{"id":16449,"date":"2021-07-16T18:29:53","date_gmt":"2021-07-16T10:29:53","guid":{"rendered":"https:\/\/www.plus-pm.com\/blog\/land-selection-in-malaysia\/"},"modified":"2023-01-11T10:24:26","modified_gmt":"2023-01-11T02:24:26","slug":"land-selection-in-malaysia","status":"publish","type":"blog","link":"https:\/\/www.plus-pm.com\/en\/blog\/land-selection-in-malaysia\/","title":{"rendered":"Purchase or rent a building or land in Malaysia?"},"content":{"rendered":"\n

\u201cI don\u2019t know about business practices in Malaysia\u201d<\/strong><\/strong><\/mark><\/h4>\n\n\n\n

\u201cWhat criteria should we apply when choosing a site or building?\u201d<\/strong><\/strong><\/span><\/strong><\/h4>\n\n\n\n

\u201cWhat’s the procedure for choosing property?\u201d<\/strong><\/strong><\/span><\/strong><\/h4>\n\n\n\n
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Do you have questions and uncertainties like that?<\/p>\n\n\n\n

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Here we have summarized the acquisition method of building site, and the process and tips to buy or rent a real estate in Malaysia<\/strong> as the useful information for the person in charge of launching projects to build factories and warehouses.<\/p>\n\n\n\n

This article has been created by Plus PM Consultant Sdn. Bhd.<\/a>,<\/strong> a construction consultant based in Kuala Lumpur, Malaysia,<\/s> who provides project & construction management services and supports the investors who are looking to enter and expand their business into ASEAN market.  <\/p>\n\n\n\n

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Acquisition of building site in Malaysia<\/strong><\/h3>\n\n\n\n

Lands in Malaysia are under the jurisdiction of the state government, and you can register the ownership of a land by state government fiat.<\/p>\n\n\n\n

According to \u201cthe guideline for real estate acquisition\u201d by EPU (Economic Planning Unit), the minimum price of the real estate which can be acquired by a foreigner \/ a foreign company is a million Ringgit, but the minimum price varies depending on states.<\/p>\n\n\n\n

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What are \u201cfreehold\u201d and \u201cleasehold\u201d?<\/strong><\/strong><\/h3>\n\n\n\n

There are two kinds of land ownership: freehold and leasehold.<\/p>\n\n\n\n

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Freehold:<\/strong><\/strong><\/mark><\/h4>\n\n\n\n

Freehold allows the owner to register ownership for both land and building when purchasing a real estate. The state government used to own all the land of Malaysia but then sold and transferred some of them for plantation. By freehold, the owner can register permanent ownership of the property.<\/p>\n\n\n\n

Leasehold:<\/span> <\/strong><\/h4>\n\n\n\n

Leasehold is the property that is leased by the state government. The government sets lease period of 30, 60, or 99 years. The lease period of a condominium is mostly long (about 99 years), and the content is almost same as freehold. Leasehold is common form of ownership.<\/p>\n\n\n\n

The purpose of use of land is specified beforehand such as for a farmland, industrial site, commercial land, or housing site, and the use for the purpose other than specified purpose is prohibited.<\/p>\n\n\n\n

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Process flow of real estate acquisition<\/strong><\/strong><\/strong><\/h3>\n\n\n\n

The process of acquisition of the land and real estate in Malaysia is:<\/p>\n\n\n\n

STEP\uff11<\/td> Selection of property (setting evaluation standards)<\/td><\/tr>
STEP\uff12<\/td> Observation and check of the property <\/td><\/tr>
STEP\uff13<\/td> Check delivery terms and Conditions with the seller <\/td><\/tr>
STEP\uff14<\/td> Letter of offer is issued by the seller <\/td><\/tr>
STEP\uff15<\/td> Payment of deposit (usually 2% of the price of the property) <\/td><\/tr>
STEP\uff16<\/td> Preparation of the Sales & Purchase Agreement (SPA) <\/td><\/tr>
STEP\uff17<\/td> The seller and buyer sign SPA and the buyer pays 8% of the price <\/td><\/tr>
STEP\uff18<\/td> Transfer procedure
\u30fbApply to EPU to obtain authorization if needed
\u30fbApply to the state government to obtain authorization
\u30fbAfter obtaining authorization by EPU and the state government, pay the remaining 90%
\u30fbApply to the Land Office for registration and pay the registration fee <\/td><\/tr>
STEP\uff19<\/td> Registration is completed after procedure at the Land Office <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Merit of hiring a construction consultant in Malaysia<\/strong><\/strong><\/h3>\n\n\n\n

In principle, both persons involved to the contract are on equal footing However, in Malaysia, seller is on the dominant position in SPA,<\/strong> so you need to check the risk.<\/p>\n\n\n\n

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For example:<\/p>\n\n\n\n

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STEP5\u3000 Payment of deposit (usually 2% of the price of the property) before preparing SPA<\/p>\n\n\n\n

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What risk do you face here?<\/p>\n\n\n\n

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The risk in this case is the \u201cpayment of deposit (2% of the price of the property) if SPA is unacceptable\u201d. Before paying deposit, it is important to confirm if deposit can be refundable depending on the condition of SPA.<\/span><\/strong><\/strong><\/p>\n\n\n\n

The following is the information for negotiation with the buyer after checking SPA.<\/strong><\/strong><\/mark><\/p>\n\n\n\n

In cooperation with a lawyer experienced in construction project, we extracted risks of the project focusing on downstream of the project and checked for unfavorable conditions before paying deposit and signing SPA.<\/p>\n\n\n\n

\"The<\/figure>\n\n\n\n
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It is recommended to check documents for registration of land and building, regulatory documentations, conditions of ground and infrastructure (electricity, water, gas) and necessity of registration of division or plottage of lot. These factors would have a major impact on cost of building and schedule.<\/p>\n\n\n\n

Do not accept SPA without questioning because the agent or the seller is kind.<\/sup><\/strong><\/strong><\/span><\/sup><\/h3>\n\n\n\n

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CLAIM YOUR FREE CONSULTATION WITH OUR EXPERTS <\/a><\/div>\n<\/div>\n\n\n\n
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Cautions when signing a lease<\/strong><\/strong><\/h3>\n\n\n\n

Check all relevant authorities\u2019 approval, certificate of occupancy (CF or CCC), certificate by fire department (BOMBA Approval).<\/strong><\/strong><\/mark><\/p>\n\n\n\n

If the other party says, \u201cWe are currently applying\u201d or \u201cWe have received provisional approval\u201d, there is likely to be high risk (of being an illegal building or such).<\/strong><\/strong><\/mark><\/p>\n\n\n\n

In a lease agreement, the cautions are same as when signing a SPA.<\/p>\n\n\n\n

It is important to check the delivery terms and have the building repaired at owner\u2019s cost if necessary. <\/strong>You need to check contract conditions because you may need to pay remaining rental if the contract is terminated before the lease term expires.<\/p>\n\n\n\n

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Tips for choosing a real estate agency<\/strong><\/a> and lawyer<\/strong><\/strong><\/strong><\/h3>\n\n\n\n

Tips for choosing a real estate agency<\/strong><\/span><\/strong><\/h4>\n\n\n\n

Buyers usually do not have to pay commission<\/strong> when buying a real estate because sellers pay for it. However, foreign companies who are unfamiliar with local business custom are sometimes requested to pay undue commission by local estate agencies, so you need to check such conditions.<\/p>\n\n\n\n

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Tips for choosing a lawyer<\/strong><\/span><\/strong><\/h4>\n\n\n\n

In Malaysia, an agreement is prepared by the intermediary of a lawyer who specializes in real-estate deal, not a real estate agency. However, the lawyer is not an expert in construction project, so it is difficult for such lawyer to give advice on defects in land or building to \u201cprotect the buyer\u201d<\/strong>. Some real estate agencies or buyers may introduce you a lawyer, but we recommend you choose a lawyer who can reduce risks to the buyer<\/strong>.<\/p>\n\n\n\n

Note that disclosure statement (an explanation that a real estate broker is required to provide before contract when buy, sell, or broker land or building) required by Japanese law is not compulsory in Malaysia. <\/p>\n\n\n\n

Therefore, the buyer needs to assess and eliminate all possible risks because pursuit of responsibilities of seller after the contract is difficult even if any defect is found in the property.<\/strong><\/mark><\/p>\n\n\n\n

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Cost for acquisition of real estate<\/strong><\/h3>\n\n\n\n

Cost for acquisition of real estate is relatively low and most of the cost is determined based on property price, which is usually 4% of the price of the property.<\/strong><\/p>\n\n\n\n