How can foreigners buy land in Malaysia? 2024 guide!

Foreigners can buy land in Malaysia. However, the Malaysian government, its states, and federal territories have regulations for foreign land ownership that may impede foreigners from doing so. Understanding how to buy land in Malaysia for foreigners is necessary, and this article will discuss essential information to guide foreign buyers who want to buy land in Malaysia.

Can foreigners buy land in Malaysia?

Malaysia is among the Southeast Asian countries that allow foreigners to buy land. However, foreign ownership of Malaysian land is not absolute since there are a few restrictions and regulations that must be observed, including:

• Property price threshold: In most states, there is a minimum price limit for foreigners to buy land in Malaysia. Land priced below RM 1 million ($210,000) is not eligible for sale to foreign buyers.
• Malay Reserved Lands: These lands are reserved exclusively for Malays and cannot be rented or sold to foreigners buying land in Malaysia.
• State and regional differences: Under Malaysia’s Federal Constitution, each state and federal territory has its land laws and regulations. Land prices and restrictions may differ between states, so foreign buyers must research state-specific laws before buying land in Malaysia.

How to buy land in Malaysia as a foreigner?

Buying land in Malaysia as a foreigner can be challenging, especially in states with restrictions on foreign land ownership. The procedure for buying land in Malaysia can differ between foreigners and Malaysian nationals. Following these seven steps can guide foreign buyers through the process.

Step 1: Define your needs and budget

The procedure for buying land in Malaysia starts by outlining your desired land based on size, location, and purpose. Before buying land in Malaysia, you must also prepare a budget analysis. This will help narrow down your options and streamline the search process.

Step 2. Partner with a real estate agent

Partner with a real estate agent in Malaysia to leverage their expertise in the local market and streamline your search for residential or agricultural lands for sale in Malaysia. They provide valuable insights into the land market and assist with negotiations. Furthermore, their in-depth knowledge can save you time and effort. Aside from that, specialized agencies like Own Property Abroad offer tailored services for foreign buyers who want to buy land in Malaysia.  

Step 3: Conduct thorough due diligence

The most essential step to buy land in Malaysia as a foreigner is conducting thorough due diligence. Since each state and federal territory has specific land regulations, it is crucial to perform thorough due diligence to assess if buying land in Malaysia for foreigners in particular locations is legally possible. Moreover, the legal status of the land must be verified by checking its title deed. Examine the land’s condition by performing a physical inspection to ensure quality and understand potential risks. Confirm the land’s market value with professional appraisers for a more accurate and detailed valuation.

Step 4. Make an offer

Based on your research and comparison, make an offer to buy land for sale in Malaysia. Negotiate the price and terms with the seller to reach an agreement.

Step 5. Secure a financing option

Foreigners buying land in Malaysia can secure property financing through local or foreign banks. With a valid visa and a good credit history, most foreigners can obtain loans. MM2H holders may qualify for higher loan-to-value ratios (up to 80%), while non-MM2H holders can typically borrow up to 70% of the property’s value. Additionally, foreigners can explore options like foreign bank loans or foreign currency borrowing from Malaysian banks.

Step 6. Process the legal documents

Engage with a qualified property lawyer to review the contract of sale and handle the legal aspects of buying property in Bangkok. Once you agree on the terms, sign the Sale and Purchase Agreement (SPA), a contract that formalizes the sale of a property. It outlines the terms and conditions of the transaction, including the purchase price, payment schedule, and other essential details. You must also provide a deposit, typically around 10% of the agreed price.

Furthermore, Stamp Duty is required for the Memorandum of Transfer (MOT), a crucial document constituting the legal agreement that transfers property ownership in Malaysia. Stamp Duty is calculated as a percentage of the land price, ranging from 1% to 4%, depending on the land price. Foreign companies buying land in Malaysia must pay Stamp Duty at a flat rate of 4%. This fee is paid at any Stamp Office in Malaysia.

Step 7. Complete the purchase

The procedure to buy land in Malaysia concludes by paying the remaining balance. Upon full payment, obtain the updated land title deed in your name at the Land Office, including all other relevant documents confirming your land ownership in Malaysia.

Pitfalls of buying land in Malaysia

Foreign buyers who want to buy land in Malaysia must know that pitfalls must be considered and avoided. Below are the common pitfalls when buying land in Malaysia:

• Skipping the due diligence process: Foreigners buying land in Malaysia must conduct thorough due diligence. This procedure to buy land in Malaysia is necessary to ensure the eligibility of ownership documents, the physical condition of properties, and adherence to national and state land laws. 
• Hidden costs and fees: Besides upfront expenses, accounting for hidden costs and fees is crucial. These include the stamp duty payable on the property transfer, legal costs for due diligence, contract negotiation, property registration, and maintenance expenses for property taxes, insurance, and landscaping.
• Cultural and language barriers: Cultural and language barriers should be considered when buying land in Malaysia. Lawyers or real estate agents who speak Malay can assist in negotiations to ensure you and the seller are on the same page.

Frequently Asked Questions (FAQs)