There’s plenty about Malaysia to recommend to foreigners looking to move or invest in property.
The climate, culture and friendly people go a long way — and with Kuala Lumpur transforming itself into a global hub for startup businesses, it’s becoming attractive to young professionals as well as the more traditional expat community of retirees.
If you’re thinking of settling in Malaysia, then you’ll need to know a bit about how the process of buying property in Malaysia for foreigners will work. Here’s a quick guide.
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During the 2010s Malaysia’s house prices were constantly increasing. But, due to an oversupply, the market has been slowing down over the past couple of years¹.
Besides this boom in new property development, the Malaysian economy was influenced by the Covid-19 pandemic, causing a decrease in the number of people searching for a new place to live.
To help fight this, the government has been taking measures to incentivize property purchase — through means such as the MM2H program — so it’s expected that the market picks up soon enough.
The short answer to this question is yes. Though there are some specificities when it comes to foreigner owned property².
If you’re not native to Malaysia, you’re allowed to purchase any kind of property, as long as it’s priced at a minimum value of one million MYR.
When buying a condo, you need to make sure that half of the block is owned by locals. The limit for the number of foreign-owned properties is two, which can be split as follows:
Note: if you’re getting a terraced house, land, a bungalow or a semi-detached house, it can’t correspond to over 10% of units built in its type.
For additional and personalized information it’s recommended that you get a lawyer or real estate agent to walk you through the process.
Malaysia My Second Home (MM2H) is a government program that incentivises foreigners to purchase property in Malaysia. This is done by granting a renewable 10-year multiple entry visa for foreigners that fit certain criteria³.
The main MM2H requirements are⁴:
- Showing proof of offshore income
- Placing a fixed deposit in Malaysia — has to be done in a Malaysian bank
- Paying for immigration fees and a security bond
Having a MM2H visa will open some doors when it comes to purchasing property, with different price caps and facilitations for loans. The application process is pretty straightforward and can be done through the government website⁵.
Ok, so now we already covered that you as an US citizen — or foreigner from any other country — are allowed to buy property in Malaysia? But how do you go about it?
First off, make sure you’ve set your budget and secured your mortgage — either with a local Malaysian bank or through an international mortgage lender back home. Then, use the steps below as guidance²:
Step 1. Find a real estate lawyer to help you with the purchase.
Step 2. Once you and the seller agree on the price, you’ll have to sign an Offer/Acceptance Letter — at this time you should also pay for a 3% down payment.
Step 3. After two weeks, the Sale Agreement will be signed, and the remainder deposit price (7%) paid within the following three months.
Step 4. This purchase agreement is then stamped at the Stamp Office, and the purchase price is verified. The buyer is then liable for stamp duty (up to 3% of the price).
Step 5. The property’s change of ownership must be registered at the Land Office Registry.
Step 6. Once you have your key, you’re free to enjoy your new home! 🎉
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As in most other places, houses in Malaysia will vary in price according to the type of property and location.
The capital of Malaysia, Kuala Lumpur, is also the largest city in the country — with nearly 1.7 million inhabitants — will be the place where you’ll find the priciest properties⁶.
George Town — Malaysia’s second largest city — boasts a colonial old town which is UNESCO listed, and is frequently dubbed the best place to choose if you want to retire in Malaysia.
Located between these two, near the Cameron Highlands, you’ll find the third largest city in the country — Ipoh. The tourist industry here is booming after Lonely Planet featured Ipoh as one of Asia’s top destinations, making it a great place to visit or settle for the longer term.
While these largest cities might offer more facilities, housing there will cost you more. Smaller expat hubs, such as Johor Bahru and Penang, offer cheaper options.
Don’t forget to do your research to find the place that suits your budget. Here are some average Malaysia house prices for you to get started:
|City||Price (sqft) in city center||Price (sqft) outside of city center|
|Kuala Lumpur⁷||227.06 USD||127.05 USD|
|George Town⁸||142.05 USD||86.92 USD|
|Johor Bahru⁹||138.26 USD||98.62 USD|
|Penang⁹||173.00 USD||121.72 USD|
|Ipoh¹⁰||213.67 USD||106.84 USD|
The total transaction costs for purchasing a house in Malaysia are relatively low compared to the US. Most of the charges will be proportional to the property price.
Here’s an overview of some of the taxes and fees you’re likely to encounter:
|Stamp duty||1% - 3%|
|Lawyer fees||0.4% – 1%|
|Other admin fees||49 USD (180 MYR)|
|Exchange rate||Variable, depending on which money transfer provider you use.|
The real estate agent’s fees, which range from 2% to 2.75%, are usually paid by the seller of the property.
The property market in Malaysia is properly regulated, which means that you don’t necessarily have to go through an agent to find your new home.
When looking to purchase a property directly from the owner — and save on the agency fees — you might want to look into websites that put you in touch directly with the seller.
|🏡 Here are some options so you can get started|
If you’d feel more comfortable going through an agent or broker, keep in mind that the fees are likely to be between 2 and 3% of the price of the property. These can be paid either by the seller or split with the buyer — it all depends on which type of agreement you make.
In case this is your first time purchasing property in Malaysia, having a specialist help you can give you insights and more confidence, as they know the local market and can even help with translations if needed.
So make sure you pick the option that best suits your needs (and your budget).
Malaysia has a well developed real estate sector. This means you'll have a wide choice of apartments, houses or even land if you want to build your dream home yourself.
It’s a good idea to familiarise yourself with some of the quirks of language used when talking about real estate in Malaysia. For example:
- A condominium apartment will mean you’re in a block with facilities like a swimming pool, tennis courts and gym
- A flat, on the other hand, will be in a block without these additional facilities
- A bungalow is a detached property, but doesn’t have to be over a single floor — in fact it can be two or three stories high
Naturally, you'll find more condos and flats available in built up areas and cities, with houses and villas more readily available in newer developments in the suburbs, and in towns and villages.
Before you commit to buying the property, it’s a smart idea to get a survey done — though this is not a legal requirement.
It’s also likely that your mortgage provider will request that you have a survey completed before you’re able to take out a loan. You can check the Royal Institution of Surveyors Malaysia website to find a registered surveyor, or ask locals for recommendations, if you’d rather.
The realty market in Malaysia is regulated, which means there are safe ways for you to find your realtor or broker.
Make sure to use official websites — such as the Malaysian Institute of Estate Agents — so you can avoid falling into scams. It’s also recommended that you check the realtor or broker certification before making any commitments.
Buying a property is a big and exciting step, but navigating the system in a new country can be a challenge. Luckily, buying your dream home in Malaysia should be fairly straightforward if you follow these steps, and source the right local help if you need it.
Good luck with finding, buying and settling into your new home in Malaysia.
- Global Property Guide - Malaysia price history
- Global Property Guide - Malaysia buying guide
- MM2H - Programme overview
- MM2H - Terms and conditions
- MM2H - Application
- Wikipedia - Kuala Lumpur
- Numbeo - Property prices in Kuala Lumpur
- Numbeo - Property prices in George Town
- Numbeo - Compare property prices: Johor Bahru and Penang
- Numbeo - Compare property prices: Ipoh and Sabah
Sources checked on 12.23.2021
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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