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Malaysia Property Buying Process

 

Malaysia the property buying process is well documented and regulated but that doesn’t prevent the purchase process from differing from person to person! 


As is often the case when buying in an overseas emerging market it’s more a case of who you know rather than what you know when it comes to speeding up and easing the entire property buying process; and the more property transactions you engage in the simpler the process gets.


Foreign investors interested in the Malaysian property market are subject to certain restrictions on the type of real estate they can purchase and a great deal of care and attention to detail has to be paid to the whole buying process, therefore it is imperative that a good and recommended local lawyer is used to assist with the transaction.


In terms of the restrictions placed on non-resident purchasers, firstly permission to buy has to be granted by the Foreign Investment Committee of the Economic Planning Unit of the Prime Minister’s Department.  Secondly property on Malay reserved land cannot be owned by overseas foreign investors.  Other than these restrictions foreign owners of property are treated in the same way as Malaysian owners and both are protected by the same real estate laws.


When looking for property for sale in Malaysia it’s wise to have a structural survey carried out on any property that meets the investor’s objectives because many homes are known to have structural problems and they may not be apparent at first glance.  Once an investor is satisfied that his chosen real estate is sound and meets his requirements he will sign an offer letter that will be submitted to the vendor for acceptance.


Once the offer letter has been accepted an option to purchase contract will be signed by the vendor and purchaser and the investor will pay a 10% deposit which is non-refundable if they withdraw from the sale.  It’s important to make sure that there is a clause added to this standard document stating that if the vendor pulls out they have to pay back the deposit and an amount equal to that to the investor for the inconvenience.


Once this option to purchase has been signed the investor is given three months to find finance, get the title deeds checked and move towards signing the S & P agreement (Sale and Purchase Agreement).  Because getting a mortgage in Malaysia is such an incredibly slow, time consuming and frustrating affair this three month period often needs to be extended by another month.  If the period to signing the S & P is extended the purchaser has to pay interest on the outstanding amount he has left to pay at a rate of 10% per annum that is calculated on a daily basis for the month.
Overseas investors who require a mortgage to purchase property in Malaysia might like to consider raising the finance outside of the country as this will speed up the whole Malaysia property buying process.


When the completion date comes the Sale and Purchase Agreement is signed and the balance of the property’s selling price is transferred to the vendor.  The S & P is then sent to the land registry along with the memorandum of transfer form 14A of the National Land Code to transfer the title deeds into the name of the property investor.
A buyer should be aware that they will be liable to pay stamp duty and lawyer’s fees and if they sell their property and realize a gain from it they will liable for 5% tax of the gain to the government ( REAL PROPERTY GAIN TAX )for the property less than 5 years ownership.