long as the applicant is
• below 70 years of age at the end of the loan tenure.
• Legal fees and disbursements will be around 0.8% of the loan amount.

Strata Title Properties

Foreigners are permitted to buy strata title properties in Malaysia. These properties, typically found in high-rise buildings and gated communities, provide an additional avenue for foreign investors to explore.

Cost That Involved Foreign Buyers in 2024

As foreign buyers in Malaysia, it is subjected for the balance purchase price should be paid in accordance with the Third Schedule of Schedule H Housing Development (Control And Licensing) (Amendment) Regulations 2015 or the SPA as part of the property acquisition process in Malaysia.

Thus, the residential property purchases in Malaysia are subject to few costs and it's crucial to be prepared for the various hidden costs that come with foreign homeownership. which includes:

1. Stamp duties & Memorandum of Transfer (MOT)

To control the price of real estate, the government has announced in Budget 2024 that Stamp duty at a flat rate of 4% will be imposed on transfer of ownership of real estate by non-citizen individuals and foreign-owned companies.

2. Legal Fees

According to the Solicitors’ Remuneration Order 2023 (SRO 2023,

• Property price for First RM500,000 subject to 1.25% 
• Property price for Next RM7,000,000 subject to 1% 
• Property price for Excess of RM7,500,000 subject to negotiation on the excess but shall not exceed 1% of such excess

3. Rental Income

Yes it is accountable to Malaysia tax. If you are a foreigner with a permanent residence status, the tax rate will be from 0-25% depending on the tax bracket. If you are a foreigner without a permanent residence status, the tax rate will be 25%.

4. Loan stamping fees

Loan stamp duty is around 0.5% of the loan amount.

5. Door tax & title deed

RM 1,500-RM3,500 for condominium (charged by land office)

6. Maintenance fee

This fee is based on price per square feet (psf) set by property developers. It will vary from project to project. A rough estimation of this cost will be from RM 0.30 – RM 1 psf. 

Calculate your house loan here!

The Property Buying Process Made Simple

Finding the Perfect Property

When searching for property for sale in Malaysia, it's crucial to conduct thorough research. Engaging a reputable real estate agent who specializes in the area of your interest can be immensely helpful. They can provide insights into the local market, help you identify the best properties, and assist in negotiations. 

The best part, in Malaysia, property developers offer the option of semi-furnished or fully-furnished units to accommodate the preferences of residents. For those who have specific design tastes, in-house design and renovation experts are available to assist throughout the process of furnishing the units to meet individual needs.

In addition to the furnishing aspect, property developers also provide property management services to ensure that the units are well-maintained and taken care of, especially when residents are away. This comprehensive approach encompasses both the initial furnishing of the units and the ongoing management and maintenance services to cater to the needs of residents in Malaysia.

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Legal Procedures

The legal process for purchasing property in Malaysia involves several steps. These include following the legal documents: 

• Property valuation
• Foreign Purchaser’s passport
• Signing the Sale and Purchase Agreement (SPA) within 14 days
• Obtaining approval from the Foreign Investment Committee (FIC)
• Application form as per section 433B of National Land Code

As for the process for obtaining state authority consent when purchasing property in Malaysia, the solicitor is responsible for applying for state authority consent as part of the property acquisition process in Malaysia.

To make it seamless, it is advisable to engage a qualified property agent and lawyer to navigate these  procedures for foreigners to acquire property and legal intricacies.

Financing Your Investment

Foreign investors can get financing from local Malaysian banks. The loan approval process may vary based on your financial situation and the type of property you intend to buy. Understanding your financing options is essential. 

However, when purchasing a property in Malaysia using cash, funds can typically be transferred by stages to the property developer's Malaysian bank account or to a bank account in another country, if that option is available.

Benefits of Owning Property in Malaysia

Rental Income Potential

Investing in Malaysian real estate offers the potential for rental income, given the country's growing tourism industry and expatriate community.

Capital Appreciation

The property market in Malaysia has shown consistent growth over the years, making it an ideal destination for long-term capital appreciation. The strategic location and economic stability of the country contribute to the increase in property values.

Quality of Life

Malaysia's diverse culture, stunning landscapes, and modern infrastructure make it an attractive place to live or retire, enhancing your quality of life and providing access to various amenities.

 

Begin Your Malaysian Property Investment Journey

The prospect of foreigners buying property in Malaysia is not only possible but also incredibly appealing due to various investment incentives and benefits. Malaysia's property market offers a wide range of choices, from bustling cities to serene beachfront properties. While specific regulations and procedures exist, they should not discourage you from considering Malaysia for your real estate investment goals.

Whether you're captivated by Penang's heritage, enchanted by Kuala Lumpur's modern attractions, or seeking serenity in Langkawi, Malaysia welcomes you to explore its property market. Take the first step toward realizing your Malaysian property ownership dreams and embark on an exciting investment adventure in this remarkable Southeast Asian country. Malaysia is your gateway to an enriching and profitable journey.

 

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