The Malaysian property market offers many advantages for foreigners looking to purchase real estate. Unlike some other markets in Asia, foreigners may directly own any number of residential properties in Malaysia, subject to the minimum price established for foreigners by the different states. Buildings, hotels, and land may also be purchased subject to relevant local authority guidelines. Financing from external and internal sources is allowed for all property acquisition.

What types of real estate can foreigners own in Malaysia?
On 30 June 2009 the Malaysian government announced changes to liberalise property acquisition by foreigners. Foreigners are now allowed to purchase:

• Landed property – property with land, usually separated by walls or fences. Some local rules and regulations may apply, for instance, Selangor state requires foreigners to own landed properties which are gated and guarded. 
• Apartments/condominiums – individually-owned residential units in a building with shared common facilities. Most states require foreigners to purchase property with a minimum purchase price of RM 1,000,000, though this varies by state.
• Land – In Malaysia, land is divided into 3 categories: agricultural land, industrial land and land set aside for development.

Is there any property a foreigner cannot own?
Foreigners are not allowed to acquire:

• Properties valued less than MYR 1,000,000 per unit;
• Residential units under the category of low and low-medium cost, as determined by the state authority;
• Properties built on Malay reserved land;
• Properties allocated to bumiputera (majority Malay ethnic group) interest in any property development project, as determined by the state authority.

Property tenure
Malaysia adopted a Torrens Land Registration System in 1965. Under this system, ownership of real property is transferred through registration of a title, rather than a deed. 

There are two types of tenure in Malaysia:

• Freehold
• Leasehold (a term not exceeding 99 years, and if the lease relates to a part of a land, 30 years).

Approval of property purchases
The liberalisation of foreign property acquisition in Malaysia in 2009 streamlined the approval process considerably. Where an acquisition involves a dilution of bumiputera or government interests for properties valued at MYR 20 million and above, approval is required from the Economic Planning Unit (EPU) of the Prime Minister’s Department. All other property transactions (be they residential or commercial) do not require EPU approval, subject to a general pricing threshold of MYR 1,000,000, as explained below.

Despite the limited need to obtain EPU approval, acquisition of properties by foreigners is still governed by section 433B of the National Land Code 1965. Foreigners must obtain prior approval from the relevant state authority for any acquisition of interest in property, excepting land categorised for industrial use. In granting their approval, state authorities are at liberty to impose any other conditions, and the payment of such levy, as they deem fit.

Local solicitors will usually submit an application on the buyer’s behalf, and charge between 0.4  – 1 per cent, payable by the buyer. While several states in Malaysia have adopted the EPU’s minimum threshold of MYR 1,000,000, other states have a lower threshold limit. Additionally, some states (such as Penang) have higher threshold limits for the purchase of land, and others (Selangor) set thresholds based on the zone in which property is located. More information on minimum purchase prices by state may be found on the government's Malaysia My Second Home website. 

Land
Land matters are within the jurisdiction of each state, so it’s advisable to check with local solicitors on the actual threshold limit applicable. While MYR 1,000,000 remains the general threshold, this figure may vary from state to state, and change over time, without being publicised.

Source:  JLL Malaysia Property Investment Guide 2015
http://www.mm2h.gov.my

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