Malaysia Property Law: FOREIGNER BUYING A PROPERTY IN MALAYSIA
LEGAL QUESTIONS AND ANSWERS FOR
Malaysia Property Law: FOREIGNER BUYING A PROPERTY IN MALAYSIA (Update September 2014)
Q: CAN A FOREIGNER BUY A PROPERTY IN MALAYSIA?
A: Foreigner is able to purchase or acquire properties in Malaysia in the subject to the following requirements:-
|Types of Property||Requirements|
|Residential / Commercial/ Industrial Property||– Minimum purchase price of RM1,000,000 in Federal Territory. For other states in Malaysia, different minimum purchase prices and conditions apply;- Foreign Investment Committee’s approval required for:-
(a) direct acquisition of property valued at RM20 million and above, resulting in the dilution in the ownership of property held by Bumiputera interest and/or government agency; and
(b) indirect acquisition of property by other than Bumiputera interest through acquisition of shares, resulting in a change of control of the company owned by Bumiputera interest and/or government agency, having property more than 50 percent of its total assets, and the said property is valued more than RM20 million.
– State authority consent
|Agriculture Land||– Minimum purchase price of RM1,000,000.00;- The land must be at least 5 acres;- To undertake agricultural activities on a commercial scale using modern or high technology;- To undertake agro-tourism projects;- To undertake agricultural or agro-based industrial activities for the production of goods for export; and- State authority consent|
Q: Documents required for Application for Approval from the State Authorities
(i) One (1) copy of the sale and purchase agreement;
(ii) One (1) copy of the purchaser’s Passport/Identity Card;
(iii) One (1) copy of Memorandum of Associations, Form(s) 24, 44 and 49 (Both purchaser and Developer if the purchaser is a foreign company);
(iv) FIC approval/notification acknowledgement (if applicable);
(v) Latest Quit Rent and Assessment receipt of the subject property; and
(vi) Application Form for S433B NLC
Q: WHAT IF THE INTENDED PURCHASE DOES NOT MEET THE REQUIREMENT?
A: Foreigner cannot proceed further if the transaction does not meet the requirements. However, in the cases where the purchase price of the property is more than RM20,000,000.00, the foreigner is required obtain approval from Foreign Investment Committee (“FIC”).
The acquisitions involving consideration of more RM20,000,000.00 that require FIC’s approval are subject to the condition that the property must be registered under a locally incorporated company, and the said holding company must have certain Bumiputera (Native People) interest shareholding.
Q: WHAT IS THE PROCEDURE OF OBTAINING STATE AUTHORITY CONSENT, AND HOW LONG DOES IT TAKE?
A: At the state level, all foreign acquisition of property is subject to approval of the respective state authority’s consent. In most cases, your solicitor would submit the application on your behalf.
The approval would usually take 1 month to 3 months, and most likely the consent will be granted if the transaction is genuine.
Q: WHAT ARE THE DOCUMENTS REQUIRED FOR OBTAINING FIC’S APPROVAL?
A: An application for FIC’s approval shall be supported by the following documents:
– Application Form UPE H/2009;
– Forms Proforma I/2009 and/or Proforma II/2009;
– One (1) copy of the relevant agreement;
– One (1) copy of the Board of Directors resolution;
– One (1) copy of the letter/license from the ministries or Government agencies (if applicable);
– One (1) copy of the approval letter on the same proposal from other ministries or Government agencies (if applicable);
– One (1) copy of the confirmation letter from the Company Secretary on the company’s current equity structure;
– One (1) copy of the latest valuation report (transaction that involves Government agencies must be accompanied with a valuation report from Jabatan Penilaian dan Perkhidmatan Harta);
– One (1) copy of the company’s current audited financial report;
– Declaration Letter UPE SA/2009 to be signed by the Chairman/Managing Director/ Chief Executive Officer of the company or any member of the company’s Board of Directors or any authorized personnel/individual; and
– Any other document considered necessary by the Economic Planning Unit, Prime Minister’s Department.
Transfer of property to a foreigner based on family ties:
Approval not required, allowed among family members.
Once you have agreed on the terms with the seller, arranged the financing if required, you need to engage a lawyer to advise and act on your behalf when signing the Sale and Purchase Agreement and making payments until the transaction is completed. The money is paid to the solicitor who will forward the money to the seller when the transaction goes through.