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Everything you need to know before buying real estate is included in our Malaysia Property Pack
Buying property in Malaysia as a foreigner requires navigating specific regulations and procedures. Each state sets different minimum price thresholds for foreign buyers, ranging from RM 500,000 in Sarawak to RM 3,000,000 for landed properties in Penang Island. The purchase process involves several key steps including securing state authority consent, which takes 1-4 months, and understanding the difference between freehold and leasehold properties.
If you want to go deeper, you can check our pack of documents related to the real estate market in Malaysia, based on reliable facts and data, not opinions or rumors.
Foreign buyers can purchase condos, apartments, certain landed properties, and commercial units in Malaysia, but must meet state-specific minimum price requirements.
The purchase process involves paying a 2-3% booking fee, signing a Sale and Purchase Agreement with 10% deposit, obtaining mandatory state authority consent (1-4 months), and completing the transaction.
| State | Minimum Price (Landed) | Minimum Price (High-rise) |
|---|---|---|
| Kuala Lumpur | RM 1,000,000 | RM 1,000,000 |
| Selangor | RM 2,000,000 | RM 1,500,000 |
| Penang Island | RM 3,000,000 | RM 1,000,000 |
| Penang Mainland | RM 1,000,000 | RM 750,000 |
| Johor | RM 2,000,000+ | RM 1,000,000 |
| Sabah/Sarawak | RM 600,000-1,000,000 | RM 600,000-1,000,000 |
How do I choose the right property type in Malaysia that foreigners are allowed to buy?
Foreign buyers can purchase high-rise properties like condominiums and apartments, certain landed properties including bungalows and terrace houses in designated areas, plus commercial and industrial properties.
You cannot buy Malay Reserved Land, low-cost or medium-cost housing units, Bumiputera units, or agricultural land without special state approval. These restrictions protect local housing stock and preserve land for Malaysian citizens.
High-rise properties typically offer the most straightforward purchase process for foreigners since they face fewer restrictions compared to landed properties. Condominiums in Kuala Lumpur, Penang, and Johor Bahru remain popular choices due to their investment potential and rental yields.
Landed properties require more careful consideration as some states have stricter rules about which areas foreigners can purchase in. Always verify with local authorities that your chosen property type and location are permitted for foreign ownership before proceeding.
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What's the minimum property price for foreigners in the state I'm interested in?
Minimum property prices for foreign buyers vary significantly across Malaysian states, with requirements ranging from RM 500,000 to RM 3,000,000 as of September 2025.
| State | Landed Properties | High-rise Properties |
|---|---|---|
| Kuala Lumpur | RM 1,000,000 | RM 1,000,000 |
| Selangor | RM 2,000,000 | RM 1,500,000 |
| Penang Island | RM 3,000,000 | RM 1,000,000 |
| Penang Mainland | RM 1,000,000 | RM 750,000 |
| Johor | RM 2,000,000+ (international zones) | RM 1,000,000 (non-international areas) |
| Sabah | RM 600,000 - RM 1,000,000 | RM 600,000 - RM 1,000,000 |
| Sarawak | RM 500,000 - RM 1,000,000 | RM 500,000 - RM 1,000,000 |
How do I check if the property has freehold or leasehold status, and what does that mean for me?
Check the Land Title Certificate at the Land Registry office, which clearly states whether a property is freehold (permanent ownership) or leasehold (ownership for a specific term).
Freehold properties grant you indefinite ownership rights, meaning you own the land and building permanently. This typically offers better capital appreciation potential and easier resale opportunities since there's no lease expiry concern.
Leasehold properties grant ownership for a specific period, commonly 30, 60, or 99 years in Malaysia. After the lease expires, ownership typically reverts to the state unless renewed. Leasehold properties generally cost less upfront but may face value depreciation as the lease term shortens.
This status significantly affects your investment returns, loan eligibility, and future sale prospects. Banks often prefer financing freehold properties and may offer better terms, while leasehold properties with shorter remaining terms face stricter lending criteria.
Always request to see the original title documents before signing any agreements, and have your lawyer verify the exact lease terms and renewal conditions if applicable.
What is the step-by-step legal process once I decide on a property to purchase?
The Malaysian property purchase process follows a structured sequence that typically takes 3-6 months to complete from start to finish.
First, you pay a booking fee of 2-3% of the purchase price to reserve the property. Next, you sign a Letter of Offer between buyer and seller, which outlines the basic transaction terms subject to the formal Sale and Purchase Agreement.
Within 14-21 days, you sign the Sale and Purchase Agreement (SPA) and pay an additional deposit bringing your total to 10% of the purchase price. Your lawyer then applies for mandatory state authority consent, which takes 1-4 months depending on the state.
Simultaneously, you can apply for mortgage financing if needed. Most banks require state consent approval before final loan disbursement. Once state consent is obtained and financing is arranged, you pay the remaining 90% balance within 3 months of the SPA date or according to agreed terms.
Finally, the property transfers to your name and the title gets registered at the land office. Your lawyer handles most paperwork, but you must ensure all payments and documentation deadlines are met to avoid transaction delays or penalties.
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How much deposit do I need to pay, and when is it due in the process?
Foreign buyers typically pay deposits in two stages: a booking fee of 2-3% upon making an offer, followed by an additional amount at SPA signing to reach 10% total.
The booking fee is paid immediately when you decide to purchase and sign the Letter of Offer. This fee reserves the property and is deducted from your final deposit amount.
When signing the Sale and Purchase Agreement (usually within 14-21 days), you pay the remaining deposit amount to bring your total contribution to 10% of the purchase price. For example, on a RM 1,000,000 property, you'd pay RM 20,000-30,000 as booking fee, then RM 70,000-80,000 at SPA signing.
The remaining 90% balance payment is due within 3 months from the SPA date for completed properties, or according to the construction schedule for off-plan purchases. Some developers may offer staggered payment schemes with different milestone percentages.
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What are the legal fees, stamp duties, and government taxes I should budget for?
Budget approximately 6-8% of the property purchase price for legal fees, stamp duties, and government taxes when buying property in Malaysia.
| Fee Type | Calculation | Amount Range |
|---|---|---|
| Legal Fees | 1-2% on first RM 500,000, scaling down | RM 10,000 - RM 25,000 |
| Stamp Duty | 1% first RM 100k, 2% next RM 400k, 3% next RM 500k, 4% above RM 1M | RM 15,000 - RM 50,000+ |
| State Consent Fee | Fixed legal processing fee | RM 3,000 - RM 5,000 |
| Land Office Registration | Fixed government fee | RM 1,000 - RM 3,000 |
| Foreign Buyer Levy | State-dependent (some states) | RM 0 - RM 50,000 |
| Valuation Fee | For mortgage applications | RM 500 - RM 2,000 |
| Insurance Premium | Annual property insurance | RM 500 - RM 2,000 |
How do I apply for state authority consent, and how long does that usually take?
Your lawyer handles the state authority consent application on your behalf after you sign the Sale and Purchase Agreement and pay the 10% deposit.
The application requires your passport, SPA copy, property title documents, completed state application forms, and payment of processing fees. Each state has its own application process and requirements, so your lawyer must be familiar with local procedures.
Processing times vary significantly by state: Kuala Lumpur typically takes 1-2 months, Selangor requires 2-3 months, while Penang can take 3-4 months depending on workload. Johor and East Malaysia states generally process applications within 1-3 months.
Delays commonly occur due to incomplete documentation, additional state queries, or peak application periods. Your lawyer should follow up regularly and respond promptly to any state office requests for additional information.
Never make full payment or begin property renovations until you receive written state consent approval, as purchasing without proper consent violates Malaysian foreign ownership laws.
What is the role of the Sale and Purchase Agreement (SPA), and when should I sign it?
The Sale and Purchase Agreement is the most important legal contract in your property transaction, containing all terms and conditions binding both buyer and seller.
Sign the SPA within 14-21 days after your Letter of Offer acceptance, once you've reviewed all clauses thoroughly with your lawyer. The SPA must be signed before applying for state authority consent, as consent applications require a copy of this agreement.
The SPA details the property description, purchase price, payment schedule, completion timeline, defect liability periods, penalty clauses, and conditions for contract termination. It also specifies what happens if either party breaches the agreement.
Key clauses to review carefully include penalty terms for late payment, handover deadlines, refund conditions if state consent is denied, and the seller's obligations for property condition and vacant possession.
Do not sign the SPA until you're completely satisfied with all terms, as this contract legally binds you to complete the purchase under the specified conditions. Your lawyer should explain every clause before you sign.
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How do I secure financing as a foreign buyer, and what are the usual bank requirements?
Most major Malaysian banks offer mortgages to foreign buyers with loan-to-value ratios of 70-80% for non-resident purchasers.
Bank requirements include a valid passport, proof of overseas income (salary slips, tax returns, bank statements for 6 months), credit approval from your home country, and sometimes Malaysia My Second Home (MM2H) program participation. Some banks require minimum annual income of USD 100,000-150,000.
Loan tenure for foreigners is typically shorter than for locals, with maximum terms of 25-30 years or until age 65, whichever comes first. Interest rates for foreign buyers are usually 0.5-1% higher than rates offered to Malaysian citizens.
Major banks like Maybank, CIMB, Public Bank, and Hong Leong Bank actively serve foreign buyers. Each has different criteria, so compare terms from multiple banks before deciding.
Loan approval often depends on receiving state authority consent first, and some banks won't disburse funds until all legal requirements are satisfied. Factor this timing into your transaction schedule.
What common mistakes do buyers make when reviewing the SPA or loan terms?
The most frequent SPA mistake is not thoroughly reviewing penalty clauses for late payments, which can cost you 10% per annum on overdue amounts.
Many buyers overlook the defect liability period terms, which determine how long the seller remains responsible for property defects after handover. Standard periods range from 12-24 months, but some agreements may specify shorter periods.
In loan agreements, buyers often miss prepayment penalty clauses that charge fees for early settlement, lock-in periods that prevent refinancing for 2-5 years, and variable interest rate terms that can increase your monthly payments.
Another common error is not verifying the property's completion timeline in the SPA for off-plan purchases. Delays beyond agreed dates should trigger penalty payments from the developer to you.
Always compare loan packages from multiple banks, as fees, interest rates, and terms vary significantly. Don't assume the first bank offer is the best available option.
How can I avoid delays with state authority approval or loan disbursement?
Submit complete and accurate documentation the first time to avoid back-and-forth requests that delay approvals by weeks or months.
For state consent, ensure your lawyer provides all required documents including clear passport copies, properly executed SPA, updated property title search, and completed state application forms with correct fees.
Follow up regularly with your lawyer about application status and respond immediately to any state office requests for additional information or clarification.
For loan disbursement, maintain your employment and income status throughout the approval process, as banks may re-verify your financial position before final fund release.
Choose experienced lawyers and banks familiar with foreign buyer transactions, as they understand common pitfalls and can navigate the process more efficiently.
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What are the key pitfalls foreigners face during the transfer of ownership, and how do I protect myself?
The biggest pitfall is discovering unclear title status or undisclosed restrictions on foreign resale rights only at the transfer stage.
Protect yourself by demanding full title verification and written confirmation of state consent before making final payment. Your lawyer should conduct a thorough title search and verify there are no encumbrances, caveats, or legal disputes affecting the property.
Another common issue is sellers failing to deliver vacant possession as agreed in the SPA. Inspect the property thoroughly before final payment and ensure all utility accounts are transferred to your name.
Some buyers face unexpected delays when sellers haven't obtained proper approvals for property modifications or additions. These issues can prevent clean title transfer until resolved.
Use only licensed lawyers registered with the Bar Council of Malaysia who specialize in foreign buyer transactions. They should maintain a stakeholder account for your funds and release payment only when all conditions are satisfied.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Purchasing property in Malaysia as a foreign buyer requires careful navigation of state-specific regulations and a thorough understanding of the legal process.
Success depends on choosing the right property type, meeting minimum price requirements, securing proper approvals, and working with experienced professionals throughout the transaction.
Sources
- Titijaya - Foreigners Guide Buying Property in Malaysia
- Veles Club - Property Investment Guide
- BambooRoutes - Foreigner Buy Property Malaysia
- HomeCity - Freehold vs Leasehold in Malaysia
- Emerhub - Buying Property in Malaysia
- Housing Watch - How to Buy House Malaysia Foreigner
- Terra Group - Can Foreigners Buy Land Malaysia
- Hartanah Viral - Freehold vs Leasehold Property Types