Malaysia has probably one of the most relaxed policies involving foreigners buying property locally. This is because foreigners are believed to be able to boost the property market positively. The policies that govern foreign purchases of local property in Malaysia are actually very encouraging and easy to comply with and have pretty lax or minimal requirements. Foreigners will also find the purchasing process to be relatively hassle free.

However, there are several frequently asked questions that often crop up when foreigners plan to buy property in Malaysia. Here, we attempt to answer some of them as clearly as possible:

What type of properties are available for purchase by foreigners?

Foreigners are allowed to own almost all types of property in Malaysia including:
• Landed property which are houses surrounded by a large plot of land
• Semi-detached homes
• Terraced houses
• Bungalows, including the plot of land on which it stands
• Studio apartments
• Condominiums or apartments

Are there any type of property foreigners are not allowed to own?

Yes, foreigner cannot buy:
• Any property built on Malay reserved land
• Properties valued at less than RM1 million
• Certain low cost and medium cost properties designated by the local government as reserved for local buyers
• Almost all types of agricultural land
• Any unit meant for bumiputera buyers in all housing projects

What is a ‘bumiputera unit/plot of land’?

Malaysian law sets aside a certain number of units in a housing project, whether landed or high rise to be bought at a lower rice by members of the indigenous East Malaysian tribes or Malay people.

Is there any conditions attached to the price of the property?

Yes, unfortunately as of March 1st 2014, the Malaysian government has stipulated that foreigners can only buy properties valued at RM1 million and above. However there is an exception to this rule as those who apply for the Malaysia My Second Home (MM2H) programme can purchase property at a lower price.

Do foreigners need a guarantor to buy property?

No, there is no need for a guarantor but your purchase is subjected to local council approval.

Local council approval, what’s that?

According to Section 433B, all foreigners purchasing Malaysian property have to apply for permission from the local council and the entire process takes about 1-3 months. The state government has the right to either approve or reject your purchase request with legitimate reasons.

What is the purchasing process like?

The first step is to engage a real estate lawyer who will arrange for you and the developer to mutually sign a Letter of Offer/Acceptance, upon which you will be expected to pay a deposit to show your sincerity in buying the property, which is usually 1-3% of the total price.

This will be followed up 2 weeks to one month later by the signing of the Sales and Purchase Agreement, at which time you will be required to pay the remainder of the down payment that totals up to 10% of the property value. You will subsequently receive consent from the local land office and be expected to settle full payment on the house within 3 months from the date of the SPA signing.

In between signing the SPA and paying of the full price, your lawyer will also have to settle other things like registering the transfer of property with the Land Office Registry.

Can I obtain financing from local banks?

Yes, local Malaysian banks usually give out loans to foreigners, provided that they have a legitimate work permit and are working in Malaysia. The exceptions for non-residents taking up loans in local banks is when you are a retiree under the MM2H programme.

You can obtain financing of up to 80% for your property and interest rates vary between 4.0 to 4.7 % depending on the banks.