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Foreigners Buying Property in Malaysia

 

The Malaysian Government is encouraging foreigners to make Malaysia their second home for long term stay, retirement or investment.

Before making a purchase, it is important to understand certain policies and legal fees imposed by the Government on property purchases, minimum threshold value of property prices imposed by state authorities, and the property financing field.

 

 

Types of properties foreigners can own

As long as the minimum requirements are met, foreigners can own 100% of the property in Malaysia. According to the law, foreigners can own all types of properties except:

  • Properties valued less than RM1 million – Properties threshold value differs from state to state (see table below)
  • Low and medium cost residential units as defined by state authority
  • Properties on Malay Reserved Land, Native Area Land, Native Customary Rights Land
  • Properties distributed to Bumiputera interest in any property development project as determined by state authority.

 

Minimum requirement for property values applied to foreign buyers

Generally, a minimum threshold value of RM 1 million, but this varies from state to state as each state authority controls the minimum value in their respective states.

 

Malaysia My Second Home (MM2H) Programme for foreigners

The Malaysia My Second Home (MM2H) Programme was introduced in 2002 to attract foreigners to reside in Malaysia for extended periods and replaced the Silver Hair Programme that was set up in 1996.

Foreigners can apply for the MM2H programme if they intend to stay in Malaysia for a long period of time of up to 10 years. This programme assists foreigners to purchase a property at a lower threshold price. Many of them who used to work in Malaysia have applied for this programme for their retirement in Malaysia.

Generally in Malaysia, those foreigners below 50 years of age are required to show proof of liquid assets worth a minimum of RM500,000 and offshore income of RM10,000 per month before applying for the MM2H programme and after approval they are required to maintain a fixed deposit account of RM300,000. Those aged above 50 years of age are required to show proof of liquid assets worth a minimum of RM350,000 and offshore income of RM10,000 per month (pensioners require pension of RM10,000 per month) and open a fixed deposit account of RM150,000 after approval. These requirements apply to both single and married applicants and those who are married are allowed to bring their spouses and unmarried children below 21 years of age as dependants.

Please note that the requirements in Sarawak differ substantially. In Sarawak, an applicant must be 50 years of age and above, but those who are 30 years old and above who have evidence that their children is pursuing further education or undergoing long term medical treatment in Sarawak may apply. A monthly offshore income or pension fund of RM10,000 is required for married couples while single applications require RM7,000 monthly. Married couples may also choose to open a fixed deposit account of RM150,000 to be eligible while single applicants require RM100,000.

Another difference between Sarawak and the rest of Malaysia is that for Sarawak an applicant must be sponsored by a Sarawakian or Sarawak Permanent Resident whereas a Malaysian from any state can be a sponsor for an applicant for the rest of Malaysia. Furthermore, a middle man or agent can act as the sponsor in every state except Sarawak where it is prohibited. Applicants with their visa issued under the MM2H Sarawak programme are allowed to reside anywhere in Malaysia but those issued under the MM2H programme are not allowed to reside in Sarawak.

The MM2H programme provides an opportunity for foreigners to purchase a property at a lower threshold price. The table below shows the minimum threshold price of a property that foreigners can buy with and without MM2H:

 

STATE

MINIMUM THRESHOLD FOR FOREIGN RESIDENTIAL PROPERTY PURCHASE

WITH MM2H

Terrenganu, Pahang, WPKL, Putrajaya and Negeri Sembilan

RM 1 million

RM 1 million

Selangor

RM 2 million (for Zones 1 & 2)

RM 1 million (for Zone 3)

RM 2 million (for Zones 1 & 2)

RM 1 million (for Zone 3)

Johor

RM 2 million (landed property in international zones)

RM 1 million (strata title & landed properties within non-international zones, except for Medini)

RM 1 million

Kelantan & Sabah

RM 1 million

RM 500,000

Perak

RM 1 million

RM 350,000

Kedah

RM 600,000 (Kedah)

RM 1 million (Langkawi)

No minimum

Perlis

RM 500,000

RM 1 million

Sarawak

RM 350,000

RM 350,000

Penang

RM 2 million (island)

RM 1 million (mainland)

RM 350,000

Malacca

RM 1 million (landed title)

RM 500,000 (strata title)

RM 1 million (landed title)

RM 500,000 (strata title)

 

*This is only a general guideline; please refer to the relevant state authorities for the most up to date information

*Zones in Selangor

Zone 1 – Districts of Petaling, Gombak, Hulu Langat, Sepang and Klang

Zone 2 – Districts of Kuala Selangor & Kuala Langat,

Zone 3 – Districts of Hulu Selangor and Sabak Bernam

 

 

Home Loan Financing

For MM2H holders, the allowed Margin of Finance (MOF) can go up to 80%, while non-MM2H holders can only get 70%. Therefore foreigners benefit more by taking loans from foreign banks in Malaysia. On the exception that when a foreigner is married to a Malaysian citizen, the spouse is required to be involved with the loan financing to enjoy MOF of up to 90%.

 

* For Sarawak, please visit: https://www.sarawak.gov.my/web/home/article_view/221/279/

* For the rest of Malaysia, please visit: http://www.mm2h.gov.my/index.php/en/home/programme/terms-conditions

* To apply for MM2H, please visit: http://mm2honline.motac.gov.my/