Foreigners Interest in Malaysian Properties
Malaysia is probably one of the most lenient countries when it comes to land and property ownership by foreigners. Unfortunately, the rules have never stayed constant, and this leaves foreign investors with a lot of questions over the policies and government regulations, especially the minimum price of properties that the foreigner may purchase.
Effective 1 January 2010, the government had reviewed the minimum property price to RM500,000, much to the displeasure of foreigners and developers. In previous years, data revealed that foreigners purchase properties between RM250,000 to RM500,000 only.
Such a regulation on the federal level does not actually reflect what goes on in the State level. The State authorities have every right to overwrite this federal policy but this was not announced to many foreign investors. Most foreign buyers were caught by surprise when they discovered that the government does not require them to get the Foreign Investment Committee’s approval anymore for their purchase after they have gone through the hassles of the paperwork and processes!
But again, usually the slow approval comes from the State, not the Foreign Investment Committee. Since all states may have their own sets of rules regarding foreign purchase of properties, a potential buyer will need to find out exactly what is to be adhered to.
Penang, for example, raised the minimum price for foreigners to RM500,000 along with the Federal Government’s guidelines (the prices of new homes here have escalated beyond the RM500,000 mark anyway, especially for terrace or semi-detached houses), but with special exemptions for those who comes under the Malaysia My Second Home program. The state confirmed that these MM2H participants may buy up to two properties below RM500,000. In most cases, a purchase of above RM250,000 is passable, and if there are two properties, it may drop as low as RM150,000.
Selangor has the lowest price limit among all, with RM250,000. Johor used to keep it at RM250,000 too, but raised it to RM500,000 on 1 July 2010, plus imposing an RM10,000 tax on foreign buyers. On the other hand, Pahang is very protective over its properties, and raised the bar to RM750,000 and caught many MM2H investors by surprise when their applications were rejected despite already putting in their downpayment for the homes of their choice. Sarawak too, has a different set of rules, at RM300,000 and different regulations for those in the MM2H program. Meanwhie, other states complied with the RM500,000 as far as we know.