*NOTE* Malaysia’s Property Regulations are Getting Tighter for Foreigners. Here’s a Suggestion

The last 20 years have seen some significant changes in the Malaysian property industry. First, the standards of quality and design have improved dramatically. That is not to say that all properties built twenty years ago were badly contstructed or all properties built today meet high standards; however, there has been an increased focus on quality of material and construction. These improving standards, combined with the generally low prices of real estate in Malaysia, and the fact that prices are on an upward trend, makes property an incredibly attractive investment.

Second, the government is now actively encouraging foreigners to buy property in Malaysia under the Malaysia My Second Home initiative. In the past they have place restrictions on foreign purchasers but now nearly all barriers have been removed. Currently there is no limit on the number of residential properties a foreigner can buy although certain categories are excluded and the purchase price must exceed RM500,000 in the majority of Malaysia’s fourteen states and territories. It is no longer necessary for foreigners to obtain approval from the Foreign Investment Committee (FIC) when they buy property. However, they still have to acquire consent from the state authorities and this can take up to six months. The real estate capital gains tax is set at 5%.

In Malaysia, foreigners can buy freehold land. The sale and purchase agreement will be in their name and can be written in English. In some areas state-owned leasehold land can be obtained. The leases are usually for 99 years with the option to renew for a fee. There are a few types of property that expats are not permitted to buy. These include properties with a vaule less than RM500,000 – this is to protect low- and middle-income Malaysians from property price inflation. In addition, certain areas of Malaysia have been designated Malay reserve and can only be purcahsed by the country’s Bumiputra (this literally means ‘sons of the soil’ and includes the native Malay population). Foreigners are not permitted to buy this land.

Like nearly every country in the world, the capital city is where you will find the highest property prices. Kuala Lumpur is no exception to this rule. However, when you compare KL’s prime real estate with Singapore’s, which can be ten times more expensive, you get some idea of the vaule offered in KL. Combine that with the generally low cost of living, and its a powerful incentive for people thinking of moving here.