guidelines in buying penang property

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I have never bought a property 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. (buying property in Malaysia)


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, From 1st July 2012 the property purchased must be valued RM1,000,000 (malaysian ringgits) and above. The minimum limit of condo purchase for foreigner buyers will be RM1 million and landed properties to RM 2 million.


How does the actual buying process work in Malaysia?

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.

(Note: For property under construction, there is a progress payment schedule for those condominiums that are still under construction. Pay in stages).


Can a foreigners open a bank account in Malaysia?

Opening a bank 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.


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 are subject to 6% GST.


*How much is the legal fees? Legal fees is calculated according to the Scale Fees provided under the Solicitors Remuneration Order, 2006 (SRO) sets out the fees based on the purchase price of the property as follows:- Purchase Price Scale Fees For the first RM150,000.00 = 1.0% For the next RM850,000.00= 0.7% For the next RM2,000,000.00= 0.6% For the next RM2,000,000.00= 0.5% For the next RM2,500,000.00= 0.4%

*For the schedule for legal fees it is advisable to consult your lawyers for the present calculation of the legal fees. Please also take note that no discount is allowed under the SRO.


What is stamp duty and how much is it?

In Malaysia, 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 property valuation and how much is the valuation cost? (Applicable only if you require bank financing)

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 council tax?

All property owners have to pay local council assessment tax. Rate of assessment is based on the value of property. An average estimate property taxes are approximately RM380 (ringgits) per half yearly for an apartment of RM600,000 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 to the bank:-

1) Identification Card (IC) or Passport for foreigner 2) Latest three months salary pay slip / Letter from employer 3) Latest Income tax statement (Form J/ EA ) 4) Latest 3 months bank statement that shows salary credited (Savings / Current) 5) Sales & Purchase Agreement / Booking receipt 6) Business Registration / Form 24 & 49 (if-self employed)


The margin of financing for foreigner is maximum up to 80% and 65 years old or 20 years base on your age. Premier Customer, the margin of financing is may be up to 85% and 70 years old or 25 years base on your age.

Can a foreigner obtain loan to finance the purchase property in Malaysia? 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) in Malaysia

The real property gains tax (RPGT) announced during the 2012 Budget will now only apply to property sold less than five years from its purchase. The % 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.

Latest property new on RPGT - announced during the 2012 Budget 1st 2 years 15% 3-5 years 10% After 5 years - no tax. Effective 1st Jan 2013.

RPGT website: http://www.hasil.gov.my/lhdnv3e/


For Foreigners buying property in Malaysia : Requirement by Penang state consent.

Latest property news. For Foreigners buyers please note guidelines to be implemented for foreign property purchase.

The following information is obtained from the Bulletin Mutiara and verbal checks with the state authority : From 1st July 2012 - The minimum limit of condo purchase will be raised to RM1 million and landed properties to RM2 million. These revised guidelines will mean that foreigners will only be allowed to buy properties priced above RM1million

guidelines in buying penang property

Real Estate