ACQUISITION OF PROPERTIES BY A FOREIGNER(S) IN KUALA LUMPUR AND SELANGOR
A steady economic growth, multiracial harmonious society and the well-connected infrastructure in
Malaysia has caused a recent influx of foreign investors coming into our region to purchase our real estates
for investments and/or own stay purposes.
However, it is prudent for foreign investors to be fully aware of the restrictions and requirements of
purchasing real estates in Malaysia.
Below are few helpful pointers.
A) DEFINITION OF A “FOREIGNER”
A foreigner is defined as : –
1. an individual who is not a citizen of Malaysia; or
2. a foreign company incorporated in Malaysia; or
3. a company incorporated in Malaysia with 50% or more of its voting shares held by a non-
citizen.
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B) THRESHOLD OF PURCHASE PRICE
In general, a foreigner is only allowed to purchase properties that exceed certain minimum
threshold of purchase price, which vary from state to state.
For example, a foreigner is entitled to purchase properties in Kuala Lumpur at the purchase price
of RM 1,000,000.00 and above.
On the other hand, a foreigner is entitled to purchase properties in Selangor at the purchase price
of RM 2,000,000.00 and above (for Zone 1 & 2) and RM 1,000,000.00 and above (for Zone 3).
* Zone 1 – Districts of Petaling, Gombak, Hulu Langat, Sepang & Klang
* Zone 2 – Districts of Kuala Selangor & Kuala Langat
* Zone 3 – Districts of Hulu Selangor & Sabak Bernam
C) TYPES OF PROPERTIES
As opposed to a local citizen, there are limitations imposed by the authority on the types of
properties that can be purchased by a foreigner.
For instance, a foreigner can buy all types of commercial and industrial properties in both Kuala
Lumpur and Selangor.
In terms of residential properties, a foreigner can only purchase stratified residential properties in
Selangor, not landed. On the other hand, a foreigner can buy both landed and stratified properties
in Kuala Lumpur.
Nonetheless, a foreigner is strictly prohibited from purchasing the following types of properties : –
1. Malay reserved land;
2. properties sold by way of public auction;
3. properties allocated to Bumiputra; and
4. low or medium cost properties.
D) CONSENT AND APPROVAL
A foreigner is required to apply for consent from the land authority, before the transfer of the
Property in his favour.
In furtherance, the approval from the Economic Planning Unit is required for the purchase of
property valued at RM 20 million and above.
E) BUDGET PLANNING
It is of utmost importance for a foreigner to be duly aware of the incidental costs and fees to be
incurred (as outlined below), apart from the purchase price of the Properties, inter alia :-
1. real estate negotiator’s fees;
2. valuation fees, if taking a loan; and
3. legal fees, stamp duty (both Transfer and Loan) and registration fees.
1. Real Estate Negotiator’s Fees
Either a vendor or a purchaser (or even both) can engage the services of a real estate
agent, subject to 3% real estate negotiator’s fees based on the value of the property.
In Malaysia, the real estate negotiator’s fees is mostly paid by the vendor. However, if the
purchaser wishes to engage their own real estate negotiator to represent them, they are
free to do so and the fees is usually shared on a co-broking basis.
It is important and crucial to verify whether a real estate negotiator is duly registered with
the Malaysian Institute of Estate Agents (MIEA). On way of doing it, to ask the real estate
negotiator to produce his REN Tag, which carries the identity of both the negotiator
himself and his company.
2. Valuation Fees (Applicable if taking a loan)
A valuation report is to be drawn up by a licensed valuer and to be furnished to the
Financier prior loan drawdown.
The valuation fees shall range from 0.25% to 0.04% based on the property value.
3. Legal Fees, Stamp Duty (both Transfer and Loan) and Registration Fees
i) Legal Fees
The legal fees for the handling of both Transfer and Loan is governed under the Solicitors
Remuneration Order, which are computed based on the value of the property / loan
amount respectively, as per Schedule below :-
Consideration or Adjudicated
Value / Amount Secured or
Financed
Scale of Fees
For the first RM 500,000.00 1%
For the next RM 500,000.00 0.8%
For the next RM 2,000,000.00 0.7%
For the next RM 2,000,000.00 0.6%
For the next RM 2,500,000.00 0.5%
Where the consideration or the
adjudicated value is in excess of RM
7,500,000.00
Negotiable on the excess
(but shall not exceed 0.5% of such excess)
ii. Stamp Duty (both Transfer and Loan)
Stamp duty is imposed on both the Transfer and Loan instruments.
Effective 2020, the stamp duty chargeable on the Transfer instrument shall be as follows
:-
Property Price Rates
First RM 100,000.00 1%
Next RM 400,000.00 2%
Next RM 500,000.00 3%
Anything above RM
1,000,000.00 4%
The stamp duty on the Loan instrument shall be 0.5% nett on the loan amount.
iii. Registration Fees
The Registration Fees for Transfer is prefixed by the land authority.
For instance, in the state of Selangor, the registration fees is capped at the maximum sum
of RM1,500.00 only. On the other hand, the registration fees is capped at the sum of
RM100.00 only in Kuala Lumpur.
In conclusion, we hope that the above write-up shall provide a detailed overview on the know-how for a
foreigner who is keen to acquire properties both in Kuala Lumpur and Selangor.
On a positive note, the threshold for a foreigner to purchase high-rise properties has been reduced from
RM1,000,000.00 to RM600,000.00 as provided in the Budget 2020.