Real Estate Law Foreign Direct Investment Laws Legal Services
This complete guide provides the information on foreign purchase of residential properties, commercial properties, industrial properties or agricultural land in Malaysia. It lays out the important issues, qualification, conditions and restriction of foreign acquisition and ownership of property in Malaysia. Last updated in November 2023.
Can a foreigner buy a residential property in Malaysia?
Yes, a foreigner can purchase subject to the following minimum purchase prices and conditions of different states: –
Federal territory (Kuala Lumpur, Labuan, Putra Jaya)/ Kelantan/ Langkawi/ Perak/ Pahang/ Terengganu: RM1,000,000.00
Selangor: RM2,000,000.00 (limited to strata title property)
Johor: RM2,000,000.00 (Landed property in designated international zone)/ RM1,000,000.00 (highrise/ strata title property)
Malacca: RM1 million (landed title)/ RM500,000 (high-rise/strata title)
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Penang:
Overhang landed property: RM1.8 million (island)/
RM750,000 (mainland)
Overhang strata/high-rise properties: RM800,000 (island)/RM400,000 (mainland)Sabah: RM1 million (landed property)/ RM600,000 (high-rise property)
Sarawak: RM500,000.00
Kedah: RM600,000.00
Perlis: RM500,000.00
What are the requirements for purchasing a commercial/industrial property in Malaysia?
The minimum purchase price of such properties in Federal Territory is RM1,000,000. For other states, different minimum purchase prices and conditions apply. Other State- imposed requirements apply.
What are the requirements for purchasing agriculture land in Malaysia?
Different rules of acquisition apply on different states.
Federal Territory (Kuala Lumpur, Labuan and Putra Jaya), Sabah and Negeri Sembilan:
A foreigner/ foreign company may acquire agriculture subject to the minimum purchase price of agriculture land of RM1,000,000, and the land must be at least 5 acres, for agricultural activities on a commercial scale, agro-tourism projects, or agricultural/agro-based industrial activities for the production of goods for export.Penang, Kedah, Kelantan: Acquisition of agriculture land is possible with State Authority’s consent and subject to applicable conditions of the State
Perak: Agriculture leasehold land classified as Homestead can be purchased by MM2H holder subject to payment of levy and minimum purchase price of USD100,000.00.
Melacca, Johor: A foreign entity cannot purchase agriculture land but may take a lease of an agriculture land with value more than RM1,000,000.00 or 15 acres for permitted high technology agriculture or agro- leisure activities.
Selangor, Pahang, Sarawak: A foreign entity cannot purchase agriculture land unless specifically permitted. Lease or tenancy is allowed.
Sources:
Kedah Land Office Guidelines
Melacca Bar
Perak Land Office Guidelines
Selangor State Assembly Archive
Sabah State Government Guidelines
Penang Land Office Guidelines
Before Buying
What do I need to do before paying a booking fee for a property in Malaysia?
You are advised to engage an independent legal representative to conduct a due diligence to verify or discover the legal ownership, restrictions or encumbrances on land. A part from due diligence, it is also important to appoint an independent legal representative to ensure that the terms and conditions contained in the booking form are fair and in line with common practice.
What is due diligence on property?
Property due diligence is the process of thoroughly reviewing and verifying all relevant information about a property before entering into an agreement. This includes conducting official land search, confirmation on the identity of the legal owner, and identifying restrictions and encumbrances on the land. Read more here on due diligence.
Why is due diligence important before paying a booking fee for a property in Malaysia?
Due diligence is crucial in order to assess the property and to discover or verify the legal ownership, restrictions, encumbrances, fraud, legal disputes or issues with the title. This will ensure that the investment is secure, and the property can be transferred smoothly.
What are the benefits of using a lawyer to conduct legal due diligence on the land before paying a booking fee?
A lawyer has the expertise to thoroughly review all legal documents related to the property, ensuring that there are no issues with the title or ownership. They can also provide advice on the terms of the sale and purchase agreement and assist with negotiating any necessary changes. Furthermore, a lawyer can help ensure that the transaction complies with all relevant laws and regulations. Read more on our service tailored for services before booking here.
What are the risks of not conducting due diligence or using a lawyer’s service to review legal documents before paying a booking fee for a property in Malaysia?
The risks of not conducting due diligence or using a lawyer before paying a booking fee include: (a) unfair contract terms siding the other side; (b) delay in completion of transaction; (c) fraud and legal disputes related to title or ownership; or (d) financial losses due to the above.
Transferring Ownership & State Authority’s Consent
What is the process for transferring the ownership of a property in Malaysia?
The process of transferring the ownership of a property in Malaysia typically involves executing a sale and purchase agreement, obtaining state consent(s) for sale and/or foreign purchase, stamping the agreement, paying the stamp duty, and registering the transfer of ownership with the land office. The transfer process can be facilitated by a lawyer or property conveyancer, which typically takes 4 to 6 months (including the period needed for obtaining state consent(s)) to complete.
What documents are required for application for approval from the state authorities?
The following documents are required: one copy of the sale and purchase agreement, one copy of the purchaser’s passport or identity card, one copy of company’s documents (for both the purchaser and the developer if the purchaser is a foreign company), FIC approval/notification acknowledgement (if applicable), latest Quit Rent and Assessment receipt of the subject property, the Application Form for S433B NLC and it is advisable to appoint a law firm for the preparation, witnessing, submission and follow- up on the application.
What is the procedure for obtaining state authority consent and how long does it take?
Foreign acquisition of property requires approval from the respective state authority. The approval process is usually done through a solicitor and takes 1-3 months. The consent is likely to be granted if the transaction is genuine.
Stamp Duty
What is the stamp duty on property purchase in Malaysia and who is responsible for paying it?
The stamp duty on property purchase in Malaysia is a tax imposed on the transfer of ownership. The buyer is responsible for paying the stamp duty, which is usually a percentage of the purchase price of the property. The formula is:
1% : For First RM100,000
2% : RM100,001 To RM500,000
3% : RM500,001 To RM1,000,000
4% : Above RM1,000,000
Legal Representative
Is it necessary to use a lawyer for buying property in Malaysia?
It is recommended to use a lawyer when buying property in Malaysia, as they can provide legal advice and assist with the various stages of the purchase process, including conducting due diligence, reviewing the sale and purchase agreement, and ensuring that the transfer of ownership is properly executed and registered.
Mortgage
Can a foreigner obtain a mortgage for purchasing property in Malaysia?
Yes, a foreigner can obtain a mortgage for purchasing property in Malaysia, although the availability and terms of the mortgage may vary depending on the lender and the buyer’s financial situation. It is recommended to engage a financial advisor or mortgage broker to assist with the mortgage application process.
Restrictions
Are there any restrictions on renting out a property in Malaysia to foreign tenants?
Foreigners are generally allowed to rent out their properties in Malaysia, although there may be restrictions imposed by the state or local authorities for specific type of property. It is advisable to seek legal advice to ensure compliance with all relevant laws and regulations.
As Property Owner
What are the ongoing obligations of a property owner?
A property owner shall continue paying quit rent (yearly), assessment (half yearly), monthly maintenance (if applicable), utilities and other out- goings related to the use of the Property.
