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Property Legal Cost

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Buying costs are very low in Malaysia

How high are realtors’ and lawyers’ fees in Malaysia? What about other property purchase costs?

Transaction Costs

    Who Pays?
Stamp Duty 1% – 3% buyer
Lawyer/Solicitor’s Fees 0.4% – 1% buyer
Other Fees MYR180 (US$49) buyer
Real Estate Agent’s Fees 2% – 2.75% seller
Costs paid by buyer 1.40% – 4.00%
Costs paid by seller 2.00% – 2.75%
ROUNDTRIP TRANSACTION COSTS 3.40% – 6.75%
See Footnotes
Source: Global Property Guide

How difficult is the property purchase process in Malaysia?

Foreigners can purchase any kind of property with a minimum value of MYR250,000 (US$67,977). They are allowed to purchase up to two residential properties – two condominiums (max. 50% foreign ownership within a block) OR one condominium and one of the following:

  • Terrace or linked houses above two storeys, but limited to 10% of the total number of units built of this type
  • Lands/bungalows and semi-detached houses, but limited to 10% of units built of these types

The first step to purchasing property in Malaysia is to hire a real estate lawyer to assist in the transaction. Once property is selected, a Letter of Offer/Acceptance is signed, and a 3% deposit is expected from the buyer.

Within 14 days, the Sale and Purchase Agreement is signed. The buyer must pay another 7% deposit. From the date of the signing, the buyer has a maximum of three months to accomplish full payment.

The Sale and Purchase Agreement must be stamped at the Stamp Office. After the examination on the property of the valuation department, Stamp Duty is paid to the Stamp Office. The transfer must be registered at the Land Office Registry.

Be cautious when buying new property in unfinished condominium projects. Buyers may not be fully protected against default, an issue vigorously raised by the Malaysian House Buyers’ Association, which has pointed to flaws in The Housing Development (Control & Licensing) Act 2002, and the Strata Titles Act. Those buying unfinished property from developers should ensure that the developer has a valid Developer’s License and a valid Sales & Advertising permit

Footnotes to Transaction Costs Table

The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc.

Currency:
Malaysia uses Malaysian Ringgit. Exchange rate is at US$1=MYR3.6777 as of 26th October 2006.

Stamp Duty:

STAMP DUTY

VALUE OF PROPERTY, MYR RATE
First 100,000 1%
Next 400,000 2%
Remainder (Over 500,000) 3%

Lawyer/Solicitor’s Fee:
Lawyer/Solicitor’s Fee

LAWYER’S FEE

VALUE OF PROPERTY, MYR RATE
First 150,000 1%
Next 850,000 0.7%
Next 2,000,000 0.6%
Next 2,000,000 0.5%
Next 2,000,000 0.4%
where the consideration or adjudicated value is in excess of MYR7,500,000 negotiable on the excess (but shall not exceed 0.4% of such excess)

Other Fees:

OTHER FEES

FEES MYR
Stamping fee (per document) 10
Adjudication fee 10
Search fee 60
Registration fee 100
Total 180

Real Estate Agent’s Fee:
Agent’s Fees are regulated by the Board of Valuers, Appraisers and Estate Agents Malaysia (LLPEH). Commission is paid either by buyer or seller, subject to a maximum discount of 30% but a minimum fee of MYR1,000 per case. The scale is not applicable to sale of foreign properties in Malaysia.

AGENT’S FEE

VALUE OF PROPERTY, MYR RATE
First 500,000 2.75%
Remainder 2%

Written by changhwee

October 19, 2010 at 2:41 pm

Posted in Thoughts

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