Buying property in Malaysia as a foreigner: Complete guide 

Malaysia’s real estate market has seen impressive growth and steady development in recent years. It is one of the countries with a promising and developing real estate industry. Foreigners buying property in Malaysia are increasing due to the high investment returns and favorable investment policies offered to them. This article will provide a complete guide for foreigners buying property in Malaysia.

Overview of the real estate market in Malaysia

The Malaysian real estate market is estimated at $36.76 billion in 2024 and is expected to reach $50.69 billion by 2029, growing at an annual growth rate (CAGR) of 6.64%. This specific growth is dominant in residential real estate, where many high-rise residential property developments are established in cities nationwide to cope with the country’s population growth and urbanization. In addition, thriving tourism has attracted many foreigners buying property in Malaysia’s many tourist destinations.

Can foreigners buy property in Malaysia?

Foreigners buying property in Malaysia follow specific regulations and restrictions. The law has particular requirements for foreigners, such as:

1. Property price threshold: Depending on the state, a minimum threshold exists for properties allowable for sale to foreigners. Properties valued at less than RM 1 million ($210,000) are not allowed for sale.
2. Properties built on Malay Reserved Lands: The properties built on Malay Reserved Lands are exclusive to Malay and cannot be rented or sold to foreigners buying property in Malaysia.
3. Low and medium-cost housing: Low and medium-cost housing is intended for local citizens. 
4. State and regional differences: Under the Federal Constitution of Malaysia, each state and federal territory has its own jurisdiction and land laws. Prices and other restrictions might vary in individual states. Researching the state law is essential for foreigners buying property in Malaysia.

Foreigners buying property in Malaysia can do so if they meet the minimum requirements listed above. They can choose any type of property, including land, residential, commercial, and industrial real estate. Condominium units are popular with foreigners and are subject to condominium rules and regulations in Malaysia. Moreover, no existing law limits the number of properties a foreigner can own.

Foreigners must also be familiar with the different land and house titles. Here is a list of the land and house titles in Malaysia:

1. Master title: A master title is an ownership document held by a developer for a whole piece of land before it’s divided into individual plots. It is also commonly referred to as a parent title.
2. Strata title: A strata title is a subdivided title meant for individual units of a multi-level building, also known as stratified properties (e.g., condominium, apartment, and retail mall).
3. Individual title: An individual title is issued for independent properties that are not part of a larger development, such as terrace houses, semi-detached houses, and bungalows.

Popular regions and areas

Malaysia is a federal constitutional monarchy comprising 13 states and three federal territories. Here are some of the popular regions and areas for foreigners buying property in Malaysia:

1. Selangor and the Federal Territory of Kuala Lumpur: Selangor is the most visited state in Malaysia, where Kuala Lumpur, the national capital and largest city, is located. The real estate market in Kuala Lumpur boasts a high-return investment for residential apartments, luxury condos, and townhouses with modern living amenities. The economy of Kuala Lumpur is attractive to businesses, which is why foreigners buy any type of property in Malaysia for commercial use.
2. Johor: The state of Johor is located in the southernmost part of Malaysia and is the gateway to Singapore. Recently, Singapore and Malaysia signed a memorandum of understanding to collaborate on creating the Johor-Singapore Special Economic Zone (JSSEZ). The collaborative endeavor aims to strengthen economic links and boost connectivity between the two countries. Foreigners buying property in Malaysia can benefit from this since Johor sets out to become Malaysia’s most economically developed state in the next few years.
3. Penang: Penang is recognized is known for its tourist destinations. Many tourists visit Penang because of the George Town UNESCO World Heritage site, famous street food, and exciting nightlife. This tourism has increased Penang’s demand for hotels and high-rise buildings, making it an investment opportunity for foreigners buying property in Malaysia.

How to buy a house in Malaysia as a foreigner in seven steps?

Foreigners can buy a landed house in Malaysia for residential or commercial use. Here are seven steps in the process of buying a house in Malaysia.

Step 1. Determine your needs and budget

Foreigners buying property in Malaysia must determine their property needs in terms of purpose, location, and budget. There are plenty of available properties for sale in Malaysia, and a proper financial assessment can help them select a suitable and affordable property that fits their needs and budget. 

Step 2. Research the Malaysian real estate market

Having informed knowledge about the Malaysian real estate market will direct a foreigner’s decision toward a financially positive result. The real estate market is complex and fast-changing, which is why it is needed to research the following:

1. State land laws: Malaysia observes common land laws, but each state is independent and may have different land laws and regulations. Understanding Malaysia’s real estate law and states are vital for foreigners buying property in Malaysia.
2. Current market trends: Current real estate trends affect property value. Property pricing, price changes, and growth potentials depend significantly on market trends shaped by state governance and the economy. Foreigners buying property in Malaysia must take into account these market trends.

Step 3. Find a reputable real estate agent and look for your property

Finding a reputable real estate agent is an effective strategy. This step is optional, but having a real estate agent can reduce time and expenses when looking for property for sale in Malaysia. Real estate agents know the type of property in Malaysia and can provide valuable suggestions for house-hunting. 

Step 4. Compare the cost of different properties

After looking for properties, foreigners must compare the costs and prices. Property prices in Malaysia are influenced by population, demand and supply, location, physical topography, access convenience, developer, material costs, and interest. Prices will differ, so comparing costs will help foreigners buy a house in Malaysia.

Step 5. Obtain a visa in Malaysia

A visa is generally not required for foreigners buying property in Malaysia. However, foreigners from countries not on the visa-free list must obtain a visa to enter the country. While not mandatory for purchase, some investor visas in Malaysia can simplify the home-buying process and offer exclusive benefits. The following are investor visas in Malaysia for foreigners:

1. Malaysia My Second Home” (MM2H) Program: Established in late December 2023, MM2H is a Malaysian golden visa that allows foreigners to receive a long-term (10 years) visa. Moreover, it also allows foreigners buying property in Malaysia to avail themselves of loan benefits. 
2. Malaysian Premium Visa Program (PVIP): A PVIP holder is granted a multiple-entry pass to stay in Malaysia for up to 20 years. This program enables investors, entrepreneurs, and foreign talents to live, work, or study in Malaysia. Applicants may also apply to bring their family members.

Step 6.  Secure property financing

Property financing is available for foreigners who are buying a landed house in Malaysia. With a valid visa and a decent credit rating, most foreigners can get loans from a Malaysian bank. Foreigners can apply for local bank loans with a Margin of Finance (MOF) reaching 80% for MM2H holders and 70% MOF for non-MM2H holders. Foreigners buying property in Malaysia can also apply for a foreign bank loan or obtain foreign currency (FC) borrowing from any licensed onshore bank.

Step 7. Sign the Sale and Purchase Agreement  (SPA) and Memorandum of Transfer (MOT)

It is essential to have a lawyer to assist in the process of buying a house in Malaysia. Although optional, a property lawyer can streamline the transaction and guide in signing the Sale and Purchase Agreement (SPA) and Memorandum of Transfer (MOT). A SPA is a binding legal contract that obligates a transaction between a buyer and seller. A MOT is a document the seller and buyer sign to transfer ownership from the seller to the buyer. Signing these two documents is crucial for the transfer of property ownership in Malaysia.

Property prices in Malaysia 

The minimum property price for foreigners in Malaysia varies based on many factors. Moreover, taxes must be paid when buying land in Malaysia and other properties. Here is a breakdown of the cost, prices, and taxes:

1. Buying land: Foreigners buying land in Malaysia per acre varies considerably depending on location, purpose (agricultural, residential, commercial), and local market trends. One acre of agricultural land in Malaysia would cost RM 250,000 ($52,500) to RM 550,000 ($115,500). Meanwhile, residential freehold lands in Kuala Lumpur have a price range of RM 260 ($54.60) to RM 650 ($137) per square foot. 
2. Buying a house: Several factors, like infrastructure development, property size, and location, influence the minimum property price for foreigners in Malaysia. Residential property and landed houses in Malaysia cost around RM 300 ($63) to RM 460 ($96.60) per square foot. 
3. Building a house: Many foreigners buy a house in Malaysia, but some prefer to build their own houses.  Building a house can cost anywhere from RM 200 ($42) to RM 500 ($105) per square foot, but the exact price depends on location, house size, materials, and additional amenities. 
4. Buying a condo: The average price for condos in Kuala Lumpur is RM 2,898 ($609) per square meter. Condominium rules and regulations in Malaysia are followed when buying a condo or paying for maintenance fees.

Property buying and selling taxes/costs

House tax in Malaysia is paid when buying a property.  Below are the taxes and fees and their corresponding rates:

Buy property in Malaysia with Own Property Abroad

Are you considering buying property or land in Malaysia? Let Own Property Abroad guide you through the process smoothly and efficiently, specially tailored for foreigners buying property in Malaysia. Our team’s extensive knowledge and experience in the Malaysian real estate market enable us to assist with legal requirements, locate the perfect properties, negotiate favorable deals, and conduct thorough due diligence.

With our experts by your side, you won’t have to face the complexities of the Malaysian property market alone. For more information on how we can assist you, please provide your details below or email us at [email protected].

Frequently Asked Questions (FAQs)