Malaysia is an attractive destination for foreign property investors, offering a blend of vibrant cities, scenic landscapes, and a relatively easy property buying process. Whether you’re eyeing a luxury condo in Kuala Lumpur or a beachfront villa in Penang, understanding the essentials is crucial.

Property prices have experienced significant growth, with the property index rising by 136% from Q1 2009 (92.4) to Q2 2024 (218.8), reflecting a clear upward trend in the market. This means that a property valued at RM1,000,000 in 2009 would now be worth RM2,360,000.

Here are 7 key things every foreign buyer should know before purchasing property in Malaysia:

1. Minimum Property Purchase Price

To ensure housing affordability for locals, Malaysia has set minimum property prices for foreign buyers, which vary by state:

• RM1,000,000: Terengganu, Pahang, Kuala Lumpur, Putrajaya, Kelantan, Perak, Labuan
• RM2,000,000: Selangor (Zones 1 and 2), landed properties in international zones in Johor
• RM600,000: High-rise properties in Sabah, Kedah (RM1,000,000 in Langkawi)
• RM500,000: Sarawak and Perlis
• Penang Island: RM1,800,000 for landed, RM800,000 for strata titles
• Penang Mainland: RM750,000 for landed, RM400,000 for strata titles

These thresholds determine the types of properties foreigners can buy in different regions.

2. Stamp Duty Details

Stamp duty is a tax applied to several documents in the property purchase process:

• Sale and Purchase Agreement (SPA): A flat fee of RM10.
• Instruments of Transfer: As of January 1, 2024, foreigners (except Malaysian permanent residents) will pay a flat 4% stamp duty on transfer documents such as the Memorandum of Transfer (MOT) or Deed of Assignment (DOA), replacing the previous tiered system.
• Loan Agreement: A 0.5% stamp duty applies to the loan amount. For example, a RM500,000 loan incurs RM2,500 in stamp duty.

3. Financing Options for Foreigners

Foreigners can secure financing from Malaysian banks, but the terms differ from those for locals:

• Down Payment: Typically, foreigners must pay 30% to 40% of the property’s value upfront.
• Loan Tenure: Loan terms for foreigners are generally shorter, ranging from 15 to 25 years.
• Interest Rates: Interest rates for foreign buyers are usually higher.

Loan approvals are assessed on a case-by-case basis, so it’s advisable to consult a financial advisor who is familiar with the Malaysian property market to explore your best options.

4. Real Property Gains Tax (RPGT)

RPGT is a tax levied on profits from the sale of property:

• 30% if sold within the first five years of ownership.
• 10% if sold after five years.

This tax is calculated on the profit after deducting the purchase price and related costs. As there are no exemptions for foreigners, it’s essential to account for RPGT in your investment plans.

5. Legal Representation

Hiring a knowledgeable lawyer is critical when buying property in Malaysia:

• Legal Fees: Typically range from 0.5% to 1% of the property’s value.
• Due Diligence: Your lawyer will ensure the property is free from legal complications and verify that the seller has the right to sell.
• SPA Drafting: The lawyer will draft or review the Sale and Purchase Agreement (SPA) to protect your interests.

A good lawyer helps prevent legal issues and ensures a smooth transaction.

6. Foreign Ownership Restrictions

Malaysia permits foreign ownership but with certain limitations:

• Property Types: Foreigners cannot purchase low-cost housing, properties on Malay Reserve land, or certain agricultural land. However, they are permitted to buy luxury condos, high-rise units, and specific landed properties.
• Quota Limits: Some developments cap foreign ownership at around 30% to maintain a balance between local and foreign buyers.

Alternatively, you can consider joining Malaysia’s “Malaysia My Second Home” (MM2H) program, a government initiative that allows foreign nationals to live in Malaysia long-term. The program offers several tiers to accommodate different investment levels and lifestyle needs:

1. MM2H Silver: Ideal for those seeking a five-year residency in Malaysia. This option requires a fixed deposit of USD $150,000 (RM705,000) and a mandatory property purchase of at least RM600,000. It’s a practical choice for retirees or individuals looking for short-to-mid-term residency.
2. MM2H Gold: For those interested in a longer stay, the MM2H Gold offers a 15-year residency with a fixed deposit requirement of USD $500,000 (RM2.35 million) and a mandatory property purchase of at least RM1 million. This tier is suitable for investors who want more flexibility and a longer-term commitment in Malaysia.
3. MM2H Platinum: The Platinum tier is designed for high-net-worth individuals seeking a 20-year visa. It requires a substantial fixed deposit of USD $1 million (RM4.7 million) and a minimum property purchase of RM2 million. This option provides the most extended residency and caters to those looking for significant investment opportunities and lifestyle benefits in Malaysia.

The MM2H program not only provides an excellent gateway for foreign nationals to enjoy the lifestyle and economic opportunities Malaysia has to offer but also enables participants to explore property investments and business prospects in a stable and welcoming environment.

7. Property Management for Non-Residents

If you do not plan to live in Malaysia full-time, it’s advisable to hire a property management company:

• Rental Management: These companies handle tenant placement, rent collection, and maintenance.
• Upkeep: They ensure your property is well-maintained, preserving its value and condition—particularly useful if you own multiple properties or live abroad.

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Is Property Investment in Malaysia Worthwhile?

As of 2025, Malaysia continues to offer excellent opportunities for property investment, especially through the Malaysia My Second Home (MM2H) program, which allows foreigners to live in the country on a long-term visa while investing in local real estate. With a growing economy and rising property demand, the Malaysian real estate market is positioned for stable capital growth and rental yields.

Understanding these seven key points will help you make well-informed decisions and maximize your investment in Malaysia’s promising property market

From the Desk of

Miichael Yeoh

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