Buying Property in Malaysia as a Foreigner
Who can buy property in Malaysia?
Foreigners can acquire both residential and commercial properties in Malaysia; however, certain restrictions apply. Typically, you cannot purchase properties valued below a specific threshold, which varies by state and may depend on your visa type. While foreigners can own land, it is generally under a leasehold arrangement, granting ownership for a fixed term, often up to 99 years, with the possibility of renewal. Regarding the property itself, your rights are largely comparable to those of Malaysian citizens. You have the ability to sell, rent, or inherit the property, but there may be restrictions on the minimum period of ownership before you can sell.
Key Differences in Real Estate With and Without MM2H Visa
In Malaysia, the government has introduced the Malaysia My Second Home (MM2H) program to encourage foreign nationals to reside in the country for extended periods. This initiative offers eligible participants a multiple-entry social visit visa valid for ten years, which can be renewed. While the primary aim is to facilitate long-term residency, the MM2H program also presents advantages for those interested in purchasing real estate.
| With MM2H Visa | Without MM2H Visa | |
| Property Ownership Eligibility | MM2H visa holders can purchase residential properties in Malaysia, typically with a lower minimum price threshold, which varies by state but often starts around MYR300,000 (US$72,000). | Foreigners without the MM2H visa may face stricter regulations and higher minimum purchase prices, often starting at MYR1,000,000 (US$240,000) in many regions. |
| Financing Options | Participants in the MM2H program may find it easier to secure financing from local banks, as some institutions offer special mortgage schemes for MM2H visa holders. | Foreigners without the MM2H visa may have limited access to mortgage financing, as not all banks provide loans to non-residents. |
| Investment Incentives | MM2H visa holders may benefit from additional incentives, such as property management services or discounts on property purchases, offered by developers eager to attract foreign investment. | Non-MM2H visa holders may not have access to these additional benefits, which can enhance the overall investment experience for MM2H participants. |
Do the research
Investing in Malaysian real estate presents a unique opportunity due to the country's growing economy and strategic location in Southeast Asia. Malaysia offers a relatively affordable property market compared to other countries in the region, making it accessible for both local and foreign investors. The government's initiatives to promote foreign investment, along with favorable policies such as the Malaysia My Second Home (MM2H) program, further enhance its attractiveness. Urbanization and a rising middle class contribute to a growing demand for residential and commercial properties, particularly in major cities like Kuala Lumpur and Penang. Additionally, Malaysia's robust infrastructure, including modern transportation networks and a well-developed financial sector, supports real estate growth. The diverse cultural landscape and high quality of life make it an appealing destination for expatriates and retirees, driving demand for rental properties. Overall, Malaysia's real estate market offers the potential for strong returns on investment and long-term capital appreciation.
Here are some sought-after destinations for real estate investment in Malaysia:
- Kuala Lumpur - As the capital and economic center of Malaysia, Kuala Lumpur is an ideal location for both residential and commercial real estate. Key areas such as Bukit Bintang, KLCC, and Mont Kiara are particularly favored for their vibrant lifestyle, modern amenities, and excellent connectivity. The city offers a wide array of luxury condominiums and office spaces, making it a top choice for investors.
- Penang - Known for its cultural heritage and stunning beaches, Penang is a highly sought-after destination for both locals and foreigners. Areas like George Town and Batu Ferringhi are popular for holiday homes, boutique hotels, and beachfront properties. Penang's thriving tourism industry and vibrant food scene make it an attractive investment opportunity.
- Johor Bahru - Located just across the causeway from Singapore, Johor Bahru is rapidly growing in popularity among property investors. The city offers affordable housing options and is known for its shopping, dining, and entertainment choices. Developments in areas like Iskandar Malaysia have led to significant growth in the real estate market, attracting both local and international buyers.
- Langkawi - This beautiful archipelago is famous for its pristine beaches and lush landscapes. Langkawi is an ideal location for resort-style living, making it a popular choice for vacation homes and investment properties. The island's duty-free status also enhances its appeal for both tourists and investors.
- Malacca - Rich in history and culture, Malacca is a UNESCO World Heritage site that attracts many visitors each year. The city offers a unique blend of traditional and modern living, with various property options, including heritage homes and modern apartments. Its charm and historical significance make it a great location for investment.
Where to find properties online:
Financing
Yes, foreigners can secure mortgage loans in Malaysia, though the process may vary from that of local buyers. When applying for a mortgage, foreign buyers typically need to submit several documents, such as proof of income, employment verification, identification papers, and details about the property being acquired. To facilitate the mortgage process and ensure compliance with Malaysian regulations, it is advisable for foreign buyers to work with a local lawyer or real estate agent. This can also help them find the most favorable financing options.
Due Diligence and Sales Contract
Although due diligence is not a legal requirement in Malaysia, it is strongly advised, particularly for foreign buyers. This process helps identify any potential issues or liabilities related to the property, which may include legal, financial, or physical concerns.
In Malaysia, the sales contract is known as the Sale and Purchase Agreement (SPA). This document outlines the terms and conditions of the sale between the buyer and the seller. Once signed by both parties, the agreement becomes legally binding. It is essential for foreign buyers to confirm their legal eligibility to purchase the specific property beforehand.
Property Buying Costs and Taxes in Malaysia
|
Transaction Costs |
||
| Who Pays? | ||
| Stamp Duty | 1.00% - 4.00% | buyer |
| Legal Fees | 0.50% - 1.00% | buyer |
| Notary Fees | 0.10% | buyer |
| Real Estate Agent's Fees | 2.00% - 2.75% | seller |
| Costs paid by buyer | 1.60% - 5.10% | |
| Costs paid by seller | 2.00% - 2.75% | |
| ROUNDTRIP TRANSACTION COSTS | 3.60% - 7.85% | |
| Source: Global Property Guide | ||
Footnotes to Transaction Costs Table
The round trip transaction costs include all costs of buying and then re-selling a property - lawyers' fees, notaries' fees, registration fees, taxes, agents' fees, etc.
Currency:
Malaysia uses the Malaysian Ringgit. The exchange rate is at US$1=MYR4.158 as of October 2024.
Real Estate Agent's Fee:
Real estate agents' fees are regulated by the Board of Valuers, Appraisers, and Estate Agents Malaysia (LLPEH). The commission is paid either by buyer or seller, subject to a maximum discount of 30% but a minimum fee of MYR1,000 (US$240) per case. The scale is not applicable to the sale of foreign properties in Malaysia.
|
Real Estate Agent's Fee |
|
| VALUE OF PROPERTY, MYR | RATE |
| Up to 500,000 (US$120,250) | 2.75% |
| Over 500,000 (US$120,250) | 2% |