Companies with foreign capital and foreign interests
(''foreign interests'') may purchase immovable property in Malaysia. Foreign
interests are referring to people who are non-citizens and foreign companies as
defined under Section 433A of the National Land Code 1965 and Section 4 of the
Companies Act 1965.
Under the National Land Code 1965 (''Code''), a person may
sell or dispose of his property to a foreign national but only after the State
Consent has been obtained. If a foreign national wishes to purchase a
residential property in Malaysia, he must therefore make an application to the
State Authority to obtain the State Consent before he completes the
transaction. If this is not complied with, the sale or disposal can be rendered
null and void.
New HomeBased on Budget 2014, announced by Prime Minister
Datuk Seri Najib Tun Razak on 25 October 2013, the government will be imposing
stricter governmental restrictions to curb speculations by local and foreign
investors in the real estate market.Announcing this when presenting the 2014
Budget, he said this was among
Minimum Property Purchase Price For Foreign Interests
Acquisitionin Kl, Penang And Johor
a slew of measures being implemented to temper the sharp
rise of homes in the country and it may cause serious implications on foreign
interests who wish to buy a home in Malaysia.
Within the framework of this Article, the acquisition of
immovable property by foreign interest shall be examined.Malaysian Government
has doubled the minimum value of properties that foreign interests could buy to
RM1 million, from RM500, 000 currently as listed down in the Table below for
the Penang, Johor and Federal Territory of Kuala Lumpur, Labuan and Putrajaya.
Wilayah
Persekutuan Kuala Lumpur, Labuan dan Putrajaya
Penang
Johor
Minimum
Threshold
RM
1 million for all types of property
RM2
million on the island and RM1 million on the mainland for all types of
property
RM
1 million for all types of property
Effective
Date
1-Mar-14
1-Feb-14
1-May-14
Foreigner
State Consent Fees
RM150
(registration and application)
3%
levy on non-citizens who purchase property in the state, in addition to the
existing application fees of RM 10,000 (for individuals) and RM20, 000 (for
companies).
2%
of the purchase price mentioned in the sale and purchase agreement duly
stamped completely or RM20,000 whichever is higher.
Federal Territory
of Kuala Lumpur, Putrajaya and Labuan
Economic Planning Unit (EPU) in the Prime Minister
Department has released their guideline on the minimum threshold for property
acquisition by foreign interests in Federal Territory of Kuala Lumpur,
Putrajaya and Labuan, effective on 1 of March 2014 are RM1 million per unit, up
from RM500, 000 previously.One of the conditions set in the guidelines is the
minimum threshold for the acquisition of residential units, commercial units,
industrial lands and agricultural lands by foreign interests.
The EPU stated that any acquisitions of residential unit
under the ''Malaysia My Second Home'' Programme are exempted from requiring the
approval of the Economic Planning Unit, Prime Minister's Department. But
according to the officers at Land Office at the Wilayah Persekutuan Kuala
Lumpur, it is not exempted at the land office. This exemption is only
applicable when come to the approval from EPU, but not with the Land Office.
Therefore, the price of the acquisitions of property by foreign interests in
Kuala Lumpur must be above RM 1 million.
With the issuance of this Guideline, the Guideline on the
Acquisition of Properties dated 1 January 2011 is repealed. As for the other
States, the respective guideline and actual enforcement date is subject to the
respective state authority. And till today, only Penang and Johor have come out
with their respective guidelines relating to the RM 1 million thresholds.
Penang
To prevent the adverse effects of a property bubble and to
attract genuine buyers rather than speculators,the Penang State Government has
come out with their latest ruling in which come into effect on 1 February 2014,
ofimposing a 3% levy on non-citizens on the purchase price who purchase
property in the state, to further curb speculation activities in addition to
the existing application fees of RM 10,000 (for individuals) and RM20, 000 (for
companies). The new ruling is gazette under Rule 83, Penang Land Rules on
foreign state consent which has come into force on 1 February 2014.
Penang's housing rules from 1 February 2014 designed to
protect Penang from being adversely affected by a property bubble as well as
ensuring that public housing and affordable housing is bought by genuine
purchasers who are qualified first time buyers from lower and middle-income
groups.In Penang since 1 July 2012, state administration allowed foreign
interests to only buy property worth more than RM1 million in Penang and RM2
million for the landed property on the island since July 2012 and remain the
same. In addition, there is a 2%additional registration fees imposed on
purchaser regardless of citizens or foreign interests on any property purchased
after 1 February 2014 and sold within three years from the date of the Sales
& Purchase Agreement (SPA).
Johor
Johor State Government passed New Policy on the Acquisition
of Property by Foreign Interests after the Housing Task Force Meeting Johor
held on 25July 2013 and the Johor Government Council Meeting held on 4 November
2013. The effective date of this new policy (on the acquisition of the property
by foreign interest in the state of Johor) is 1 May 2014, and shall remain in
effect until new ruling supersedes it.
Minimum price of property to be acquired by foreign interest
is RM1million per unit for all types of property including residential units,
commercial units, industrial lands and agricultural lands.However, there are
new fees on the Foreign State Consent in which for acquisition through sale and
purchase agreement, payment approval is 2% of the purchase price mentioned in
the sale and purchase agreement duly stamped completely in accordance with the
provisions of the Stamp Act 1949, or RM20,000 whichever is higher; and for
acquisition through lease, payment approval is 2% of the lease amount mentioned
in lease agreement duly stamped completely in accordance with the provisions of
the Stamp Act 1949, or RM20,000whichever is higher. The maximum acquisition
value is RM10 million and the permitted property (ies) is residential property
(ies), commercial property (ies) and agricultural lease.
The rate is amount to more than twice the current RM10, 000
fee foreign interests pay to buy properties in the state. Since foreign
interests are required to purchase units valued at RM1 million and above, the
new rate of 2% of the property purchase price would make the levy starts from
at least RM20,000.All application involving purchase of property valued less
than RM1 million where sale and purchase agreement has been signed and stamped
with execution before 1 May 2014 is exempted from the new policy with condition
that the completed application shall be submitted to Johor's Director of Land
and Mines Office before or on 29 May 2014 (Thursday).
However, foreign interests planning to purchase property in
Johor's Iskandar region will be exempted from the minimum purchase rule of RM1
million, that projects approved by Johor authorities before May 1 this year
would be exempted from the ruling. Further, developers with planning permission
for projects approved before 1 May2014 are allowed to sell to foreign interests
at the pre-set prices.
