Malaysia has become an attractive destination for foreign property investors due to its vibrant economy, modern infrastructure, and appealing lifestyle. However, if you’re a foreigner looking to purchase property in Malaysia, there are specific regulations and guidelines you must follow to ensure a smooth transaction. Pursuant to National Land Code (NLC) 1965, foreign interest is defined as individuals that are not a Malaysian citizen.
Can Foreigners Buy Property in Malaysia?
Yes, foreigners can buy residential, commercial, and industrial properties in Malaysia. However, there are some restrictions:
- Properties built on Malay Reserved land, low and medium-cost residential units, or properties allocated for Bumiputera interests are off-limits.
- Foreigners cannot purchase agricultural land unless it’s designated for development.
Minimum Purchase Price for Foreigners
Foreigners are generally required to purchase properties valued at least RM1 million, though certain regions have lower thresholds. Some states impose additional restrictions on the types of properties foreigners can buy.
You may refer to the link below for more information:-
https://www.malaysianbar.org.my/document/members/circulars/2020—2024/2024&rid=48375
MM2H Program (2024 Update)
The MM2H (Malaysia My Second Home) program allows foreigners to buy property while offering long-term residency options. The 2024 update introduces higher financial thresholds and a mandatory property purchase requirement with a 10-year holding period. The program has three tiers (Silver, Gold, and Platinum), with varying financial criteria based on fixed deposits and property value.
Steps to Buy Property in Malaysia as a Foreigner
According to S433B of NLC, a foreign purchaser that fits the definition of foreign interest will have to obtain written approval from the State Authority before a property can be registered in the name of foreign purchaser.
The process of purchasing property involves:
- Signing a Sale & Purchase Agreement.
- Applying for financing (if necessary).
- Submitting required documents and obtaining approval from state authorities.
- Eg. CTC of SPA, CTC of foreign purchaser’s passport, latest quit rent and assessment receipt of the property, application form under S433B of NLC, processing fees for State Authority’s consent
- Completing the transaction and receiving the property with a certificate of completion and compliance.
Mortgages for Foreigners
Foreigners can obtain home loans in Malaysia, but the approval process depends on factors like financial standing and the type of property. MM2H participants may face fewer obstacles in securing a mortgage.
Additional Costs of Buying Property
When buying property, consider these additional costs:
- Stamp Duty:
- stamp duty on (SPA) of your property – this costs only RM10
- stamp duty on the instruments of transfer – (MOT) or (DOA). As announced in Budget 2024, for foreigners (non-citizens and foreign-owned companies, excluding Malaysian permanent residents), a flat rate stamp duty of 4% will be imposed on the instrument of transfer of property, effective 1 January 2024.
- stamp duty on your loan agreement – a flat rate of 0.5% of the total loan.
- Legal Fees:
- Varies based on the transaction size.
- Real Property Gains Tax (RPGT):
- Foreign buyers should be aware that Real Property Gains Tax (RPGT) applies to profits made from selling a property. If the property is sold within the first five years of ownership, the RPGT rate is 30%. However, if the property is sold after the fifth year, the RPGT rate drops to 10%.
In conclusion, Malaysia’s property market offers great opportunities for foreigners, but it’s essential to understand the regulations, financing options, and costs involved to make a successful investment.
Navigating property laws as a foreign buyer can be complex—but you don’t have to do it alone. Reach out to Yu & Ling for trusted legal advice and reliable support throughout your property transaction in Malaysia.
