The Legal Perspective of Your Malaysian Dream: A Friendly Guide to Property Ownership & Your MM2H Visa.
Malaysia is considered a top destination for foreigners to own properties. This is understandable as Malaysia has a vibrant culture, beautiful landscape, reasonable cost of living, minimal language barrier and a favourable climate.
FINDING YOUR FIT: WHAT CAN YOU BUY?
Foreigners are welcome to purchase and own all kinds of properties whether it is for residential use or for investment purposes. The types of properties in Malaysia that can be owned ranges from landed houses, high-rise apartments, commercial and industrial lands.
Of course, there are a few restrictions that foreigners need to be aware of in terms of purchasing properties in Malaysia. Below is generally the type of properties that foreigners would not be eligible to purchase:
- Properties built on Malay Reserved Land.
- Low and medium-cost residential units which are allocated by State Authorities.
- Properties that are designated as “Bumiputra”, which are reserved for Malay ethnic groups and natives of Sabah and Sarawak.
- Agricultural Land unless this land has been gazetted to be developed as a “housing development”.
BUDGETING SMARTLY: MINIMUM PRICES & ASSOCIATED COSTS
Once you have chosen the type of property that fits you, the next step is to ensure that you are eligible to purchase that property. One of the most crucial items to check is whether the property surpasses the baseline minimum of price. Each state has their own baseline minimum for a foreigner to purchase a property. The table below gives you a general idea of what are the baseline minimum purchase for purchases in states of Johor, Kuala Lumpur, Selangor and Penang. Ultimately, whichever purchase price of property you are looking to own would also need to fulfill the specifics in the MM2H tiers.
| State | Minimum Purchase Price (Landed) | Minimum Purchase Price (Strata/High-Rise) |
| Johor | RM1 million (Single storey or one and a half storey terrace is not permitted) | RM1 Million (Shop or shop-office less than 3 stories, stalls or service workshops are not permitted) |
| Johor (Special Finance Zone, MM2H) | – | RM500,000 |
| Kuala Lumpur, Putrajaya, Labuan | RM1 million | RM1 million |
| Selangor | Not Permitted. | RM1 million – RM2 million (in designated zones) |
| Penang (Island) | Range from RM1.5 million – RM3 million (depending on direct purchase from Developer OR sub sale) | Range from RM700,000 – RM1 million (depending on direct purchase from Developer OR sub sale) |
| Penang (State) | Range from RM750,000 – RM1 million (depending on direct purchase from Developer OR Sub sale | Range from RM400,000 – RM500,000 (depending on direct purchase from Developer OR sub sale) |
Note: The table is based on Circular 444-2024 of the Malaysian Bar Council uploaded on 23 Dec 2024
There is other state’s baseline minimum purchase to be considered. The best way to check is to confirm with a solicitor before you commit to the purchase.
Beyond these property prices, you will also need to factor in the following costs:
- Stamp Duty: this cost is payable on the Memorandum of Transfer (MOT) at a tier up to 4% of the property value and 0.5% of the loan amount for loan agreement.
- Legal Fees: generally, the legal fee is computed through a tier in Solicitors’ Remuneration Order 2023 which is typically computed between 1% to 1.25% of the property price.
- Real Property Gain Tax (RPGT): this is a tax for the disposal of property. As a foreigner, you will have to pay a sum of 30% from the gain if you sell/dispose before 5 years and a sum of 10% if you sell/dispose after 5 years.
THE CRITICAL TIMELINE: WHEN TO BUY? (FOR MM2H VISA)
If you are planning to apply for your Malaysia My Second Home Visa (MM2H Visa), the following are the timeline you would need to purchase property in Malaysia:
- For Platinum, Gold & Silver Tiers: The requirement is to purchase a property within 12 months after your passport has been endorsed with MM2H Visa.
- For SFZ/SEZ (Special Finance Zone in Johor): The requirement is to purchase property after receiving conditional approval BUT before your passport is endorsed with MM2H Visa.
On a sidenote, MM2H Visa holders would be required to hold onto the property for a total of 10 years. One can upgrade to a more expensive property at any time, but you are not allowed to downgrade. If you decide to cancel your MM2H Visa, you are free to sell your property.
TIPS FOR A SMOOTH JOURNEY
Purchasing a property is overwhelming in any country. We recommend that you take the following steps to ensure that you have peace of mind.
- Interview your team: If you are looking to purchase property in line for your MM2H Visa, ensure your real estate agent and solicitor have verifiable experience handling MM2H property purchases. Their expertise is invaluable in navigating state-specific rules.
- Plan your finances: Obtaining a mortgage as a foreigner is possible but can be challenging. Malaysian banks are conservative and may offer a lower loan-to-value ratio than for locals. A key benefit for approved MM2H holders is the ability to withdraw up to 50% of their required fixed deposit to pay for a property once you sign on the dotted line.
- Do your due diligence: The quality and capital appreciation of properties can vary. For new developments, research the developer’s track record. For existing properties, assess the building maintenance and security. Gated communities and high-rises with private security are common and wise choices.
- Consult a solicitor early: The most critical step is to consult with a qualified solicitor before you make any financial commitment. They can help you prepare documents, confirm the latest state regulations, and ensure your budget is accurate, providing peace of mind throughout your exciting journey to owning a home in Malaysia.
Finding a property in Malaysia is more than a transaction, it is the start of a new chapter and commitment. Understanding the legal landscape and planning your steps ahead can turn the key to your Malaysian dream property with confidence and ease.