So you may have read our how-to guide on purchasing your own home, and you may have even managed to accumulate enough funds for a down-payment on a home – but before you go ahead and seal the deal by signing on the dotted line, we highly recommend taking a look at these top three priorities to keep in mind when purchasing a property – as outlined by Christopher Chan, Director of the Malaysian Institute of Estate Agents (MIEA) and Associate Director of the Hartamas Real Estate Group.
Engage a solicitor
You’re about to venture into a landscape of legal and financial jargon – even if you’ve spent the better part of your life operating in these fields, you’re better off getting a trained and licensed guide.
Getting your own lawyer will ensure that you’ve got someone looking out for your interests – as opposed to a developer’s designated lawyer who might be acting in the best interests of the party paying their fees. In order to avoid any conflicts of interests, the lawyer you engage will have to be a different lawyer representing the seller.
Legal Fees on Loan Documentation
This applies when the buyer wants to borrow from the bank to finance the purchase of the property. As with the lawyer’s fees, the scale of legal fees for loan agreements is stated under the Solicitors’ Remuneration Order (SRO) of 2005 and its related amendments. Take a look at the scale of fees stated in the SRO to know what to expect – the Third Schedule of the SRO provides for varying lawyers’ fees based on the purchase price of the property.
If you buy a property from a developer that is still under construction, it will be governed under the Housing Development Act of 1966. Schedule G and Schedule H of these housing regulations determine the schedule of payments to be made depending on the progress of construction (for landed and high-rise properties respectively).
Stamp Duty on Transfer
Stamp duties are essentially a transfer tax and this falls on the buyer. The buyer will have to pay for this when they buy a property. The stamp duty rates form the bulk of the buyer’s cost when they buy a property.
The government has given some exemptions on stamp duty – particularly transfers of property between spouses, parents, and children. Please also take note that when you buy a property from a developer, as long as the title is not issued, the buyer does not have to pay the stamp duty on transfer.
Under Budget 2017 (and again in Budget 2019), the government has given exemptions on stamp duties for first-time home buyers. So if a buyer buys a property up to a value of RM300,000, there’s a 100% exemption on the stamp duty on transfer. For properties above RM500,000, for the first RM300,000 it’s a 100% exemption – the balance is subject to the prevailing stamp duty rates (calculator here).