Everything that You Need to Know about Real Estate and Property Rules in Malaysia

Thinking of buying a property in Malaysia? Most banks offer mortgage loans at attractive rates of interest and for flexible tenures. However, it’s best to have a decent idea about the real estate sector before purchasing a property.

If You Want To Buy a New House or a Second-hand Property

While buying a property in Malaysia, you need to consider a couple of things. Will you be buying a completed property or a property under construction, or a second-hand property? If you are opting for a new house, there are various schemes available to opt for. Almost all of the housing loan schemes offer 90% of financing. More on that later.

For used properties, the paperwork involved could be a bit of a task. You have to appoint a lawyer and prepare a Sale and Purchase Agreement (SPA). Initially, you can make a 10% down payment. The remaining 90% can be paid within 3 months from the signing of the SPA.

If You Want to Sell a House

Relocating to another state? Bought another property elsewhere? There are many reasons why one would sell their property. Due to the high property prices in the country, it will be easier to sell your home if you find the right buyer. However, if you own a Bumiputera plot, you can only sell your home to a Bumiputera. Similarly, if you have a property built on a Malay Reserved Land, you can only sell it to Malays.

If an expatriate is showing interest in your property, you need to first estimate your property’s value. This is because expatriates cannot own properties more than RM1 million. Hiring a real estate agent or a lawyer will be a great idea if you don’t have any experience in property sale. Once you find a buyer, ensure you have all the property documents and are aware of the legal fees involved.

If You are a Foreigner/Expatriate

Every country has their own laws for foreigners who plan to buy properties in their land.Foreigners in Malaysia can opt for any type of property they want. However, there are some restrictions. As a foreigner, you won’t be able to buy any of the following:

  • Properties with the value of more than RM1 million.
  • Properties built on any Malay Reserved Lands.
  • Properties and plots of land allotted to Bumiputera.
  • Low and medium cost residential units as per the state authority’s definition.
  • Any agricultural lands.

The government has introduced a scheme for foreigners who are looking to buy a property in the country. This scheme, Malaysia My Second Home (MM2H), is only or foreigners who are planning to stay in the country for 10 years and have a Visa for the same. The price of properties is much lower compared to the offered price. You can get up to 80% to 90% financing under this programme.

If You are a First-Time Home Buyer

Years back the thought of owning a house was a distant dream. But today with government schemes, it is easy for a first-time home buyer to get financing for the property of their choice. The First House Deposit Financing Scheme/Skim Rumah Pertamaku (SRP) which was launched in 2011 gives applicants up to 100% financing. Additionally, there is no down payment for this scheme.

Another programme, PR1MA or Perumahan Rakyat 1Malaysia, was launched in 2013 for those who earn a monthly income between RM2,500 and RM7,500.

The latest scheme, MyDeposit or Skim Pembiayaan Deposit Rumah Pertama, was introduced in the budget of 2018. This is exclusively for first-time home buyers who earn a monthly income from R3,000 to RM15,000.

If You Have a Low Income

With soaring property prices in Malaysia, low-income earners find it really difficult to find a property within their budget. The government introduced a scheme, Skim Pinjaman Perumahan (SPP), to help the low income earners own a house.

The applicant has to be a Malaysian, between 21 and 70 years of age, and who is not a government employee or a retiree. The income of the household should be less than RM3,000 to get this facility.

If You are a Youth

Now it is easier for married youths to own a home without any hassle. The government has teamed up with BSN to offer a scheme called Youth Housing Scheme (YHS). This plan is designed is for Malaysians from 21 to 45 years of age, single or married, with an income of RM10,000 or less.

Applicants will be able to get a margin of financing of up to 100% of the purchase price or the market price of the property. The loan tenure is up to 35 years to 65 years of age. The current interest rate is from Base Rate (BR) + 0.60% to BR + 3.00%. (The BR of BSN is currently at is 4.10%).

If You are Looking for a Home in Selangor

The Selangor state has introduced a housing policy so that every citizen has a home to live in. This policy, Rumah Selangorku by Lembaga Perumahan dan Hartanah Selangor (LPHS) targets low and middle-income earners in Selangor. Homes are available within the range RM42,000 and RM250,000. Once the applicant gets the loan successfully, they are not allowed to rent it out or sell the property to somebody else for 5 years.

Recently, the government was in talks with the central bank and commercial banks to loosen the loan approval requirements for this particular scheme. Though the scheme targets people who earn from RM3,000 to RM10,000, applicants earning below RM5,000 are getting their loans rejected by banks.


Just like most developing countries, Malaysia also faces its own challenges as far as the property scenario is concerned. There is not just property imbalance but also high mortgage loan rejection rate. Currently, the government is planning to loosen some of the stringent housing requirements in the country.

With these schemes and initiatives from the government, Malaysians will soon be able to own a home in the near future. The good news is there has been a decline in property prices in the recent past. As per the statistics from the last quarter of 2017, there was a decrease of 1.6% in property prices. In Selangor, Kuala Lumpur, Johor, and Penang the property prices decreased by 2.1%, 1.2%, 0.5%, and 0.2%, respectively.

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