5 KEY POINTS OF MALAYSIA LEGAL FOR PROPERTY
Compared to other Asian countries, acquiring real estate in Malaysia is relatively easy. Foreigner are able to acquire full ownership of a property. The acquisition of full ownership of real estate is often not possible in other countries of the region. Prospective buyers should have five key points in mind.
1. Minimum Purchase Price
The minimum purchase price is the most important prerequisite a foreigner has to consider when purchasing real estate in Malaysia. There are different pricing thresholds applicable to different states that have to be met when purchasing real estate. Some states are divided into zones for which different thresholds exist. Aside from the location, thresholds also depend on the type of real estate. Across the country, the minimum purchase price for residential property is usual at 1,000,000 MYR.1 The minimum purchase prices for commercial and industrial property as for example in Selangor (3,000,000 MYR) can be higher.
2. Excluded Real Estate:
As long as those thresholds are met, foreigners are principally able to acquire real estate with the exception of 3 property types which cannot be acquired by foreigners:
- Real Estate that is label as Malay Reserve Land
- Real Estate that is label as Bumiputra Interest
- Low & Low Medium Cost Houses
3. Real Property Gain Tax (RPGT)
Real Property Gains Tax (RPGT) is another important factor that should be considered. RPGT is a tax that real estate owners have to pay when selling their property. The tax rate is variable as it depends on different factors, e.g. the duration of the acquisition and disposal of the real estate. The tax is to be borne by the seller. Following table is the latest RPGT announcement in year 2019.
4. Foreigner Consent
Foreigners must obtain a “Foreigner Consent” from the relevant authorities in order to acquire real estate. The consent procedure differs from state to state. The same holds true for forms and fees. Fees are to be borne by the applicant. Typically, consent is given as long as the requirements are met.
5. EPU Approval
At last, it should be inquired if an approval of the Economic Planning Unit (EPU) is required for the acquisition of real estate. The EPU is an office of the Ministry of Economic Affairs. EPU’s responsibility is the preparation of development plans for the nation. Therefore, acquisition of real estate by a foreigner might require approval of the EPU.