Frequently Asked
Questions - Buying Property In
Penang, Malaysia
I have never bought a house before where do I start?
The first step is to determine your property location you want and
affordability (budget), as most people need to buy with the help of a mortgage
loan. As a general guide, the monthly loan repayment should not exceed about 35%
of your gross monthly income. (More general questions about
buying property in Penang.)
What is the difference between an
apartment, a condo or a flat ?
In Malaysia, apartment and condo are the same meaning. Most condo or
apartment will have condominium facilities and security services. Flats generally means medium or low
cost flat and in most cases would not have the facilities unlike condominium.
Can I buy property if I am not a resident of Malaysia?
Yes. Non-Malaysian & Foreigners intending to purchase a property in Malaysia needs to obtain
the respective state consents which the property is situated before the purchase
is considered valid and lawful. (
In most cases, your solicitor would submit the application on your behalf).
Note:
For Penang State Consent, the property purchased must be valued RM250,000 (ringgits) and above.
How does the actual buying process work?
Once you have agreed on the terms with the seller, arranged
the financing if required, you need to engage a lawyer to advise and act
on your behalf when signing the Sale and Purchase Agreement and making payments
until the transaction is completed. The money is paid to the
solicitor who will forward the money to the seller when the transaction goes
through.
How do I pay for the purchased unit and when should I pay?
You pay a 2% earnest deposit to secure the property when you first decide to buy the property.
(This is the booking deposit and
will become part of the deposit after the legal Agreement is
signed). Once the vendor signed the Letter of Intent and
accept this deposit, he cannot sell the said property to any other party.
The Sale and Purchase Agreement (SPA) to be drawn up by the solicitor and upon
signing of SPA, pays 10% of the purchase price (minus the earnest deposit). The remaining 90% is paid within
the next 3 months from the signing date of the SPA. An extension of 30 days is
allowed, with an interest of approximately 6% per annum on the balance sum.
This is the normal basic framework of the agreement subject to your lawyer's
advice and the usual practice. Once your legal representative has finished
their searches and investigations, and all monies are paid over, the title
transfer are finalized, and the property is all yours.
(For property under construction, there is a progress payment schedule for those
condominiums that are still under construction).
How do I open a bank account in Malaysia?
Opening an account in Malaysia is relatively easy. Once you decided to purchase the
property your lawyer will introduced to you a bank of your choice or if you
prefer, one recommended by us so that you can open a local banking account. With
the internet banking you can access your account in English at all times from
anywhere, check balance, transfer funds and even pay utilities bills - all done
online through the internet.
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What are the fees are associated with buying property?
a. Legal fees.
b. Gov't Stamp duties
c. Loan agreement fee
d. Valuation fee
e. Agent's fee
*Fees subject to 5% GST.
How much is the legal fees?
The first Schedule of the Solicitors Remuneration Order 1991 sets out the fees
based on the purchase price of the property as follows:-
1.5% on the first RM150,000
0.7% on the next RM4,900,000
0.25% on the remainder
For the schedule for legal fees it is advisable to
consult your lawyers for the present calculation of the legal fees.
What is stamp duty and how much is it?
All transfer of property is subject to Government Stamp Duty. Rate of Stamp Duty
is based on the value of property.
1% on the first RM100,000
2% on the next RM400,000
3% on the next RM1,500,000
For the schedule for stamp duty it is advisable to consult your
lawyers for the present calculation.
How much is the loan documentation charges? (Applicable only
if you require bank financing).
Preparation of the Loan Agreement of the property and attending to stamping and
registration.
1% of the purchase price on the first RM100,000
0.5% on the next RM4,900,000
0.25% on the next RM4,901,000 and above
Do I need a valuation and how much is the valuation cost?
For those who need financing from banks, a report by a Valuation firm is
required by the bank. The financial institution
requires a valuation to ascertain whether the property provides sufficient
security for the loan given. It also provides an indication that the property is
worth what you are paying for. The fees would depends on the value of the property. A
rough estimate of the fees is of RM500 - RM1,000 for a normal 900 square feet apartment valued.
Please consult your valuation firm for the present calculation of the fees.
What about yearly local tax?
All property owners have to pay local council assessment tax. Rate of assessment is
based on the value of property. An average property taxes are
approximately RM200 (ringgits) per half yearly for an apartment of RM300,000
value. All assessment rates bills are issued & posted twice a year, at the end
of December / June and must be paid in full not later than February / August,
respectively.
What documents do I need to apply for a housing loan?
The following is a checklist of the documents you will need to provide:-
1)
Identification Card (IC) or Passport for foreigner
2) Latest two months latest salary slip / Letter from employer
3)
Latest Form J/ EA (income statement) / EPF statement
4)
Sales & Purchase Agreement / Booking receipt
5)
3 months’ bank statements (Savings / Current)
6)
Business Registration / Form 24 & 49 (if-self employed)
Can a foreigner obtain loan to finance the purchase?
Financing / bank loan is available up to 70% for foreigner from most local banks.
Do I need consent from the developer for the sale and assignment of his
apartment unit to me?
If the strata title for the property has not been issued, the vendor shall apply to the Developer
for consent to the sale and assignment of the apartment unit to you. All
administrative fees for obtaining the consent is borne by the vendor. In the event written consent is refused by the
developer to the vendor, the vendor shall refund the deposit (if any) without
interest to your solicitor and the Sale and Purchase Agreement between you and
the vendor shall forthwith be null and void.
Real Property Gains Tax (RPGT)
RPGT website: http://www.hasil.gov.my/lhdnv3e/
Latest news on Dec 23rd 2009: The real property gains tax (RPGT) announced during the 2010 Budget will now only apply to property sold less than five years from its purchase. The 5% tax would now only be imposed on property sold within five years of the date of purchase. If owner has owned property for 5 years or more, No tax.
For Foreigners: Requirement by Penang state consent. The property purchased must be valued RM250,000 and above.
Got a question? Speak to our friendly and efficient lawyer or banker.
If you are interested in seeking financing to facilitate your property purchase
, we will forward you the email and telephone contacts of several banks - and
queries can be initiated. Financing of up to 70% can be arranged for, provided
that income documents can substantiate the margin. We will also forward to you
contacts of lawyer who can assist you with any of your questions you may have.
Expatriate's Commonly Asked Questions About Buying Property In Penang
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Disclaimer The information provided are for information only and does not constitute a basis for any offer or contract of sale. No part of this document may be construed as a statement or representation of fact based on which a contract is created. Interested parties are advised to carry out their own independent investigation.