Can Foreign Nationals Own Property in Malaysia?

The short is answer is yes. However, there are foreign nationals are not legible to purchase certain types of property and there are several states that impose further restrictions. So, if you are planning on selling your property to a foreign national or if you are a non-Malaysian wanting to buy property, the following article will be of use.

1. What kind of properties can foreigners own?

Foreign nationals can own 100% of a property as long as minimum requirements are met. Please note that there are two types of property tenure in Malaysia, namely Freehold (owned entirely by the purchaser) and Leasehold (held under a lease, usually for 99 years and may be renewable).

Under Federal Law, non-Malaysians can own any type of properties EXCEPT the following:

a. Properties valued less than RM1 million in most of the major states;
b. Properties built on Malay Reserved land;
c. Property designated as agricultural land (See National Land Code 1965);
d. Low and medium cost residential units as defined by the relevant state authority; and
e. Properties distributed to Bumiputera interest in any development project as determined by the state authority.

Nevertheless, non-Malaysians still have the option to choose to purchase a studio unit, condominium unit, landed properties including terrace houses and bungalows, commercial property, industrial property and industrial land (except Malay Reserved Land) and agricultural land gazetted for development, after receiving the consent from the relevant state authority.

The state of Selangor does impose a further restriction. In Selangor, non-Malaysians are also prohibited from:

a) Purchasing landed residential properties unless said property is issued with a landed strata title (e.g. gated community); and
b) Buying auction properties


2. What is the minimum property purchase price in each state with or without MM2H?

The Malaysian Government in 2002 had launched the Malaysia My Second Home (MM2H) programme to allow Malaysian who meet the criteria to be offered renewable 10 year multiple entry passes. This was done with a view to increase investment into the nation. As such, the minimal value for land purchases in certain areas or for certain land types are lower for foreign nationals with a MM2H pass. Nevertheless, this is different in each state. For ease of reference, we have listed out the minimum value for non-Malaysians to purchase property in each state.

STATEMINIMUM VALUE - MM2HMINIMUM VALUE (NON-MM2H)
JohorRM 1,000,000 for all propertyRM2 million (landed property in designated international zones)

RM1 million (high-rise/strata title property within non-international zones, except for Medini)
KedahRM 1,000,000RM 600,000 in Kedah (main land) RM 1,000,000 in Langkawi  
KelantanRM 500,000RM 1,000,000
Kuala LumpurRM 1,000,000RM 1,000,000
PahangRM 1,000,000RM 1,000,000
PenangRM 500,000Overhang landed property: RM1.8 million (island)/ RM750,000 (mainland)

Overhang strata/high-rise properties: RM800,000 (island) / RM400,000 (mainland) **
PerakRM 350,000RM 1,000,000
PerlisRM 1,000,000RM 500,000
PutrajayaRM 1,000,000RM 1,000,000
MalaccaRM1 million (landed title)

RM500,000 (high-rise/strata title)
RM1 million (landed title)

RM500,000 (high-rise/strata title)
Negeri SembilanRM 1,000,000RM 1,000,000 (landed home/landed strata) RM 600,000 (high-rise strata)
SabahRM 500,000RM 750,000 (For overhang residential units) RM 1,000,000 for other units
SarawakRM 350,000RM 500,000
Selangor*RM2 million (for Zones 1 & 2)

RM1 million (for Zone 3)  
RM2 million (for Zones 1 & 2)

RM1.5 million for strata/high-rise properties (overhang units in Zones 1 & 2)

RM1 million (for Zone 3)
TerengganuRM 1,000,000RM 1,000,000


*Selangor

On January 24 2020, the Chief Minister of Selangor, Datuk Seri Amirudin Shari said that the state government is reducing the price threshold for strata properties, including strata landed homes to RM1.5 million from RM2 million previously, effective Jan 1, 2020. This new ruling is for overhang units (located in Zone1 and 2) that have received a certificate of completion and compliance as at 2018 and have a leasehold title.

Zones in Selangor

Zone 1 – Districts of Petaling, Gombak, Hulu Langat, Sepang and Klang
Zone 2 – Districts of Kuala Selangor & Kuala Langat
Zone 3 – Districts of Hulu Selangor and Sabak Bernam


** Penang
This new property price threshold for foreigners applies only for overhang units and is only valid for 1 year, starting from 11 June 2020 (Expires on: 10 June 2021).


3. What are the procedures for foreigners to acquire property?

Under the National Land Code, state authority consent prior to any acquisition of land in Malaysia is mandatory. The solicitor for the Foreign Purchaser will submit the application for the state authority consent and this application process typically takes at least 1-2 months.


Where the Foreign Purchaser takes a loan for the acquisition of a property and the application of the state authority’s consent is rejected, do not panic. The bank providing the loan will not release the loan sum to the developer or vendor. However, without the State Authority’s consent, the developer or vendor may terminate the Sales and Purchase Agreement.


4. What are the home loan financing options?

In order to incentivize foreign nationals to obtain MM2H, MM2H holders are allowed to obtain loans as high as a 80% margin from banks whereas non-MM2H holders can only obtain a maximum 50% margin. Nevertheless, for both MM2H and non-MM2H holders, they can be granted a 30-year loan tenure, provided the applicant is not above 70 years of age when the loan tenure ends.

Conclusion
With the property market not as high as it was in late 2019, this is a good time for foreign nationals to consider investing in property in Malaysia. If you are considering purchasing a property or are considering selling a property to a foreign national, please do obtain legal advice to ensure the property can be bought/sold by a foreign national and advise on your loan options.