Malaysia
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Capital: Kuala Lumpur
Official Language: Malay
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" Prime Minister's Office
Yab Tun Dr. Mahathir Bin Mohamad
Prime Minister
Telephone: 603 - 8888 8000 / 603 - 8000 8000
Fax Number : 603 - 8888 3444
Website: https://www.pmo.gov.my
Address: Main Block, Perdana Putra Building Federal Government Administrative Centre 62502, Putrajaya Malaysia
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" Lands and Survey Department Serawak
Sr Zaidi Bin Haji Mahdi
Director of Lands and Surveys Sarawakn
Email: zaidim@sarawak.gov.my
Telephone: 6082-446446
Website: https://landsurvey.sarawak.gov.my
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" Ministry of Foreign Affairs
The Honourable Dato' Saifuddin Bin Abdullah
Minister
Email: saifuddin@kln.gov.my
Telephone:03-8887 (Ext : 4503)
Website: http://www.kln.gov.my
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Intellectual Property Corporation of Malaysia (MyIPO)
Ms. Rashidah Sheikh KHALID Director E-mail address: ipmalaysia@myipo.gov.my Telephone: (603) 2299 8400 (603) 2299 8411 (DR CR) Web site address: http://www.myipo.gov.my Address: Unit 1-7, Ground Floor Menara UOA Bangsar No. 5, Jalan Bangsar Utama 1 59000 Kuala Lumpur
The process of selling your Malaysian property is complicated, with several parties involved, and can take up to six months from signing the sale and purchase agreement (SPA) to the official transfer of the property.
First, foreigners are not allowed to buy properties priced below RM1 million (S$364,000) in Malaysia. If for some reason you are selling a property now worth less than RM1 million, you must look to Malaysian buyers only. Second, Malaysia has two types of units - bumiputera units and non-bumiputera units. Bumiputeras are indigenous Malaysians, including Malays. Only bumiputeras can buy reserved bumiputera units at special prices from developers. These units can be resold or transferred only to other bumiputeras. Bumiputera owners can sell their units to non-bumiputera Malaysians, but they need to get the state authority's consent. Sellers also need to prove that no bumiputera buyers were interested in the property, such as showing evidence of advertisements placed. "The state government, in deciding whether to approve or not, takes into account the racial make-up and present bumiputera ownerships in the area where the property is situated," said Ms Chang Mei Kee, managing partner at law firm Henry Soong and Chang.
For a start, sellers should keep track of how long they have held the property. This will determine the Real Property Gains Tax they have to pay under Malaysian laws, which affects the net proceeds of the sale.
With effect from last year, the gains tax rate payable by foreigners disposing of a chargeable asset is 30 per cent of the net profit, if the chargeable asset is sold within five years of its acquisition. Chargeable assets sold more than five years after acquisition are subject to a much lower gains tax - 5 per cent of the net profit.
If you decide to proceed with the sale, you need to make sure your finances are in order.
Mr Mark Mah, senior negotiator at L and C Properties, said that sellers need to clear all outstanding fees applicable to the property, otherwise there will be a delay in completing the sale. These include the "quit rent" (cukai tanah), a form of land tax paid annually to the state, and the "assessment tax" (cukai pintu), a local property tax for services provided by the local council.
A key part of selling is to set an acceptable price by looking at recent transactions in the area or project. Sellers should work with a reliable real estate agency to market the property. You need to appoint a registered estate agent. Normally, the agent's commission for completing a sale is 2 to 3 per cent of the final sale price.
You have to give your agent some key documents to assist in marketing your property. These include the copy of the title to the property, renovation plans and copies of the quit rent and assessment receipts for the property. Most prospective buyers would need those details to obtain a valuation from a bank to get financing.
Know the strengths and weaknesses of your property when you market it. Mr Mah noted that certain factors will appeal to Malaysian buyers, such as the fengshui or the vastu shastra (ancient Indian science of architecture) of the property. "A bad condo management will also definitely reduce the property price," he added.
Mr Ricky Lee, executive director of Knight Frank Malaysia Johor Branch, and Mr Herbert Leong, associate director of project marketing with Knight Frank Malaysia, say that township developments have become more attractive. If the township is popular with good amenities, buyers will want to live there, regardless of its surroundings.
Be clear on who your target buyers are. In Malaysia, selling a property to a foreigner is more complicated than selling to a local. All intended purchases of real estate property, except industrial property, by any foreigner require approval from a state authority.
The approvals are given at the discretion of the state and are subject to payment of a consent fee or 2 per cent of the sale price, whichever is higher. In Johor, the approval process can take as long as six months from the date of application.
Excluding disbursements, legal fees are standardised by the country's Solicitors Remuneration Order.
It is 1 per cent for the first RM150,000 of the sale price, 0.7 per cent for the next RM850,000, 0.6 per cent for the next RM2 million, 0.5 per cent for the next RM2 million and 0.4 per cent for the next RM2.5 million.
So if a seller disposes of his condo unit for RM1.5 million, he pays about RM10,450 in legal fees.
For any sale amount above RM7.5 million, the legal fee rate is negotiable but it cannot be more than 0.4 per cent.
The seller must provide his lawyer with the same documents that he gave to the estate agent. He must also supply copies of the latest bank mortgage statement, his identity card and passport.
If the seller's passport number stated in the title deed or purchase agreement differs from his present passport number, he ought to provide copies of both passports.
The option agreement is usually the first document a potential buyer will sign to make an offer to the seller to buy the property at a certain price.
Along with that offer, the buyer will enclose a part deposit to secure the deal while he sorts out his financing. At this stage, the buyer's lawyer sorts out the SPA's terms with the seller's lawyer.
This part deposit - known in Malaysia as an "earnest deposit" - is usually 1 to 2 per cent of the sale price. The seller or his lawyer should review the terms of the option document carefully. They will be bound by its terms regardless of the seller's subsequent instructions to his lawyer.
Some option agreements state that the deposit should be refunded to the buyer if he cannot obtain financing. If a seller is not agreeable to this, he should raise the issue.
In Malaysia, once the option agreement is signed, sellers generally wait 21 to 30 days for the buyer to execute the SPA and pay the balance of the full 10 per cent deposit. However, this 10 per cent is negotiable. Some buyers offer to pay the seller a higher deposit upon execution of the SPA, in exchange for a lower sale price or to obtain keys to the property earlier.
If the buyer is unable to take these steps, the option usually provides for the failed buyer to forfeit the part deposit to the seller as agreed liquidated damages.
Similarly, if the seller has signed the option but no longer wants to sell to the buyer, he has to return the part deposit and provide an equal additional amount as compensation. After the signing of the SPA, there are two possible scenarios, depending on whether the buyer is a Malaysian or a foreigner.
The sale and purchase transaction would be completed about three months after the SPA is signed.
If the buyer cannot pay the 10 per cent full deposit within three months, he will usually be given one more month, but he will have to pay late interest charges to the seller.
If the seller's property is subject to a charge or mortgage payment during this time, the seller's lawyer will obtain the buyer's financing details.
This is because the buyer's bank has to disburse part of the loan sum to the seller's bank. Unless the buyer pays in cash, the seller's lawyer will also get the redemption statement to redeem the property from the seller's bank.
A conditional SPA will be signed, as it depends on whether the state authority approves of the transaction.
The agreed deposit may be released to the seller, but is often kept by an impartial "stakeholder" who could be either the buyer's or the seller's lawyer. The buyer has about three to six months to apply for the state authority's consent for the purchase.
If consent is denied, the buyer can appeal, but he has to wait for another three to six months for the result. If the appeal is rejected, the transaction is aborted and the stakeholder solicitors will return the deposit to the buyer. The seller then looks for a new buyer. If approval is granted, the stakeholder solicitors will release the deposit to the seller as the buyer proceeds to secure his financing.
The sale transaction should conclude three to four months after the approval is granted.
The loan funds used to seal the deal are disbursed in a similar way to deals involving Malaysian buyers.
The buyer's bank will disburse the loan monies in two stages.
The first stage, called "redemption amount", goes towards redeeming the property from the seller's bank, assuming the seller still owes money on the property.
The second stage is after the seller's bank releases to the buyer's lawyer all security documents, such as the original title or original principal purchase agreement, depending on whether the titles are available at the point of sale. The buyer's lawyer can then register the title in the buyer's name and the buyer's bank can create the charge or mortgage over the property. If the seller's property has no outstanding loans at the point of sale, then disbursement of the buyer's loan involves only one stage.
However, the seller has to hand over the security documents to his lawyer, to transfer the property to the buyer and create the charge or mortgage by the buyer's bank over the property. This transfer process must occur before the seller receives any money from the buyer's bank.
After the balance of the sales monies has been provided to the seller's lawyer, the seller has to disconnect and pay the bills for all utility connections servicing the property. The seller must then present proof of payment of these bills, along with keys to the property.
Assessment rates and quit rent will be divided between seller and buyer at the date of delivery of vacant possession or legal possession.
As both taxes are paid once or twice a year, the seller would have paid the rates for the calendar year. So after taking legal possession, the buyer will reimburse what the seller has paid for the part of the year that the property belongs to the buyer.