YOUR GUIDE TO INVESTING IN MALAYSIAN REAL ESTATE

Malaysia Property Incorporated (MPI) is a Government initiative set up under the Economic Planning Unit to drive foreign direct investments into the Malaysian real estate market.

MPI connects interested parties through its extensive network of government agencies, private sector companies, real estate firms, business councils and real estate-related associations. As MPI is an initiative funded by the Malaysian Government, all services provided by MPI are gratis.

OWNING MALAYSIAN PROPERTY

OWNERSHIP OPTIONS

Freehold Freehold property belongs to the owner in perpetuity. Transfer of interest in the property can proceed without any restrictions or approvals from the government.

Leasehold Land leased by the government for a specific term, most commonly in the duration of 33 years or up to 99 years. Transfer of interest to another party may require some state authority approval, depending on conditions in the title.

Landed Issued for properties built on individual plots of land that is sub-divided horizontally.

Strata A form of ownership commonly found within residential and commercial multi-storey buildings, as well as landed properties within a gated community. Strata title properties comprise individual lots owned by individual owners and include common property.

States Min. Value Threshold

Federal Territory of Kuala Lumpur & Labuan, Penang, Johor, Melaka, Negeri Sembilan, Terengganu, Perlis, Kedah, Perak, Selangor

RM500,000

Pahang• UnlessinCameron

Highlands, Bentong & Kuantan

RM500,000RM750,000

Sarawak RM300,000

Sabah Not Applicable

DO I NEED TO OBTAIN ANY SPECIAL APPROVALS?You are required under Section 433B of the NationalLandCodetoobtaintherespectivestategovernment’s approval for your purchase.

Landed Titles (May be freehold or leasehold)

Strata Titles (May be freehold or leasehold)

GatedCommunities Condominiums

Semi-Detached & Terrace Houses

Serviced Apartments

Bungalows Town Houses

Golf Resort Homes / Beach Villas

Residential Land

ARE THERE ANY RESTRICTIONS ON MY PURCHASE?

The Economic Planning Unit’s Guideline on Acquisition of Properties (Updated January 2010) states that a foreigner is not allowed to purchase any types of properties below RM500,000.00 from 1 January 2010. One is also not allowed to purchase (i) low or low-medium cost residential properties, (ii) properties built on Malay reserve land, and (iii) properties allocated to Bumiputera interests. The minimum purchase price set by a few states differs from the abovementioned. Please confirm with your solicitor before you make a commitment on any property.

WHY INVEST IN MALAYSIA?• Directforeignownershipofrealestateispermitted

Security in legal ownership• Nocapitalcontrols

Non-residents are free to purchase any kind of property priced above RM500,000

• NocapitalgainstaxThe Real Property Gains Tax only applies if property is disposed of within 5 years from purchase

•TransparentTorrensLandadministrationsystem Based on Australian Torrens System•Noinheritancetax Property will be distributed according to the owners’ will• Endfinancingavailableforforeignbuyers

Malaysian banks can offer overseas buyers loans of up to 70%

MORE REASONS TO INVEST HERE

•EconomicStability• RealEstateInvestor-friendly

Tax Environment•RepatriationofIncomeisAllowed•SoundBasicInfrastructure&Amenities•GoodTravelInfrastructure•MultilingualAdvantage•YoungandGrowingPopulation•AwayfromNaturalDisasterZones•SummerAllYearRound

DO I NEED TO ENGAGE A LAWYER FOR THE PURCHASE?It is advisable to engage a solicitor who will conduct a search on the property to confirm ownership and perform a bankruptcy/winding-up search on the vendor before you make any commitments. Your solicitor will prepare the necessary legal documentations. Solicitor’s fees are set out under the Solicitors’ Renumeration Order 2006. You may enquire with the Malaysian BarCouncilforassistance.

IS THE HOUSE BUYER’S INTEREST PROTECTED UNDER MALAYSIAN LAW?Yes.TheHousingDevelopment(ControlandLicensing) Act 1966 not only regulates the business of housing developers but also protects theinterests of house buyers.

WHAT ARE THE STEPS INVOLVED? I. Sign a Letter of Offer/Intent prepared by the

developer or the agent after your solicitor has perused it. You will usually pay 3% of the purchase price as earnest deposit which forms part of the purchase price.

II. You are then required to execute the Sale & Purchase agreement within 14 days of signing the Letter of Offer/Intent. The contract must take the form of either:

a. Schedule G of the Housing Development (Control&Licensing)Actwhenyoupurchaseland and and buildings from developers, OR

b. Schedule H when you purchase subdivided buildings from developers.

III. The vendor will execute a Memorandum to transfer the title to you. If there is no title, the vendor will execute a Deed of Assignment to assign all his rights and benefits under the principal Sale and Purchase agreement to you.

IV. If you are buying direct from a developer, they will execute a Letter of Undertaking to transfer the title to you.

V. You must also execute the Land Office forms for the application of the state government’s approval of your purchase.

VI. Upon signing the Sale and Purchase agreement, you pay up to 10% of the purchase price. When you buy from an existing property owner, you pay the balance within 3 months from the date you obtain the state government’s approval of your purchase.

OWNERSHIP CHARGES

HOW CAN I GET A LOAN IN MALAYSIA?

Malaysian financial institutions and overseas buyers are able to negotiate a loan of up to 70% of the property purchase value. Your limit depends onthe financial institution’s internal and credit assessment guidelines and your property will be charged/assigned to the financial institution.

DO I NEED TO PAY STAMP DUTY ON MY PURCHASE?You have to pay stamp duty on the document of transfer, calculated as follows:For every RM100.00 or fractional part of RM100.00 of the amount of the purchase price or the adjudicated market value of the property by the tax department, whichever is the greater -• RM1.00onthefirstRM100,000.00;• RM2.00onanyamountinexcessofRM100,000.00butnotexceedingRM500,000.00;

• RM3.00onanyamountinexcessof RM500, 000.00.

WHAT ARE THE OTHER POSSIBLE COSTS ASSOCIATED WITH BUYING PROPERTY?Stamp duty on your loan documentation, land search fees, bankruptcy/winding-up search fees, land office registration fees etc.

WHAT ARE THE TYPICAL OUTGOINGS INCURRED FOR A MALAYSIAN PROPERTY?

Charges/Fees Authority Frequency

Quit rent Land office Yearly

LocalCouncilFee* Local authority Half-yearly

* paid for the maintenance of public services

IN THE EVENT OF MY DEATH, WHO WILL INHERIT MY PROPERTY?

If you are a non-Muslim, your property will be distributed according to your will or the Distribution Act 1958 if you do not have a will. A Muslim’s estate will be distributed according to Syariah law. No inheritance tax is levied in Malaysia.

ARE THERE ANY RESTRICTIONS ON SELLING PROPERTY?None unless the state approval contains such conditions.

DO I HAVE TO PAY TAX ON THE-SALE OF MY PROPERTY?

You may be required to pay a 5% real property gains tax (capital gains tax) if your property was bought less than 5 years ago.

CAN I TRANSFER MY EARNINGS-FROM THIS PROPERTY OUT OF MALAYSIA?TheMalaysianCentralBankdoesnotimposeanyrestriction on the repatriation of profits, rental or proceeds from divestment of investments inMalaysia by a non-resident.

MALAYSIA PROPERTY INCORPORATEDUnit 6-03A, Level 6 MenaraUAC,No.12Jalan PJU 7/5, Mutiara Damansara47800 Petaling JayaSelangor Darul EhsanMalaysia

tel +603 7724 1878fax +603 7724 1877email info@malaysiapropertyinc.com

MALAYSIA PROPERTY GALLERY2 Shenton Way No. 01-02, Ground FloorSGXCentre1,Singapore

tel +65 6438 0312fax +65 6438 0875email infosg@malaysiapropertyinc.com

opening hoursMonday to Friday 9am – 7pm

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Updated : June 2011