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HENRY BUTCHER MALAYSIA (PENANG) PROVIDES INSIGHT ON PENANG PROPERTIES AND FOREIGNERS NEED-TO-KNOW WHEN BUYING

PENANG – A PlAcE to DiE for with thE lurEs of olD worlD chArms

Penang state, also known as Pulau Pinang, Pearl of orient, Prince of Wales Island, and silicon Island of the World, encompasses an island and mainland (seberang Perai), with a total land area

of 293 km2 and 738 km2 respectively. The state, with its mix of beachfront, city heritage, and hillside residential living, makes for a diverse and colourful place to live, stay, nurture the young, and retire.

To date, the accolades awarded to Penang, include the inscription of George Town as the uNesCo World heritage site on 7 July 2008; the island was also honoured one of the top Asian Islands in Travel + Leisure’s 2008 World’s best Awards; Penang has been chosen as No. 2 by readers recommendation in the New york Times as “best Places to Go” in 2009. Furthermore, George Town was ranked the most liveable city in malaysia and the eighth most liveable in Asia by eCA International in 2010 and 2011 respectively. The smartTravelAsia.com, in 2011, ranked Penang as one of the top 10 holiday destinations in Asia. moreover, yahoo! Travel voted Penang eighth in place as the “Ten Islands to explore before you Die”. recently, Penang AsamLaksa was picked as the 7th most delicious in CNNgo.com under “World’s 50 most delicious foods” list. On Feb 2013, KIPLINGER–a US based personal finance and business forecasting publication (in February 2013) listed Penang as a great place for foreigner to retire in. In short, Penang, or The Pearl of the orient, with her own unique and charming character, is a place to die for.

In terms of living in this state, the malaysia my second home (mm2h) programme was launched by the malaysia government a few years ago, with offers of a renewable, ten-year, multiple entry visa for qualified applicants (non-Malaysian) who choose to stay and live for a long term or extended period in malaysia. As of march 2013, the mm2h programme has generated a lot of interest and more than 21,000 foreigners have been approved under this programme1. Penang has indeed proven to be an excellent choice to stay/retire under the mm2h programme.

Property Investing in PenangPenang, with her charming charisma and strategic location, is one of the most dynamic real estate markets in malaysia. The sector has experienced significant growth, in terms of volume and value transacted for the last couple of years.

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on the island, the hotspot or corridor of opportunities would be from batu maung–bayan Lepas–George Town–Tanjung bungah–Teluk bahang areas. on the mainland, investors would be able to get residential properties that are relatively cheap and low density at strategic locations. A new enabler–the second Penang bridge will appear in the landscape of Penang in the third quarter of this year. opportunities are not only abound on the island but at the mainland as well. Investors could look into and analyse the future potential opportunities of the land banks around the intersection of the North-south highway and the second Penang Bridge. The areas around the five new proposed highways under the “recommended Penang Transport master Plan strategy, 2013”, namely George Town outer bypass, The North Coast Pair road, The Air Itam–relau Pair road, The North-south expressway Link road, and the Third sea Crossing, could be potential property hotspots in the near future.

Currently, pre-war heritage shophouses around George Town’s unesco World heritage site present high investment value and potential capital appreciation. The price index of these pre-war properties in George Town has started to soar since 1999. The cumulative annual growth rate (CAGr) (1999-2012) of pre-war heritage properties’ price per square foot is at about 13.4%.

since 1 July 2012, the minimum purchase prices for strata-titled and landed properties on Penang Island are rm1 million and rm2 million respectively. Nevertheless, for permanent residents, the existing limit of rm500,000 has been retained. For approved applicants under mm2h, the minimum purchase price stays put at rm500,000, with purchase limit of up to two properties. state consent is also required and the property cannot be disposed within three years from the date of purchase.

Real Property Gains Tax in Malaysia In malaysia, gains arising from the disposal of real property are subject to real Property Gain Tax (rPGT). The relevant legislation is governed by the real Property Gain Tax Act 1976 (Act 169). every person, whether resident or non-resident in malaysia, is chargeable in respect of any chargeable gain he has made on the disposal of a chargeable asset.

The malaysian Government, in the recent budget 2013 announcement, has proposed a 5% increase to the current rPGT rates to further curb speculative activities in the local real property market. With effect from 1 January 2013, the revised rPGT rates for the disposal of real property and shares in real property companies are as follow:

Disposal Period

RPGT rates

Individual (Citizen / Pr)

Individual (Non-citizen)

Company

Disposals within 2 years 15% 15% 15%

Disposals within 3rd to 5th year

10% 10% 10%

Disposals after 5th year 0% 0% 0%

The following rPGT exemptions which were implemented under the previous budget 2012 continue to be available:(a) rPGT exemption on gains from the disposal of one residential

property once in a lifetime to individuals;(b) rPGT exemption of up to rm10,000 or 10% of the net gains,

(whichever is higher) from the disposal of real property by individuals; and

(c) rPGT exemption on gains arising from the disposal of real property between family members (e.g. husband and wife, parents and children, grandparents and grandchildren).

Legal Fees – Sales & Purchase Agreement (SPA) and Loan AgreementThe fees to be collected by lawyers in handling the sale or purchase of real estate/properties and loan documentation based on the purchase price or loan value, as stated in the first Schedule of the solicitors remuneration order 2006, are as follow:

Purchase Price or Loan Value

Fees Schedule (%)

For the first RM150,000 1% (subject to a minimum fee of rm300)

For the next rm850,000 0.7%.

For the next rm2,000,000 0.6%

For the next rm2,000,000 0.5%

For the next rm2,500,000 0.4%

Purchase price or loan value is in excess of rm7,500,000

Negotiable on the excess (but shall not exceed 0.4% of such excess)

“Currently, pre-war heritage shophouses around George Town’s Unesco World Heritage Site present high investment value and potential capital appreciation. The price index of these pre-war properties in George Town has started to soar since 1999. The cumulative annual growth rate (CAGR) (1999-2012) of pre-war heritage properties’ price per square foot is at about 13.4%.”

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Stamp Dutystamp duty is usually payable by the purchaser and is levied on the document of transfer (i.e. the deed of assignment of the Principal sPA if the title has not been issued, or the memorandum of transfer if the title has been issued) based on the purchase price or the market price as determined by the valuation department of stamping Office, whichever is the higher. The amount is as follow:

(i) 1% on the first RM100,000;(ii) 2% on the next rm400,000;(iii) 3% on the remainder

The Benefits of Engaging a Registered Real Estate AgentIt is advisable to obtain the services of a registered real estate agent whether for a sale or a purchase. It can help to save a buyer’s or seller’s time with all facts ready in hand. The agent is the best point of access for all available properties, who can arrange for the viewings of the houses. he or she can narrow down the search by matching the house with one’s requirements. some agents who are also the registered valuers have the advantage of advising one on the market value by providing him or her with a comparative market analysis. The agent can also recommend bankers and work with bankers on one’s behalf to pre-qualify a buyer for a loan. sometimes, it is best to leave negotiations to the agent who will lead one through the process until a formal contract is signed.

henry butcher malaysia (Penang), which is part of the

international network of henry butcher & Co., International Asset Consultants & Chartered surveyors, has been providing real estate solutions to government, commerce & industry in malaysia for more than 20 years. our “one-stop” concept offers comprehensive range of professional services - meaning that you can deal with just one company for all your real estate (ranging from new/primary and secondary markets of residential, commercial, industrial, agricultural, land), plant and machinery needs, asset auction, research and consultancy, project consultancy, and investment.

This article is provided by henry butcher malaysia (Penang). For any enquiry on property investment or business partnership, please contact max Wong at +6016412 5582.

Note: The rates and schedules are subject to change by authorities from time to time.

One is required to seek independent advice before making any investment decision.

1Tourism malaysia (www.tourism.gov.my)

Rare opportunity to own a pre-war heritage gem in George Town, Penang

A UNESCO World Heritage Site

Fascinating, historic, unique, appealing, romantic, love...

For enquiries on property investment, please contact :Henry Butcher Malaysia (Penang) Sdn. Bhd.142M, Jalan Burma, 10050 PenangTel +604-2298 999 Fax +604-2298 666Max Wong +60164125582Email : hbpenang@hbmpg.com