16 Tips on buying property in Malaysia

1. Before you decide to buy a house or property, please ensure that:
• The housing developer has a license and it is still valid.
• The housing developer has an advertisement and sales permit and it is still
valid.

2. Determine the house type that you plan to get:
For landed property such as bungalows, semi-detached houses and terrace
houses, the expected date of completion is 24 months from the date of signing of
the Sales and Purchase Agreement.

For subdivided building such as condominiums, flats, apartments and
townhouses, the expected date of completion is 36 months.
Buyers are advised to obtain from the housing developer the
complimentary brochures with all the pertinent information about the project such
the development's license number, and advertisement and sales permit.

3. Land status
Please ensure whether it is:-
• Freehold land - it is in perpetuity.
• Leasehold land – check the number of years left.
• Malay Reserve.
The status of the land can be checked at the Land Office or the State
Land Registrar.

4. Brochure Information
Brochures are given free by the developers. Please ensure the brochure has
the following information:
1. The Housing Development’s License number and the expiry date.
2. The advertisement and sales permit number and the expiry date.
3. Name and address of:
i. The licensed housing developer
ii. Authorized agents (if any)
iii. Those holding power of attorney (if any)
iv. The project management company (if any)

4. Land status
i. Freehold
ii. Leasehold – number of years left
iii. Encumbrances – whether the land has been mortgaged to the bank
for a loan

5. Location description
i. Building material specification
ii. Size of building
iii. Amenities and/or Services
6. Name of housing project (if any)
7. Expected date of completion
8. Price of each type of house
9. Number of units for each type
10. Reference number of the approved building plan and name of the local
authority.
The rights of buyers must be understood as contained in the Sales and
Purchase Agreement as per schedules G and H of the Housing Development
(Control and Licensing) Regulation 1989.

5. First Payment
The first payment of 10 per cent must be made upon signing of the Sales
and Purchase Agreement. Please ensure the date of signing of the SPA and the
date of first payment are the same.
Be aware that the housing developer is not allowed to collect any form of
payment without a Sales and Purchase Agreement being signed.

6. Architect Certification
Make sure any demand by the developer for installment payment is
supported by a certificate duly signed by an architect or a certified engineer.

7. Interest on Late Payment
If the buyer or end financier for the buyer fails to pay the developer the
progressive payment or installment within 21 working days from the date of the
written notice of payment from the developer, the buyer will be charged an
interest of 10 per cent per annum on the installment not paid.

8. Termination of the Sales and Purchase Agreement
Be aware that failure to make the progressive payment or interest charged
on late payment for a period of more than 28 days will give the developer the
right to terminate the Sales and Purchase Agreement. The developer must serve
the notice in writing by AR registered post of its intention to terminate the SPA.

9. Infrastructural Maintenance Fee
Buyers must pay the cost of maintaining the infrastructure from the date of
vacant possession till the date the responsibility is taken over by the local
authority or management corporation (in the case of a subdivided building).
Infrastructure is defined as:
1. For land and building - Road, driveway, drains, sewerage, pipelines and
sewerage tank for the housing development.
2. For subdivided building - Road, driveway, drains, sewerage, pipelines and
sewerage tank for the building.

10. Maintenance and Management Fee
From the date of vacant possession the buyer shall be responsible for
paying for services such as:
1. For land and building
i. Refuse removal, upkeep of drains and grass-cutting on the road
reserves.
ii. The buyer is responsible for such payment until such responsibility
is taken over by the proper authority.
iii. The buyer must pay a six months’ deposit upon being handed
vacant possession for the services to be rendered. After six months,
if the services are still not taken over by the relevant authority, any
subsequent payment shall be payable on a monthly advance.
2. For subdivided building
i. Payment is for the cost of maintaining and managing the common
area and payment starts when vacant possession is handed over.
ii. The buyer shall pay one (1) month’s deposit and three (3) months’
advance in respect of the maintenance service charges and any
payment thereafter shall be payable on a monthly advance.
iii. Maintenance fee must be paid to the developer from the date of
vacant possession up until the formation of a management
corporation under the Strata Title Act 1985.
iv. Once the management corporation is formed under the Strata Title
Act 1985, maintenance services will be handled by the
management corporation and the buyer must pay the maintenance
fee to the management corporation and not to the developer.
Reminder: Maintenance fee must be paid as long as the buyer owns a
parcel in the said maintained building.

11. Sinking fund
For subdivided building only
The buyer shall upon the date he takes vacant possession of the said parcel
contribute to the sinking fund an amount equivalent to 10 per cent of the service
charges.
The buyer shall pay one (1) month’s deposit and three (3) months’
advance in respect of the service charges to the sinking fund and any payment
thereafter shall be payable on a monthly advance.

12. Payment of Quit Rent, Rate Assessment, etc
From the date of vacant possession or date of assignment, whichever is
earlier, the buyer is responsible for the quit rent, assessment, rate payment and
other charges relating to the property bought.

13. Vacant Possession
Vacant possession on the building complete with water and electricity
connection must be handed over within 24 calendar months from the date of
signing of the SPA for landed property and 36 calendar months for subdivided
building.

According to Regulation and Rights of House Buyers during the Handing
over of Vacant Possession, the buyer have to ensure the property is free from any
encumbrances before accepting notice of vacant possession.
If the developer leases the land or the property, the developer must settle
the balance payment before handing over vacant possession.
Conditions that must be followed by housing developers:
1. Certificate from the developer’s architect stating that:
i. The building is completed.
ii. Water and electricity are ready for connection.
2. The developer has applied for:
i. The issue of the Certificate of Fitness for Occupation (CFO)
through Form E**
ii. The local authority has issued a notice stating that Form E has been
checked and accepted by the relevant authority.
** Form E is an application from the developer’s architect to the relevant
authority for the issue of the CFO.
The buyer is entitled to enter into occupation of the property only upon
issue of the CFO by the relevant authority. Likewise, any renovation can only be
carried out upon issue of the CFO and approval of the plan by the relevant
authority.
While inspecting the building, any defect is recorded and handed over to
the developer to be rectified. Make sure you obtain a copy of the report.

14. Damages
The buyer is entitled to claim for late delivery from the developer.
If the developer fails to deliver vacant possession of the building as
stipulated by the SPA, it must pay damages calculated on a daily rest, 10 per cent
per annum of the purchase price.

15. Defect liability period
The defect liability period is 18 months after the date of vacant possession.

16. Creation of Management Corporation for Subdivided Building
A management corporation will be created once the strata title of each
individual parcel is issued to the owners.
Other functions of the management corporation include insuring and
maintaining the building.