Companies with foreign capital and foreign interests


(''foreign interests'') may purchase immovable property in Malaysia. Foreign


interests are referring to people who are non-citizens and foreign companies as


defined under Section 433A of the National Land Code 1965 and Section 4 of the


Companies Act 1965.

 

Under the National Land Code 1965 (''Code''), a person may


sell or dispose of his property to a foreign national but only after the State


Consent has been obtained. If a foreign national wishes to purchase a


residential property in Malaysia, he must therefore make an application to the


State Authority to obtain the State Consent before he completes the


transaction. If this is not complied with, the sale or disposal can be rendered


null and void.

 

New HomeBased on Budget 2014, announced by Prime Minister


Datuk Seri Najib Tun Razak on 25 October 2013, the government will be imposing


stricter governmental restrictions to curb speculations by local and foreign


investors in the real estate market.Announcing this when presenting the 2014


Budget, he said this was among

 

Minimum Property Purchase Price For Foreign Interests


Acquisitionin Kl, Penang And Johor

a slew of measures being implemented to temper the sharp


rise of homes in the country and it may cause serious implications on foreign


interests who wish to buy a home in Malaysia.

 

Within the framework of this Article, the acquisition of


immovable property by foreign interest shall be examined.Malaysian Government


has doubled the minimum value of properties that foreign interests could buy to


RM1 million, from RM500, 000 currently as listed down in the Table below for


the Penang, Johor and Federal Territory of Kuala Lumpur, Labuan and Putrajaya.

 

  

 

 

 

 

Wilayah


Persekutuan Kuala Lumpur, Labuan dan Putrajaya

Penang

Johor

Minimum


Threshold

RM


1 million for all types of property

RM2


million on the island and RM1 million on the mainland for all types of


property

RM


1 million for all types of property

Effective


Date

1-Mar-14

1-Feb-14

1-May-14

Foreigner


State Consent Fees

RM150


(registration and application)

3%


levy on non-citizens who purchase property in the state, in addition to the


existing application fees of RM 10,000 (for individuals) and RM20, 000 (for


companies).

2%


of the purchase price mentioned in the sale and purchase agreement duly


stamped completely or RM20,000 whichever is higher.

 

Federal Territory


of Kuala Lumpur, Putrajaya and Labuan

Economic Planning Unit (EPU) in the Prime Minister


Department has released their guideline on the minimum threshold for property


acquisition by foreign interests in Federal Territory of Kuala Lumpur,


Putrajaya and Labuan, effective on 1 of March 2014 are RM1 million per unit, up


from RM500, 000 previously.One of the conditions set in the guidelines is the


minimum threshold for the acquisition of residential units, commercial units,


industrial lands and agricultural lands by foreign interests.

 

The EPU stated that any acquisitions of residential unit


under the ''Malaysia My Second Home'' Programme are exempted from requiring the


approval of the Economic Planning Unit, Prime Minister's Department. But


according to the officers at Land Office at the Wilayah Persekutuan Kuala


Lumpur, it is not exempted at the land office. This exemption is only


applicable when come to the approval from EPU, but not with the Land Office.


Therefore, the price of the acquisitions of property by foreign interests in


Kuala Lumpur must be above RM 1 million.

 

With the issuance of this Guideline, the Guideline on the


Acquisition of Properties dated 1 January 2011 is repealed. As for the other


States, the respective guideline and actual enforcement date is subject to the


respective state authority. And till today, only Penang and Johor have come out


with their respective guidelines relating to the RM 1 million thresholds.

Penang

To prevent the adverse effects of a property bubble and to


attract genuine buyers rather than speculators,the Penang State Government has


come out with their latest ruling in which come into effect on 1 February 2014,


ofimposing a 3% levy on non-citizens on the purchase price who purchase


property in the state, to further curb speculation activities in addition to


the existing application fees of RM 10,000 (for individuals) and RM20, 000 (for


companies). The new ruling is gazette under Rule 83, Penang Land Rules on


foreign state consent which has come into force on 1 February 2014.

 

Penang's housing rules from 1 February 2014 designed to


protect Penang from being adversely affected by a property bubble as well as


ensuring that public housing and affordable housing is bought by genuine


purchasers who are qualified first time buyers from lower and middle-income


groups.In Penang since 1 July 2012, state administration allowed foreign


interests to only buy property worth more than RM1 million in Penang and RM2


million for the landed property on the island since July 2012 and remain the


same. In addition, there is a 2%additional registration fees imposed on


purchaser regardless of citizens or foreign interests on any property purchased


after 1 February 2014 and sold within three years from the date of the Sales


& Purchase Agreement (SPA).

 

 

Johor

Johor State Government passed New Policy on the Acquisition


of Property by Foreign Interests after the Housing Task Force Meeting Johor


held on 25July 2013 and the Johor Government Council Meeting held on 4 November


2013. The effective date of this new policy (on the acquisition of the property


by foreign interest in the state of Johor) is 1 May 2014, and shall remain in


effect until new ruling supersedes it.

 

Minimum price of property to be acquired by foreign interest


is RM1million per unit for all types of property including residential units,


commercial units, industrial lands and agricultural lands.However, there are


new fees on the Foreign State Consent in which for acquisition through sale and


purchase agreement, payment approval is 2% of the purchase price mentioned in


the sale and purchase agreement duly stamped completely in accordance with the


provisions of the Stamp Act 1949, or RM20,000 whichever is higher; and for


acquisition through lease, payment approval is 2% of the lease amount mentioned


in lease agreement duly stamped completely in accordance with the provisions of


the Stamp Act 1949, or RM20,000whichever is higher. The maximum acquisition


value is RM10 million and the permitted property (ies) is residential property


(ies), commercial property (ies) and agricultural lease.

 

The rate is amount to more than twice the current RM10, 000


fee foreign interests pay to buy properties in the state. Since foreign


interests are required to purchase units valued at RM1 million and above, the


new rate of 2% of the property purchase price would make the levy starts from


at least RM20,000.All application involving purchase of property valued less


than RM1 million where sale and purchase agreement has been signed and stamped


with execution before 1 May 2014 is exempted from the new policy with condition


that the completed application shall be submitted to Johor's Director of Land


and Mines Office before or on 29 May 2014 (Thursday).

 

However, foreign interests planning to purchase property in


Johor's Iskandar region will be exempted from the minimum purchase rule of RM1


million, that projects approved by Johor authorities before May 1 this year


would be exempted from the ruling. Further, developers with planning permission


for projects approved before 1 May2014 are allowed to sell to foreign interests


at the pre-set prices.