GUIDE FOR EXPATRIATES
- Work out a budget. You could work out your affordability by referring to the loan calculator. Your budget would depend on your monthly salary. As a general rule of thumb, your monthly salary should at least be three times your monthly repayment installment.
- Location is of paramount importance. Look for a place that is easily accessible via public transportation, light railway transit and/or major highways, convenience in terms of food and other daily necessities, and amenities for your children (e.g nursery, kindergarden, school, playground, library and etc). Lush landscaping, well-planned townships, and a tranquil and clean environment are a plus.
- Choose a reputable developer who can deliver good quality houses and complete on time. If in doubt, ask around and check its track record.
- List out the "must-have" features which you would not compromise on and stick to it. Do not be swayed into compromising any of them just because of a few thousands, saving as you may have to live with what you have forgone for years to come.
- Look for a house within a large township rather than in an isolated housing estate. Generally, the larger the township, the more amenities there will be for the convenience of the residents. Moreover, larger townships are generally more well-planned as they are not developed on a piecemeal basis.
- Avoid choosing properties around polluted areas such as industrial areas or next to a major highway or on slopes which are prone to erosion.
- Ascertain whether the property is freehold or leasehold. Premium is usually attached to properties with freehold status. If the property is leasehold, check how many years are left of the title. The shorter the period, the lesser is the value of the property. Moreover, leasehold properties will need the consent of the state authorities for transfer, a process which is cumbersome and lengthy.
- Check the direction of the house. A unit which faces North, South or East is better regarded than a house which faces West as the latter is hotter since it faces afternoon sun.
- Check the specifications of building materials for the floor, wall, ceiling, doors and windows carefully as quality will not only affect the property value, it also has a bearing on safety.
- Check the terrain of the property as it affects the view, ventilation and tendency for flooding to occur. The lower the terrain in relation to the drainage level, the higher the risk of flooding.
- The sale and purchase agreement ("SPA") for uncompleted residential units purchased from developers is prescribed by the government and is therefore standard. For other properties however, the agreement is subjected to negotiations between the parties. Make sure you read through the terms, especially the fine print.
- You will have to pay each purchase price installment against the developer's architect certificate of completion for that stage of construction, which corresponds to the particular installment.
- The due date for each installment is 14 days after receipt of the billing. Make sure you pay on time, otherwise you will have to pay interest at 10% per annum on late payment.
- If you are late in your installment or interest payment for more than 28 days from the due date, the developer is entitled to terminate the SPA by giving 14 days' notice.
Completion Date and Delivery of Vacant Possession
- Quit rent, assessment and other charges in respect of the property are payable from the date of the SPA. Service charge for rubbish collection, cleaning of sewerage system, grass cutting and etc (for landed properties) or service charge for maintenance and management of common property (for apartment and condominium) is payable from the date vacant possession is delivered.
- The developer will have 24 months from the date of SPA (for landed residential properties) and 36 months (for apartment and condominiums) to deliver vacant possession with water and electricity supply ready for connection to you. You are entitled to claim for damages at 10% per annum on the purchase price if the developer fails to deliver on time.
- Developer can deliver vacant possession as soon as the Certificate of Practical Completion is issued by the architect even though Certificate of Fitness ("CF") is not yet issued (which is usually the case as it takes time for local authority to process CF application). There is no risk, however, of the developer failing to obtain CF subsequently, as all requirements for CF application would have been complied with before vacant possession can be delivered to you. The CF application after vacant possession is only a formality.
- You will have to take delivery of the property within 14 days from the date of the notice requesting you to take vacant possession. If you do not do so by the stated 14 days, you will still be deemed to have done so the day immediately after the 14 days period. Thereafter any damage of fixtures or fittings to the property will be at your responsibility.
- If you find any defects in the property after moving in, make sure you submit the defects list to the developer within 18 months from the date of vacant possession. The developer will have 30 days from the date of receipt of your list to rectify the defects. If the developer fails to rectify within the stated time, you can then engage someone else to do the rectification works and charge the costs to the developer provided you have given another 14 days' notice to notify the developer of your intention.
TIPS ON APPLYING FOR A LOAN
- Apply for a housing loan immediately to avoid paying interest on late payment. Banks/Finance Companies need time to process the loan and there is a fair amount of documentation to be done before the Bank releases monies to pay for the property. Those in government service should apply to Bahagian Pinjaman Perumahan, Treasury. Request the bank/finance company to appoint a lawyer to handle the SPA loan documentation. This helps to reduce processing time.
- Shop around for the best rates. Go to the developer's panel of bankers as most developers would usually have used their bargaining power to secure the best rates on your behalf. Generally, banks have a lower cost of funds than finance companies and therefore their rates tend to be lower.
- Besides interest rates, you should also consider other factors such as quick approval time, efficiency and quality of service, willingness to listen, offer good advice on insurance and other house matters and convenience (some banks open on Sundays or late in the evenings, while some even go to your office or home).
- Do not forget your entitlement to withdraw from your Employees' Provident Fund ("EPF") account. You can withdraw every five (5) years starting from the time you first contribute to it and every withdrawal is limited to a maximum of 30% of your total fund.
MALAYSIA: FACTS AND FIGURES
- Malaysia is located in the heart of South East Asia region at seven (7) degree north of the Equator.
- Weather: Malaysia has a tropical climate with relatively uniform temperature and a humidity of over 90 percent with abundant rainfall.
- Average daily temperature: 26 degree Celsius.
- Mean maximum temperature: 31 degree Celsius.
- Mean minimum temperature: 23 degree Celsius.
- Monsoon season: December to February .
- Population: 23 million.
- Population composition: Bumiputra: 60%, Chinese: 25% Indians: 8%, Other Ethnic Groups: 7%
- Language: The national language is Bahasa Malaysia (Malay). Other languages spoken are English, Mandarin and Tamil. Most Malaysians are able to speak at least two languages and almost everyone can speak English. Mandarin, Hokkien, Teochew, Cantonese and Hakka are widely spoken among the Chinese. Besides Tamil, some Indians also speak Telegu, Malayalam, Punjabi, Hindi and Bengali.
Buying a home in Malaysia
- All purchases of properties by foreign interests, if allowed under the law, must be with the approval of the Foreign Investment Committee ("FIC") regardless of value. FIC application is normally just a formality. Your solicitors handling the purchase will be able to assist you in this.
- Foreign interests are permitted to purchase the following types of residential properties provided they are above RM1,000,000:
- Terrace houses which are more than two storeys, provided the houses purchased do not exceed 10% of the total number of units of each such type in a particular housing project.
- Land/bungalow houses and semi-detached houses provided the houses do not exceed 10% of the total number of units of each such type in a particular housing project. If the land purchased is further developed for investment purposes, the buyer is required to form a company, which is incorporated in Malaysia and of which at least 49% is owned by Malaysians, comprising at least 30% Bumiputera.
- Condominium/apartment units provided that the units do not exceed 30% of the total number of units in each block.
- Foreign individuals (including husband and wife) however, can only purchase up to two (2) residential properties of which at least one (1) property must be a condominium.
- Notwithstanding (2) & (3) above, there is no restriction on foreigners or foreign companies buying any types of property above RM1,000,000 if the following conditions are satisfied:
- Property must be purchased direct from a developer licensed in Malaysia.
- Property must be newly-completed or at least 50% in progress.
- Financing for the purchase is obtained from overseas financial institution outside Malaysia.
NB : FIC approval is automatic for purchases under this paragraph.
- Acquisition of a third property is deemed to be for investment purpose and can be made only through a company incorporated in Malaysia with at least 70% equity held by Malaysians with at least 30% by Bumiputera.
- All properties purchased by foreign interests cannot be resold within three (3) years from the date of the FIC's approval.
Note: Please note that apart from the above FIC guidelines, each of the 13 states in Malaysia also have their own separate guidelines on ownership of properties by foreigners which may or may not be the same as the FIC guidelines. It is therefore advisable to make enquiries at the respective state land offices for guidelines specifically applicable to a particular state.
LAND OFFICE GUIDELINES FOR THE STATE OF JOHOR
All the FIC guidelines outlined above are applicable except for those expressly varied below.
Foreigners cannot purchase:
Foreigners can purchase:
- Apartment /condominium priced at RM1,000,000 and below.
- House priced at RM1,000,000 and below.
- Properties set aside for Bumiputera quota.
- Shop lots which are less than two storeys high.
- Shop lots which are more than two storeys high and priced at RM1,000,000 and above provided that the total units purchased do not exceed 10% of the total number of units available for such type.
- Office space or commercial buildings of any value provided that the total units purchased do not exceed 20% of the total units available for such type.
THE BUYING PROCESS
(For properties purchased direct from developers only)
- Pay 10% deposit and sign sale and purchase agreement ("SPA"). The SPA for residential properties is a standard agreement prescribed by the government.
- For residential properties, subsequent payments of between 10% -15% each are due at various prescribed stages of construction. For other types of properties, payment term varies depending on the developers.
- The statutory maximum period for completion of properties is 24 months from the date of the SPA for landed residential properties and 36 months from the date of SPA for apartments and condominiums. There is no statutory completion date for other types of properties.
- Purchaser can take delivery of the property upon completion subject to payment of full purchase price and other charges such as maintenance fee for road, sewerage, street lighting, landscaping and others.
- Individual title, when issued will be transferred to the purchaser's name and a stamp duty based on fixed scale for each range of purchase price will then be payable for the transfer.
THE RENTAL PROCESS
- Sign a letter of intent and pay one (1) month's rental as earnest deposit. If tenant fails to take up the tenancy or fails to sign the tenancy agreement subsequently, the earnest deposit will be forfeited.
- Sign the tenancy agreement and pay a further deposit equivalent to one month's rental, utility deposit (usually half a month rental for residential properties) and one (1) months's rental in advance. Lease periods are normally one (1) to two (2) years. This refundable deposit is kept by the owner as security for any damage to the property or furnishing or fittings or against unpaid rent or utility bills and is standard in Malaysia.
- At the time of signing the tenancy agreement, the Tenant is required to pay the stamp duty (government tax on the agreement) on rented property. Duty is approximately 0.35% of the yearly rental for each year of lease.
- Open a telephone account at the nearest Telekom office. For further assistance, please dial 100.
- A joint inspection of the property is held with the landlord prior to taking delivery where an inventory list is signed and agreed upon.
- Take possession of the keys.
SILVER HAIR PROGRAMME
Senior citizens from any country (except Israel and Yugoslavia) who attain the age of 50 and above are allowed to stay on a long term basis. Upon application, a Social Visit Pass will be issued for a maximum period of five (5) years on yearly basis. Extension of another five (5) years may be granted on a periodical basis. The conditions to be satisfied to qualify for this programme are:
- Applicant must be above 50 years old. There is no age restriction for the applicant's spouse.
- Application has to be submitted by local sponsor in Malaysia to the Immigration Head Office, Kuala Lumpur. The sponsor must be a Malaysian citizen or Permanent Resident.
- If applicant needs a visa, it should be obtained from Malaysian Representative Office abroad prior to entry into Malaysia.
- Applicants with spouse must EITHER have a pension(s) or royalties or other income of not less than RM10,000.00 per month OR a savings of RM150,000 in a Malaysian bank account which must be maintained when renewing their annual visit pass.
- Single applicant must EITHER have a pension or royalties or income of RM7,000 per month OR a savings of RM100,000 in a Malaysian bank account which must be maintained when renewing his/her annual visit pass.
- Applicants must possess medical insurance coverage applicable in Malaysia. If insurance coverage is refused due to old age, this requirement may be waived subject to proof.
- The applicant shall not participate in any profession, occupation or business activities while residing in the country. Participating in voluntary organisations in accordance with the government's rules and regulations is however permitted.
- The fee for one (1) year Social Visit Pass is RM90.00. The fee for visa will be based on the existing bilateral agreement of visa fees between the two (2) contracting countries.
- If the property is purchased direct from the developer, the developer would apply for water and electricity connection on your behalf. The relevant deposits, the connection charges and charges for water metre (for high rise residential units only) however, will have to be borne by you.
- You will however, need to apply for telephone connection yourself. Just complete the form and bring it together with your passport and work permit to the nearest Telekom office. You will have a pay a deposit of around RM1,500. For further assistance, please dial 100.
- Apartment: A multi-storey building for residential purpose but with no facilities other than car park and community hall.
- Bungalow: A unit that stands alone and does not share any of its external walls with other units.
- Common property: The remaining portions of a sub-divided high rise property which are jointly owned by owners of all the units within the property (e.g. recreational facilities and car parks (if unit is not sold together with the parking lot) .
- Condominium: Apartment with facilities (e.g swimming pool, tennis courts and gymnasium) .
- Earnest Money: The deposit money given to the seller to show that he is serious about buying the house. If the sale goes through, the earnest money is applied against the purchase price. If the sale does not go through, the earnest money will be forfeited.
- Freehold: A title which is valid for perpetuity.
- Fully-furnished: The owner must provide all furniture to allow tenant to live comfortably.
- Landed: A property with land, can be a bungalow, semi-detached or terrace house.
- Leasehold: A title which has a maximum validity of 99 years from the date of issue.
- Management Corporation: A corporate body, established under the Strata Titles Act 1985, which consists of all the owners of the units in a high rise property. The Management Corporation controls and manages the common property.
- Partially-furnished: Some basic essential items such as wardrobe, kitchen cabinet and curtain are included.
- Semi-detached: A unit that shares one side of its external wall with another unit
- Short term lease: A lease which is less than three (3) years.
- Strata Title: A separate title issued for each unit within a high rise building.
- Terrace house: A house that shares both sides of external walls with other units (except for end unit where only one side of its external wall is shared with another unit).
- Unfurnished: No furniture included. However the owner would normally be expected to include lights.
- Walk-up Apartment: Apartment with no lifts.