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Procedure of Buying Property In Malaysia

Buying property in Malaysia as a foreigner involves several important steps and legal requirements. Here’s a comprehensive guide to help you navigate the process:

  1. Eligibility and Restrictions: Foreigners can purchase residential properties valued above RM1 million. There are some restrictions, including prohibitions on acquiring low- to medium-cost housing, properties on Malay reserved land, and properties allocated for Bumiputera (indigenous Malays) quotas​ 

  2. Initial Steps:

  • Due Diligence: Before proceeding, engage an independent legal representative to conduct due diligence. This involves verifying the legal ownership, any restrictions, and encumbrances on the property​

  • Letter of Offer: Begin with expressing your intention to purchase through a Letter of Offer or a developer’s sales form​

  1. Financing: Apply for a home loan if necessary. Malaysian banks and international banks operating in Malaysia offer mortgage options to foreigners. Ensure all required documents are prepared, such as a photocopy of your passport, proof of income, and a local bank account​

  2. Sale and Purchase Agreement (SPA): Within 14 days of signing the initial offer, you will need to sign the Sale and Purchase Agreement (SPA). This contract outlines the terms of the sale and is accompanied by a 10% down payment​

  3. State Authority Consent: Foreign buyers must obtain state authority consent for the purchase. This process is typically managed by your solicitor and involves submitting necessary documents, including the SPA, your passport, and the application form for state consent. This step can take 1-3 months

  4. Stamp Duty and Legal Fees: Buyers are responsible for paying stamp duty on the property transfer. The rates are as follows:

  • 1% for the first RM100,000

  • 2% for RM100,001 to RM500,000

  • 3% for RM500,001 to RM1 million

  • 4% for amounts above RM1 million​ (L Y Lu & Co)​​ (​. Additionally, legal fees for the SPA and loan agreement are generally around 1% of the property value for the first RM500,000, decreasing slightly for higher values​

  1. Completion and Transfer: Once the state authority consent is obtained and all payments are made as per the SPA, the property transfer can be registered with the land office. This process includes paying the remaining purchase price and obtaining the title deed. The developer or seller then delivers vacant possession of the property​

  2. Malaysia My Second Home (MM2H) Programme: The MM2H programme offers a 10-year renewable visa for foreigners, allowing them to stay long-term in Malaysia. This can facilitate property ownership and residence for those meeting the financial requirements of the programme​

Following these steps ensures a smooth and legally compliant property purchase process in Malaysia. Engaging experienced legal and real estate professionals is crucial to navigate the local regulations and make a sound investment.

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