If you’re considering buying a home

There are a wide variety of properties available in Malaysia, from bungalows set in their own area of land, to new-build condominiums or terraced houses.

New condominiums or properties in gated communities such as those in Desa City Park are now in high demand, overtaking the previous demand for bungalows with land. Bear in mind that proximity to city centres and to International or Chinese Schools will affect the price. Kuala Lumpur is the most expensive place in Malaysia to purchase property, with an average property price in the city being RM785,327 ($188,191 USD or £148,485).

With a property market that had been on the rise, recent slowing of the economy, combined with a depreciation of the ringgit and political scandal, means the increase in property prices has slowed to a halt when adjusting for inflation. According to Numbeo, a city centre apartment per square metre will cost you RM8,478. Outside the city, the price per metre would be closer to RM5,100.

In the third quarter of 2017, Malaysia’s average house price stood at RM404,835 (£76,592 or $97,012USD), which is up by 5.10% (0.73% inflation-adjusted) from the previous year. During the same period, the average cost of property types changed as follows:

• Terraced house – 7.1% rise (2.6% inflation-adjusted) to RM 354,725 (£67,073 or $84,966 USD)
• High-rise residential properties – 4.2% rise (0.2% fall inflation-adjusted) to RM344,201 (£65,091 or $82,445 USD)
• Detached house – 2.9% rise (1.39% fall inflation-adjusted) to RM670,916 (£126,876 or $160,701 USD)
• Semi-detached house – 2.9% rise (1.37% fall inflation-adjusted) to RM647,941 (£122,532 or $155,198 USD)

Malaysia has some of the most liberal regulations in the region regarding foreigners buying property, but the rules have been changing over the last few years. It can be quite difficult to know what current regulations are, with lots of conflicting advice out there for expatriates wishing to take the plunge.

As of 2014, foreigners can buy property in Malaysia for a minimum purchase price of RM1million (the equivalent of £189,080 or $239,525USD) as ruled by the Federal Government. They can purchase up to two residential properties, e.g., two condominiums (max 50% in within the block) or one condo and either a terraced house (limited to 10% of this type), or land with bungalow or semi-detached house (limited to 10% of this type).

However, property is the responsibility of each individual state government, and they have the power to overrule these Federal policies. It’s worth checking the State Visit Land Offices for current legislation in the state you wish to purchase property in, as some may not be in line with the Federal legislation described above. For example, the state of Sengalor has increased the minimum purchase price for foreigners to RM2 million, which applies to all its districts. Foreigners are also only allowed to buy landed properties if they are in a gated community.

In Penang, the rules of the MM2H programme have also changed, with foreign buyers who are part of the scheme now only allowed to buy property priced at a minimum of RM 500,000 (2 units maximum).  

Before this, more than half the properties bought by foreigners were in the range of RM250,000 — RM500,000, and such a large adjustment and had a significant effect on the foreign housing market.

Foreigners used to have to gain approval from the Foreign Investment Committee before being able to purchase a property. This is no longer the case, but approval is still required from the State, which can be a lengthy process.

When it comes to purchasing the property of your choice, engaging a real estate lawyer is the first step, whose fee should be regulated by the Board of Valuers, Appraisers and Estate Agents Malaysia (LLPEH). Your lawyer should handle the exchange of contracts, and other fees will include stamp duty, a registration fee, search fee, adjudication fee, and any estate agent fees. The purchase process is outlined below:

1. Property selected (through estate agent or privately)
2. Letter of Offer/Acceptance signed with a 3% deposit from the buyer
3. Sale and Purchase agreement signed within 14 days (and stamped at the Stamp Office) and the buyer pays another 7%. Buyer has three months from the signing of this document to complete the payment in full  
4. Property examined by a valuation department, then Stamp Duty paid
5. Transfer registered at Land Office Registry

It is wise to be wary of vacant land adjacent to the property. Check planning permissions at local state offices and consider whether you want to take the risk of purchasing, even if there are no planning applications registered. You never know what might pop up right next to you, potentially affecting views, noise levels, traffic flow, and potential future sale price.

Be careful of properties advertised as ‘unfinished’ — this can be a problem in condominium projects in Malaysia. Also, ensure that the developer has a valid Developer’s License and Sales & Advertising Permit.

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