BUYING A HOUSE
All Malaysian citizens are free to purchase houses within Malaysia save for low-cost houses which can be applied for through the relevant land offices or registries based on the relevant rules for eligibility.
Houses built on Malay reserved land can only be purchased by Malays. Thirty percent of each housing project is to be reserved for bumiputra, purchasers who enjoy 5% to 8% discount on the purchase price.
Foreign purchasers are subject to the approval of the Foreign Investment Committee(FIC) of the Economic Planning Unit of the Prime Minister’s Department based on the FIC “Guidelines on the Acquisition of Properties in Malaysia by Foreign interest”.
There are two categories of titles:-
• Freehold-which gives the owner perceptual ownership:
• Leasehold-which allows the owner to stay in possession only for a specific period.
When the specified period ends, ownership reverts back to the authority which issued the title.
Generally, a house is issued a title for the piece of land on which the house is erected; and an apartment is issued a strata title for the specific area on the specific floor of the building in which the apartment or condominium is located.
A search can be done at the relevant lands office or registries to determine whether the title is encumbered. A search can be done on the master title on which the whole or part of the housing project is erected.
Bank and other financial institutions have different packages of housing loans to assist house buyers in their purchase. Pursuant to a recent Bank Negara guideline, house buyers can now only obtain housing loans of up to a maximum of 60% of the purchase price for the purchase of a second or subsequent house.
Other than financing from a bank or financial institution, the Employees Provident Fund (EPF) currently provides two schemes of withdrawal for its depositors prior to attaining the age of 50:-
• For purposes of buying or building a house or a shop house consisting of a residential unit, depositors can withdraw the difference between the purchase price and the loan obtained plus 10% of the purchase price, or 30% of the total amount deposited in the EPF whichever is lower;
• For purposes of reducing or settling housing loans (i. e for one property only), depositors can further withdraw 20% of the total amount deposited in account no. 2 with the EPF, or the amount of the housing loan remaining outstanding, whichever is lower after a period of 5 years from the first withdrawal and thereafter at 5- year intervals.