Buying Property in Malaysia as a Foreigner
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Foreigners in Malaysia are either expatriates or tourists, and thus have been received with warm welcomes when visiting our country. Now the Government is also encouraging these foreigners to choose to make Malaysia their second home, whether for long-term stay, retirement or investment purposes.
If you're reading this and you're a foreigner, before making any decisions, you would need to understand certain policies and legal fees imposed by the Government on property purchases. Therefore, this article serves to guide you through the properties available to foreigners, the minimum purchase value imposed by state authorities, and the property financing in Malaysia.
What kind of properties can foreigners own?
Foreign ownership of property is liberal (foreigners can even own 100% of the property) in Malaysia as long as minimum requirements are met. In law, foreigners can own any type of properties with the exception of:
1. Properties valued less than RM1 million
2. Low and medium cost residential units as defined by state authority
3. Properties standing on Malay Reserved land
4. Properties distributed to Bumiputera interest in any property development project as determined by state authority
Having said that, foreigners can easily own a bungalow, terrace house, condominium, flat, landed property, studio unit, commercial property, industrial property, agricultural land (except Malay Reserved Land) and industrial land (except Malay Reserved Land).
What is the minimum requirement for the property value?
Generally speaking, a minimum value of RM1 mil is applied to all kinds of property in every state. However, state authorities remain in power to amend the minimum value in the states that they control.
How can foreigners buy at a lower price?
Malaysia My Second Home (MM2H) programme is a programme tailored to foreigners who wish to stay in Malaysia for a long period of time (10-year visa). A large number of foreigners who used to work in Malaysia have already applied for this programme for their retirement in Malaysia.
Before putting in an application, foreigners below 50 years of age are required to prepare a minimum of RM500,000 in their Savings Account / Current Account / Fixed Deposit whereas those aged above 50 years of age need to have at least RM350,000 in similar accounts.
Despite the relatively high requirement, one clear advantage is that MM2H gives foreigners access to property with lower value.
Financing with home loan
The Margin of Finance (MOF) can go up to 80% for MM2H holders, while non-MM2H holders would generally get 70% MOF. In this matter, foreigners are usually better off taking loans from foreign banks in Malaysia. However, all these come with an exception when they are married to a Malaysian citizen. In this case, the spouse will be required to take part in the loan financing to enjoy MOF as high as 90%.
I'm a Singaporean / Singaporean PR and I own a HDB flat, can I buy private residential properties in Malaysia?
Readers who fall in this category might need to guard against the Singapore's policy. According to HDB InfoWEB, those who own HDB flat can only buy both local and overseas private residential properties after 5 years since first possessing the flat, regardless of whether the flat is being transferred to others within the period. This is known as minimum-occupation-period (MOP).
As you may wonder, many policies are made to tackle the ballooning property price in major cities. Other than that, Malaysia is still a foreigner-friendly country with relatively cheap living costs. Make sure you are fully prepared with your funds and don't forget to enjoy the interesting life of mingling with the multi-racial community here in Malaysia!