Can a Foreigner buys any property in Malaysia?
Foreign ownership of property in Malaysia has been facilitated by the Malaysian government to encourage investment and boost the real estate market. While certain guidelines and restrictions exist, the overall policy allows foreigners to purchase residential and commercial properties, contributing to the country’s economic growth and international appeal.
Before embarking on the acquisition of properties in Malaysia, a foreigner would need to comply with specific requirements set out by the relevant authorities to buy and own a property (whether residential or commercial) in Malaysia.
Firstly, according to Section 433A of the National Land Code 1965 , the definition of a “foreigner” is defined as follow :-
a) a non-citizen, which means a natural person who is not a citizen of Malaysia; or
b) a foreign company, which is a company, corporation society, association or other body incorporated outside of Malaysia with fifty percent (50%) or more of its voting shares are held by a non-citizen or a foreign company or by both.
Foreign individuals are permitted to acquire residential properties in Malaysia, subject to minimum price thresholds set by each state. These thresholds vary across locations and property types.
Typically, the minimum purchase price for foreigners is set at RM1 million or higher, ensuring that foreign investments primarily target the luxury and high-end segments of the market.
By imposing such thresholds, Malaysia aims to attract high-net-worth individuals while safeguarding affordable housing for its citizens.
In addition to residential properties, foreigners are allowed to purchase commercial properties in Malaysia, such as offices, retail spaces, and industrial buildings.
Unlike residential properties, there are generally no minimum price requirements for commercial real estate. This flexibility opens up opportunities for foreign investors and businesses to establish a presence in Malaysia, contributing to the growth of various sectors and enhancing economic activities.
Foreigners who intend to acquire properties in Malaysia must take note of the following requirements:-
1) Minimum threshold on purchase price.
2) Off-limit properties.
Below are the categories/types of property that are off-limits to foreigners:
i) Low or low-medium cost properties.
ii) Properties with description of “malay reserved land”.
iii) any property allocated under “bumiputera interest (lot)” in a development project.
3) Foreigner’s Consent application.
Foreigners who intend to acquire any property in Malaysia have to apply for a prior written approval from the relevant State Authority, regardless of freehold or leasehold property. This is required by Section 433B of the National Land Code 1965.
Each State Authority in Malaysia has its own respective guidelines to govern the same.
4) Real Property Gains Tax (RPGT) application on foreigners.
Foreigners who intend to purchaser properties in Malaysia are advised to consider the RPGT, not so much on acquisition but rather on the disposal per say.
RPGT is a form of disposal tax imposed by the Inland Revenue Board of Malaysia and is chargeable on property owners when they dispose off their land or real property with a resale price that is higher than the original acquisition price.
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