Malaysia - Property
Non-residents are allowed to purchase residential and commercial property in Malaysia. There are a few restrictions but the market is relatively open. It is always advisable to rent however, and often renting is better value than buying in that renting often allows you to live in a better residence; a residence that maybe unaffordable.
For example, Josh and Kendal live in a huge two-storey house with four bedrooms, three bathrooms, a big kitchen and a garden. (And they have a dog and two cats.) All this for US$160 a week in rent. To buy the house would cost about US$470,000, though Josh and Kendal have neither the funds nor the interest to buy.
The rental market
There is very good value for money when you rent in Malaysia.
Look at Bob and Marion’s deal. In Penang, they are renting a luxurious, massive, five-bedroom apartment, with a pool and gym in the complex, for US$430 a week. This apartment would cost more than US$780,000 to buy, so the gross return on it, as an investment, is very poor at just 2.85 per cent.
For a retiree, of course, US$430 a week is a large amount, especially if the plan is to leave Australia to spend less but live better. Bob and Marion’s place is, however, on the five-star end of the scale—for those with more modest needs, there’s even better news.
Rent in Kuala Lumpur for a comfortable, furnished two-bedroom, two-bathroom apartment, with parking, starts from US$80 a week. It goes up from there, and a luxury apartment costs about US$350 a week.
A very comfortable and large three-bedroom, two-bathroom furnished apartment in an upmarket area of Penang, such as Gurney Park, virtually on the water and close to Georgetown, rents for less than US$160 a week. For the same amount you can get a four-bedroom family house with a garden in one of the ex-RAAF suburbs.
This three-bedroom, two-bathroom apartment near the beach at Batu Ferringhi in Penang was renting (2013) for US$100 a week.
Ipoh is even cheaper. You can rent a spacious apartment with three bedrooms, two bathrooms plus ensuite, parking and views over the Cameron Highlands, for US$80 a week. You could buy this apartment for less than US$70,000.
Purchasing property in Malaysia
Non-residents are allowed to purchase residential and commercial property in Malaysia, although with some restrictions.
All purchasers are subject to restrictions on Malay Reserve Lands and properties allocated for Bumiputras (ethnic Malays). There is a minimum investment value of US$135,000 (RM500,000) for property purchases but this can vary by state.
In Penang, for example, the state government has raised the floor price of property for foreign buyers from US$135,000 (RM500,000) to US$265,000 (RM1 million). This applies to all types of property in the state. In addition, foreigners who wish to own landed property on the island will have to meet a US$550,000 ( RM2 million) minimum purchase price.
Craig and Fiona have done well out of Penang property. They bought a ten-year-old penthouse that has eight bedrooms, six bathrooms and overlooks the water. The living area is massive with 20-foot windows. They paid US$160,000 in 2010, just before a property boom. The condominium next door is now selling for US$400,000
For around US$235,000 you can buy a very pleasant three-bedroom, two-bathroom apartment in KL and Penang. For that price in Ipoh, you can purchase a luxury apartment or a house.
Malaysia land law is based on the Australian Torrens System. The rights of foreign investors to own and possess property and to seek legal redress in the courts are rights guaranteed under these laws.
In centre of Kuala Lumpur this 2 bedroom, 3 bathroom apartment is for sale (2014) for US$360,000.
From 1 January 2010, the effective tax rate on disposal of property is 5 per cent subject to the provisions of the Real Property Tax Gains Act 1976. No tax is imposed on profits if the property is disposed of after five or more years of ownership. Or at least, that was the case at the time of writing this book. Laws are forever changing, especially tax laws.
Bank Negara Malaysia, the national bank, does not impose any restrictions on the repatriation of profits, rental or proceeds from divestment of investments in Malaysia by a non-resident. There is no withholding tax on property disposal and no inheritance tax. However, investors may have to pay tax on earnings depending on their place of residence and income tax band. (For more information see ‘Taxation’.)