Types Of Property
There are two broad categories of property sale – sales by a developer of newly constructed properties and sales by individual owners of existing properties.
New Developments: In Malaysia it is common for developers to sale properties “off the plan” which means you purchase the property before it is built. Under the Housing Developers Act property developers are required to complete the construction of these properties within three years of the sale and purchase agreement. Purchasers are required to make periodic progress payments throughout the three year period as the architects confirm that progress has been made on the overall project construction. Usually 5% of the price is held by solicitors for up to 18 months after completion to cover any defect claims. Recently the Malaysian government has been trying to encourage developers to change to a “build then sell” policy which means that they will complete construction before making the sale. The suggestion is that the purchaser then pays a 10% payment to secure the property and the balance is only payable when the property is completed.
Existing Properties. Purchase of existing properties usually involves a down payment of 10% of the purchase price (this may be made in two instalments 3% with letter of offer and 7% within two weeks). The remaining 90% is payable within three months. After that period then interest would become payable on the outstanding balance.
Before buying an existing property you should ensure there will be no problems in obtaining the necessary State approval to acquire it as a foreigner.
Freehold/Leasehold Land
Foreigners can acquire both freehold and leasehold land in Malaysia. Most leasehold land is owned by the state and leases are usually for 60 or 99 years. At the end of the lease it is fairly easy to renew the lease for a further 99 years upon payment of a premium which is based on the current market value of the property. It is also possible to arrange for a new lease during the period of the exiting lease. This involves cancelling the existing lease and applying for a new one.
Local terminology
Malaysians use the following terms to describe the types of residential property available:
Bungalow. This is a detached stand alone house on its own land. Unlike the UK where it means single story smaller dwelling it can be any size in Malaysia. Some are extremely large with built up areas exceeding 10,000 square feet.
Semi D. This is short for semi detached and refers to house which is joined on one side to another property. Tow homes make up one building.
Terraced. This refers to houses which are connected on both sides to other homes. The end unit, which is obviously only connected on one side, has the largest land space and is usually premium priced. Terraced house are usually one or two stories high but occasionally they consist of three floors. Many terraced houses in major cities like Kuala Lumpur are being renovated. Some of the end units are reconstructed to substantially increase their built up area with a corresponding reduction in their garden space.
Town Houses. These are essentially the same as terraced houses except they tend to be more up market and expensive. Some may have an internal patio.
Gated Community. This generally refers to developments which have controlled access with a guard house and fencing surrounding the whole development. This usually means security will be better but it is advisable to check exactly what security is offered. Consider how easily you gained access, ask how often they patrol the development and what system they have to let visitors enter. Do they have security cameras and do the properties have an alarm system connected to the guard centre?
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