Buying land and houses in Kuala Lumpur
Build a futuristic house in the suburbs
After the recent relaxation on property law regarding overseas investment, both foreigners and locals are subject to broadly similar regulations regarding buying land in Kuala Lumpur. The land tenure system of Malaysia is based on the Australian Torrens method of land ownership, where register of land holdings guarantees an indefeasible title.
Although the housing market in Kuala Lumpur has cooled slightly since the global economic downturn, the city has remained comparatively buoyant when pitted against other cities of the region. But real estate agents and housing developers generally have quite a mixed view on exactly how the future of the KL property market will develop.
A small proportion of usually rural land is reserved for indigenous Malays (bumiputras) and cannot normally be owned or foreigners. However, in urban areas such as KL things are less restricted and investment from abroad is being actively sought.
Current take-up rates remain strong in the city despite an apparent oversupply of residential properties, with prime locations relatively insulated from the slump. And farther out of town it is possible to take advantage of low prices and build your dream home for a bargain price, but remain a swift commute from the city centre.
Foreign ownership of land in Kuala Lumpur
Style a Western interior into your home
The Malaysian government has changed its attitude regarding foreign ownership of property in recent times and has stripped away lots of the prohibitive red tape. Other nationalities can now own the freehold to residential properties as long as they do not conflict with bumiputra interests.
And seeking out overseas investment has actually become a key policy of the government, with Hong Kong, Chinese and United Kingdom citizens being particular targeted. Properties in KL have not fared as badly as other Southeast Asian cities since the global downturn, and it is still possible to find value for money. Furthermore, the sector has become liberalised by the removing of key approval for foreign transactions less than RM40 million.
Tips for buying houses or land in Kuala Lumpur
The golden rule of ‘location, location, location’ still rings true no matter where you are looking to buy property. Make sure that you are a convenient distance from your place of work, children’s school or other crucial amenity and that the transport links are up-to-scratch. If necessary, get up early and travel the prospective route to ensure the traffic or crush on the metro is not too nightmarish.
Houses within the metropolitan area mean you will have easy access to facilities such as cinemas, shops and hospitals. But being a little further out from the city has the advantage of daytrips to the beach at the weekend and outdoor pursuits. Of course, you get more for you money outside the city and some residential complexes have communal swimming pools and leisure facilities.
It is also very important to assess potential areas thoroughly, especially for expatriates who may not be fully away of all the aspects. There may be a dodgy park nearby where you wouldn’t want your kids to hang out, or perhaps a raucous bar which plays music until the early hours. Research is everything and it is best to see a wide range of properties to get the fullest picture possible.
Process of buying land or a house in Kuala Lumpur
Once an expat has decided upon a specific property, they are required to complete an real estate agents undertaking and pay the booking fee or good faith payment to secure the deal.
If the purchaser subsequently renegades he must be prepared to forfeit this payment (minimum two per cent), but if the vendor pulls out after accepting this payment they are liable to pay back double in compensation.
The real estate agent then forwards the vendor and purchaser’s passport or ID card plus copies of the title and any previous sale agreement to the appointed legal firm. These are usually engaged upon recommendation of the broker to prepare the sale and purchase agreement.
Once the sale and purchase agreement has been completed the legal team will arrange a date for the signing of the paperwork and for the required deposit of a further eight per cent – adding up to 10 per cent including the good faith payment.
The purchaser is then given three months to settle the balance sum. Usually, 70 per cent of this would come from a lending institution such as a bank with the remained 30 per cent (minus the 10 per cent deposit already transferred) coming from the purchaser’s pocket.
If necessary the purchaser can request an extra month to meet the final payment, although this latitude is normally subject to interest of some eight per cent per annum. The 20 per cent must be passed on to the lawyer for finalising the mortgage from the bank, and then this will redeem the property and the process of title transfer can be completed.
After the property has been redeemed and all outstanding bills have been settled by the vendor, the legal team will register the property under the purchaser’s name with the Land Office. Once this is completed, the lawyer will transfer the remainder of the deposit to the vendor.
