Frequently asked questions

Ad valorem stamp duty on the Memorandum of Transfer is charged on a tiered scale against the higher of the purchase price or the market value assessed by the Valuation and Property Services Department (JPPH). The scale is banded, so a higher price band only attracts the higher rate on the portion falling within it, not on the whole price.

There is a separate, much smaller nominal duty on the Sale and Purchase Agreement itself, and a further ad valorem duty on the loan agreement calculated against the loan sum. Budget-linked exemptions for first-time buyers below a stated price ceiling have been offered in most recent years, but the ceiling and the qualifying conditions change, so ask your solicitor to compute the exact figure for your price and your circumstances before you sign.

The Memorandum of Transfer, or Form 14A under the National Land Code, is the instrument that actually moves legal ownership of the land from the vendor to you and gets registered at the land office or land registry. Until it is registered you have a contractual right under the Sale and Purchase Agreement, but the vendor is still the registered proprietor.

For a completed property with an individual or strata title already issued, the MOT is presented for stamping and registration around completion. For a property bought from a developer where the individual or strata title has not yet been issued, the transfer is done later — sometimes years later — once the title is issued, and in the meantime your interest is protected by a deed of assignment and a private caveat. Buyers are frequently caught out by MOT stamp duty falling due long after they moved in, so budget for it.

For most buyers, a bank will consider up to 90% of the purchase price or the bank's own valuation, whichever is lower, on a first or second housing loan. On a third outstanding housing loan the margin is typically capped at 70% under Bank Negara Malaysia's guidance. Some lenders offer a further 5% to cover MRTA or MLTA insurance, which is why you sometimes see 95% quoted.

The approved amount also depends on your debt service ratio: the bank totals your monthly commitments against net income, and different banks apply different ratios and treat variable income differently. Note that the valuation, not your negotiated price, sets the ceiling. If you agree RM 800,000 and the bank values at RM 760,000, the 90% is calculated on RM 760,000 and you fund the difference in cash. Get an indicative approval before you pay a booking fee.

The booking fee, commonly called the earnest deposit, is customarily 2% to 3% of the purchase price, paid when your offer is accepted to take the property off the market. It is held as stakeholder — properly by the agency's client account or by the solicitor, never in a negotiator's personal account — and it forms part of the 10% deposit paid on signing the Sale and Purchase Agreement.

Whether it is refundable depends entirely on what the letter of offer says. A well-drafted offer includes a financing clause allowing a full refund if you are declined by a stated number of banks within a stated period, usually fourteen to thirty days. Without that clause, a failed loan application can cost you the booking fee. Read the offer document before you transfer any money, and if it does not contain a financing condition, ask for one.

In the standard Malaysian sale the vendor pays. The BOVAEP scale of fees prescribes a maximum of 3% of the sale price for the sale of land and buildings; for a letting, the scale provides for a fee equivalent to one month's rent for a tenancy of up to three years, also payable by the landlord. The fee is subject to service tax where the firm is a registered taxable person.

A buyer or tenant should not be asked to pay a separate fee in a normal transaction, and should be cautious of anyone who does ask. The exception is an agreed exclusive buyer-search or tenant-search mandate, which must be documented in advance. Always ask to see the appointment letter, and check that the person showing you the property carries a REN tag issued under a registered firm.

State governments require developers to allocate a share of units in a development to Bumiputera purchasers, usually at a mandated discount of between 5% and 15% depending on the state and the price band. That status is endorsed on the title as a restriction in interest, and it does not fall away after the first sale.

The practical consequence is on resale. A Bumi lot can generally only be sold to another Bumiputera purchaser unless the state authority consents to release the restriction, and that consent is an application with a fee, a processing period, and no guarantee of approval. So the discount you enjoy on purchase is paid back in a smaller buyer pool and a slower, often lower, resale. If you are buying any property in Selangor or Shah Alam in particular, have the title searched for a Bumi endorsement before you offer.

Real Property Gains Tax is charged on the chargeable gain when you dispose of Malaysian real property or shares in a real property company. The rate depends on how long you held the asset and on whether you are an individual Malaysian citizen or permanent resident, a non-citizen, or a company — the rate is highest in the early holding years and steps down the longer you hold.

Your chargeable gain is the disposal price less the acquisition price less permitted expenses, which include the legal fees, stamp duty and agency commission on both the purchase and the sale, plus the cost of permanent improvements. Keep every one of those receipts; buyers routinely lose deductions they were entitled to because the paperwork is gone. A Malaysian citizen may claim a once-in-a-lifetime exemption on the disposal of one private residence, and there are other exemptions such as transfers between close family members. The disposal must be reported to LHDN within the statutory period after the disposal date, and the buyer's solicitor will retain a portion of the price toward the tax.

Yes, but it is an application to the state authority, not an entitlement. Under the National Land Code the proprietor may apply to surrender the title and have it re-alienated for a fresh term, commonly ninety-nine years. The state charges a premium, calculated on a formula that takes into account the current market value of the land and the unexpired term. The shorter the remaining term when you apply, the larger the premium.

The practical issue arrives well before expiry. Most banks reduce the margin of finance, shorten the tenure, or decline outright once the unexpired term falls below a threshold, often around seventy or eighty years at the end of the loan tenure. That tightens your buyer pool and pushes the price down. If you are buying leasehold, check the exact expiry date on the title, not the year the building was completed, and factor the eventual extension premium into what you are willing to pay.

Yes, foreigners may own property in Malaysia on freehold or leasehold title in their own name, which is unusual in the region. There are three main constraints. First, a minimum purchase price set by each state, commonly around RM 1 million but varying by state and by property type, and periodically revised — some states set a higher threshold for landed property and a lower one for high-rise. Second, state authority consent is required for the transfer, which adds time and a fee to the transaction. Third, categories of property are off limits: Malay reserve land, Bumiputera-allocated units, low- and medium-cost housing, and in most states agricultural land.

Participants in the Malaysia My Second Home programme may face different thresholds and conditions. Because the rules genuinely differ between Kuala Lumpur, Selangor, Penang and Johor, confirm the current state threshold and consent procedure with a solicitor before you commit.

The Malaysian convention is expressed as one plus one plus a half. That is: one month's rent as an advance rental for the first month, two months' rent as the security deposit against damage and default, and half a month's rent as a utility deposit covering electricity, water and Indah Water. On a two-year tenancy at RM 3,000 a month you would therefore hand over RM 3,000 plus RM 6,000 plus RM 1,500 — RM 10,500 before you receive the keys.

Deposits are refundable at the end of the term less any agreed deductions, and the document that decides those deductions is the inventory and condition report signed at handover. Insist on one, with photographs, and make sure both parties sign it. Note also that residential tenancies in Malaysia are governed by the contract and by general contract law rather than by a dedicated residential tenancy act, so the wording of the agreement matters more here than in many other jurisdictions.

A tenancy agreement should be stamped at LHDN. An unstamped agreement is not void, but it cannot be admitted as evidence in court proceedings until the duty and any penalty are paid — which is precisely when you need it. Stamping duty on a tenancy is calculated on the annual rent above a small exempt threshold, at a rate that steps up with the length of the term, plus a small fee for each duplicate copy.

By convention the tenant pays the stamp duty and the cost of preparing the agreement, while the landlord pays the agency's letting fee. That convention can be varied by agreement, so make sure the tenancy states who bears what rather than leaving it to custom.

The maintenance charge covers the day-to-day running of the common property — security, cleaning, lift servicing, common-area electricity, insurance, management office costs. It is levied by the joint management body or the management corporation under the Strata Management Act, normally at a rate per share unit that works out close to a rate per square foot of your parcel.

The sinking fund is a separate reserve for major capital works: lift replacement, repainting, roof and waterproofing, pump and generator overhaul. It is typically levied at around ten per cent of the maintenance charge. Before you buy into any strata scheme, ask for the latest audited accounts, the arrears position, and the sinking fund balance. A block with heavy arrears and a thin sinking fund will eventually raise a special levy on every owner, and that liability lands on whoever holds the parcel when it is raised.

For a completed property with title issued, plan on three to four months. The usual sequence is: offer accepted and booking fee paid; loan submitted and approved in principle within two to four weeks; Sale and Purchase Agreement signed within fourteen to thirty days of the booking fee, with the balance of the 10% deposit paid on signing; then a completion period of three months from the SPA date to settle the balance, commonly with an automatic one-month extension available on payment of interest.

Leasehold property takes longer because the transfer needs state consent, which can add two to six months depending on the state and the land office's workload. If the property is still encumbered by the vendor's existing loan, the redemption process adds further time. Build the buffer into your plans rather than giving notice on your current home in month two.