In my years sharing advice on the Malaysia My Second Home (MM2H) programme, I have encountered the same questions many times. I have compiled these FAQs into a list to help individuals like you who might be considering MM2H.
Following my recent article on property purchase by foreigners (https://samchoong.com/2020/06/03/purchasing-
property-malaysian-secondary-market-foreign-purchaser-needs-know/), it was reported on June 11th, 2020 that the Penang state government is lowering the price threshold of properties foreigners are entitled to purchase. Here is the summary of the price threshold of properties available for purchase by foreigners in Penang (island):
- The current price threshold for apartments is to be lowered from RM1,000,000/- to RM800,000/-;
- The current price threshold for landed residential properties is to be lowered from RM3,000,000/- to RM1,800,000/-.
Our checking with the Penang land office as of the 16th June, 2020 indicates that this has not come into force although we expect this to be implemented soon. If you are looking to purchase one of these lower threshold properties, it would be prudent to check with your lawyer before signing an earnest monies contract or sale and purchase agreement. For further reading refer to:
Do note that until further updates, those holding Malaysia’s long stay visa, known as Malaysia My Second Home (MM2H for short) are still entitled to purchase residential properties at an even lower threshold for Penang, namely RM500,000/-. For those of you thinking of obtaining MM2H for the purpose of making such property purchase, expect the approval timeline to remain approximately 6-9 months or longer as the Malaysian immigration are still practicing partial working from home. The MM2H requirements remain unchanged for now.
My 2019 article on the types of properties a foreigner can purchase needs to be read together with this update: https://www.freemalaysiatoday.com/category/nation
Further to the above lowering of price threshold for foreigners, the Government has also announced a real property gains tax (RPGT) exemption for Malaysians for disposal of up to three properties between June 1, 2020 and Dec 31, 2021. Although this article serves to guide a foreign purchaser, this RPGT exemption which applies only to a Malaysian vendor may be good to keep in mind just in case there is a gap between the offer price and the selling price. The savings from this RPGT exemption may well bridge this gap! For further reading refer to:
Facebook and various large companies have recently given employees the option of working from home permanently. Whatsapp, Wechat, Zoom or Team calls feel like second nature as we get accustomed to the new way of life. Air travel, hotels, restaurants, theme parks to name just a few have become victims of this shift. Yet as this segment of the economy wanes, other unexplored or segments which previously fell by the wayside have started coming under the spotlight. My mate who runs the main baking shop in Penang tells me he has not seen such demand for his products since the baking craze in the 80s. People are literally lining to get into his shop. Local food suppliers & vegetable farmers are experiencing similar increased demands as limited border activities reduce imports. In the US, increasing demand for properties in smaller cities or towns has been reported as people see less need to stay near their work places in the cities and seek cheaper options in the suburbs.
As the World grapples with loss of income or diminished income, there is inevitably a search for more affordable options including migrating to countries like Malaysia (As a side note, for those who are applying for MM2H, Malaysia’s long stay visa, you don’t need to be in the country to submit your application. The application currently takes about 8 to 9 months to approve. I would therefore encourage early submission if you want to stay long term in Malaysia. This is because the Malaysian Immigration authorities do not encourage “visa runs” so it’s best to have this organised early.). Or the “work from anywhere” new norm has broaden options for intrepid travellers. Either way, for those who are in cash or are seeking a new life in a foreign land, there are undoubtedly bargains or affordable options (See: https://www.edgeprop.my/content/1618639/kl-ranked-second-best-city-world-expats) to be had in Malaysia. There is furthermore talk of reduced stamp duties and property gains tax. During the 2007 – 2008 global financial crisis, Malaysia temporarily suspended gains tax and this spurred record transactions. See https://www.theedgemarkets.com/article/cover-story-property-market-outlook-and-opportunities-times-uncertainty. If all this pans out, Malaysia’s property sector stands to gain.
With this backdrop, here’s my list of what a foreign purchaser should look out for when purchasing a property in the Malaysian secondary market. Instead of a full on legal commentary on the acquisition of properties by foreigners (I get it. Much as I am passionate about the legal details, if you ‘re just wanting to relocate to Malaysia, you’re not looking for the full lecture on Malaysian Property law. This is, of course, available by dropping me an email at email@example.com). The following is compiled from the questions most frequently posed to me by clients:
COSTS – Here are the estimated costs of acquisition to look at:
- Legal fees & disbursements for the purchase:
- Legal fees
- 1st RM500,000.00 – 1.0% (min of RM500.00) on the property’s market value
- Next RM500,000.00 – 0.8%.
- Next RM2,000,000.00 – 0.7%.
- Next RM2,000,000.00 – 0.6%.
- Next RM2,500,000.00 – 0.5%.
- Stamp Duty
- First RM100,000 : 1% on the property’s market value
- RM 100,001 to 500,000 : 2%
- RM 500,001 to RM1,000,000 : 3%
- RM1,000,001 and above : 4%
- Application fees for the foreigner’s state consent to purchase:
- For Penang residential property : RM10,000 (foreign individual) / RM20,000 (foreign company)
- For Penang commercial property : RM20,000 (foreign individual) / RM40,000 (foreign company)
- Levy payable on obtaining the foreigner’s state consent to purchase:
- For Penang landed property : 3% of purchase price
- For Penang strata property at
- RM1 million to RM1.5 million : 1.5% of purchase price
- Legal fees & disbursements for the loan:
- Legal fees
- 1st RM500,000.00 – 1.0% (min of RM500.00) on the loan amount
- Next RM500,000.00 – 8%.
- Next RM2,000,000.00 – 0.7%.
- Next RM2,000,000.00 – 0.6%.
- Next RM2,500,000.00 – 0.5%.
- Stamp duty
Stamp duty on the Facilities Agreement – 0.5% x loan amount + RM 10.00 per copy.
- Estate agents fees:
- Up to 3% of the value of the property
- The Penang practice is for the 3% to be split between the Purchaser & Vendor
- In Kuala Lumpur the practice is for the Vendor to bear.
- It’s advisable to clarify this from the outset.
The above cost calculations are a handful especially if an impromptu offer is expected. In such an instance, I normally use 10% as a rough guide for the above costs on top of the purchase price.
Do note that the above write up and cost calculation serves as a general quide. It is therefore advisable to consult your own lawyers prior to any major decisions as land laws vary from state to state in Malaysia, the title may have an unusual restriction, transfer fee or tax and may be updated from time to time. Should you have further clarifications, do drop me an email at firstname.lastname@example.org.
Inter-state travel in Malaysia, whether by road or by air, requires consent during this Conditional Movement Control Order period.
I’ve just accompanied a foreign client to the police station in Pulau Tikus (Note that only the Police Station in charge of the area where you reside will process this application), Penang, to assist in the application of a police permit for him to fly to KLIA from Penang. I must say, it was a pretty straightforward procedure. We obtained the consent within 30 minutes at no cost. Do ensure:
- A letter of application (ours was in Bahasa Malaysia to make it user friendly to the police) is furnished setting out the reason;
- Fill in the attached PKP form (It’s been translated from Bahasa into English to make it user friendly for our foreign friends).
Weekends are sacred. Time to catch up with family and to recharge. Some “me” time and I’m looking forward to hitting the Tanjung Bungah Market to source ingredients for my latest attempt at baking the banana bread! Still, this piece of news came in through Whatsapp this morning, I have reconfirmed this with MM2H and it’s got to be shared before my baking activities! Credit goes to the MM2H team at the Ministry of Tourism who have lobbied for this and here’s the result, MM2H holders stranded outside Malaysia can now return “home”:
Welcome back folks!
Today marks the first day we officially return to the office in Penang and I must say I have mixed feelings. My surfer and biker friends often talk about retirement or taking time off to ride the mountain passes of Leh & Ladakh in Northern India or surf uncrowded waves in Sri Lanka or other locations which can’t be mentioned openly! Unfortunately, being time poor, these “dreams” remain as they are. It was therefore with great reluctance that I went into Malaysia’s Movement Control Order (“MCO”), our equivalent of the “lockdown” on the 18th of March, 2020. As I reflect on this mixed feeling of going back to the office, I realise it stems not so much from the resentment that this was wasted time which could have been have used to learn tube riding or to carve mountain roads as much as it is about giving up a routine I’ve gotten into and actually enjoyed. Although I initially begrudged being dragged away from my work routine, over the past few weeks I’ve actually enjoyed some moments of solitude. I took stock, realigned priorities and experienced numerous “I see the light moments”. These being a luxury we never had with the noise and bustle of life sprinting full speed ahead.
As Malaysia partially relaxes the MCO and offices in the private and public sector start to open, albeit in a new work environment, guidelines are being released by the authorities to address issues which have cropped up for foreigners as our country grounded to a sudden halt in March, 2020.
From an immigration perspective, during the MCO period, the social visit passes of MM2H applicants who have come into Malaysia to submit their applications may have expired as have the MM2H visas of some MM2H holders. What do these people do?
Today’s guideline (refer below) which has been issued by the Ministry of Tourism (MM2H) on the 6th of May, 2020 address these concerns. As usual, should you require further clarifications, do contact the Ministry of Tourism. We can also be contacted at email@example.com should you prefer to work through us.
IMMIGRATION PROCEDURES (UPDATES 6TH MAY 2020)
RENEWAL OF VISA FOR MALAYSIA MY SECOND HOME (MM2H) MEMBERS THAT EXPIRED DURING MOVEMENT CONTROL ORDER (MCO)
All MM2H members who have overstayed during MCO is enforced will be issued a Special Pass by the Immigration Department of Malaysia. The visa fee for the Special Pass is exempted temporarily for the situation. However, the issuance of Special Pass is subject to the following situation:-
a. Those Social Visit Pass holders whose pass expired during MCO are allowed to proceed with the first endorsement of the MM2H Long Term Pass. However, the foreign visitors must first apply for the Special Pass at the Immigration Unit, MM2H Centre, Ministry of Tourism, Arts and Culture and subsequently will be allowed to proceed with the first endorsement of the MM2H Long Term Pass at the same venue.
b. Those Social Visit Pass holders whose pass expired during MCO and have entered Malaysia to apply for Add On/Dependents First Endorsement of MM2H Long Term Pass, must first apply for the Special Pass at theEnforcement Unit, Immigration Headquarters. Subsequently will be allowed to proceed with the first endorsement of the MM2H Long Term Pass at the Immigration Unit, MM2H Centre, Ministry of Tourism, Arts and Culture.
c. Those MM2H members who applied for 10 years visa renewal or extension of remaining 10 years, whose visa expired during MCO, must apply for the Special Pass at the Immigration Unit, MM2H Centre, Ministry of Tourism, Arts and Culture while awaiting approval.
d. For the MM2H Dependents Pass holders whose pass expired during MCO but the Principal holder of MM2H visa is not in Malaysia, the MM2H Dependents Pass holders must apply for the Special Pass at the Immigration Unit, MM2H Centre, Ministry of Tourism, Arts and Culture. The Special Pass will be given for a duration until the Principal is able to renew the pass.
e. Those MM2H domestic helper work permit that expired during MCO, the Principal/Employer must first apply for the Special Pass at the Immigration Unit, MM2H Centre, Ministry of Tourism, Arts and Culture before proceed to do the medical check-up (Fomema) for the domestic helper. Subsequently, after obtaining the result of the Fomema, the Principal holder of MM2H visa may proceed with renewal of domestic helper visa at the same venue.
f. Please be reminded that all Immigration related transaction at the MM2H Centre only via appointment.
Malaysia My Second Home Centre
Ministry of Tourism, Arts and Culture
6 May 2020
Here’s another question that crops up frequently over the past weeks especially for holders of Malaysia’s long stay visa known as Malaysia My Second Home or MM2H for short. Unfortunately nothing concrete yet as to whether holders of MM2H visas who are currently abroad can return to Malaysia. Currently Malaysia focusses its efforts in dealing with the last of the Covid cases, relaxing its Movement Control Order in stages, reviving the economy and minimising imported cases. As and when MM2H holders are permitted back into Malaysia, some form of quarantine is likely. Here’s a statement by Malaysia’s Senior Minister Datuk Seri Ismail Sabri Yaakob on the matter:
To put things in perspective, here’s how the rest of the world is dealing with the entry of foreigners and minimising imported Covid cases:
Do bear with us. We look forward to welcoming back our foreign friends!
It’s been a momentous few months, starting with a seemingly innocuous virus a few thousands of miles away towards the end of 2019. It was very easy then to momentarily commiserate with the Chinese, dismiss this as a problem on the other side of the world and to get back to our lives. And get on with my life I did!
On the topic of what properties can foreigners buy in Malaysia, a few days ago, a developer asked if I would be willing to do a seminar for them in Hong Kong to explore the possibility of Hong Kong nationals relocating or retiring to Malaysia via Malaysia’s long-stay visa, more commonly known as Malaysia my Second Home or MM2H for short. They also required me to cover the legalities foreigners need to consider when buying a property in Malaysia.