Advice for Buying an Apartment in Malaysia

Although property prices have risen considerably over the past few years in Malaysia, it still continues to be a good investment for foreigners, particularly if they intend to live in their own property. Here is some advice on buying an apartment. If you are a cash buyer then just ignore the section on bank loans.

1. Inspecting the Property

There are several things that you need to check and some of this information can be obtained from the Management Office in the building. These are some of the things to check:

- Have the electrical and water pipe systems been updated and when?
- Run the taps and see if the water is orange, it indicates decayed and rusty plumbing.
- How much are the maintenance fees?
- How many parking spaces are included and where are they located?
- Are there any leaking problems in the apartment?
- Verify the size of the apartment with the Management Office.
- How much is the Property Assessment Rate?
- Ask about security of the building?
- Is the apartment Freehold or Leasehold?

2. Bank Loans

If you plan to apply for a bank loan, shop around. Different banks may offer different interest rates and conditions. Based on the specific address of the apartment, banks will contact a valuer and the loan offered will be based on that valuation. Valuers look at the latest transacted prices for identical apartments. A bank may use several valuers to find the best valuation for you. For any mortgage loan to be considered you will need to provide income support documents, usually by means of your last Tax Return.

3. Choosing a Lawyer

Banks can provide you with a list of Lawyers whom they work with regularly, however, you can choose any law firm (or lawyer) that you wish. Law firms can offer discounts on certain parts of their fees, but you'll need to ask them about it before agreeing to accept their services. The firm I have most used gave a 45% discount on all my property transactions. The lawyer and bank will coordinate and take care of everything. Do not sign anything given to you by the Property Agent until your lawyer has approved or revised it.

4. Property Agents

In my opinion, property agents are not on the side of either buyer of seller however nice they may seem. Their purpose is to make a deal so they will mediate to achieve that. The Agent will usually ask you to sign a Letter of Appointment (it may have a different name), but I always refuse to sign these letters because they are full of small print and binding commitments which are usually to the advantage of the Agent and not in your own interests. Please be careful.

Once you have decided on a property to purchase, you will need to pay the Agent an "Earnest Deposit" of 2% or 3% of the purchase price. I always pay a cheque for 2% and refuse to pay 3%. However, before handing over this cheque you should sign the "Letter of Intent to Purchase" or "Letter of Offer" (it may have a different name) which will be provided by the Agent under her firms letter head. It is usually a standard document.

This "Letter of Offer" is generally a one page printed document with gaps to be filled in. As the Purchaser, you will be the first to approve and sign the document. However I cannot stress how important this document is. PLEASE DO NOT SIGN UNTIL YOUR LAWYER HAS REVISED AND APPROVED IT. This document lays out the main terms such as Sale price, property address, furnished or unfurnished, deadlines for signing the Sales and Purchase Agreement (SPA) etc. The thing to realise is that this document is not just an agreement between the Purchaser and the Vendor, it incorporates the Agent and protects them so that even if the deal falls through they will probably still get a commission at either yours or the sellers expense. Usually my lawyer will make five or six amendments to the Letter of Offer before I will agree to sign it. Also, please note that it is the Vendor that pays the Property Agents commission and not the Purchaser.

Once this document is signed, the process is underway and the lawyers of the two parties will negotiate the SPA which once agreed upon you will be required to sign and to pay a further 8% bringing up your total paid deposit to 10%. During the negotiation of the SPA between the lawyers, my own lawyer constantly keeps me in the loop by emailing me copies of all the correspondence in the negotiation and occasionally asking my preference on certain matters along with giving her own recommendations or advice.

5. Schedule

1. Sign the Letter of Offer and pay Agent with cheque 2% of the purchase price. The cheque is usually made out to the Agents Firm's name and retained by the Agent as Stakeholder, but released to them as their Commission once the transaction is completed.

2. Usually 30 days later, sign the SPA once all the terms and conditions have been agreed between the lawyers of both parties. Upon signing the SPA you will need to give a cheque for 8% of the purchase price, bringing the total amount paid to 10% of the purchase price.

3. Between signing of the SPA and Completion of the transaction, the lawyer will be busy checking with the Land Office, obtaining the Foreigners Consent to purchase the property from the Land Office, coordinating with your bank for the loan, checking all outstanding bills that the Vendor hasn't paid, and communicating with the Management of the Apartment building etc. Within 1-3 days of completion, your should have the keys of the apartment in hand.

6. Summary & Notes

The entire process commonly takes around 4 months from start to finish. If you are a cash purchaser then it will be quicker and if the Vendor does not have a loan then the whole process might only take 2 months.

From the beginning of the process right through to the end, I cannot stress how important it is to trust your lawyer. Send her copies of everything before signing them. Always ask advice on anything you do not understand.

An important point to note is that when you take on a mortgage loan with a bank here, the bank will automatically deduct a Fire Insurance Premium each year or once every two years. At the same time, the Condominium Management will also bill you a mandatory annual premium for Fire Insurance. Once you have paid and received your mandatory Fire Insurance Policy from the building Management you can pass a copy to your bank and they should reimburse you for the amount they have deducted for their policy which is commonly very considerable and sometimes ten times more than what the condominium management charges.

One additional point, if you are purchasing an apartment or condominium directly from a Developer either before or during construction, the procedures will be somewhat different. I hope to make a new posting for that type of transaction soon.

There is no official limit to the number of properties a foreigner can buy in Malaysia.

Do I understand correct.  Must the buyer pay the agent commission.
Surely if the seller is using an agent to sell his property, then the Seller must pay the agent commission for finding a willing buyer for him
This is how it works in South Africa
What cost does the Seller bear

No. it's only the seller who pays the agency commission. The buyer doesn't pay the Agency commission.

However, the initial 2% deposit (earnest deposit) is paid by the buyer to the Agent who holds onto this cheque as Stakeholder. In reality that cheque could be paid over to the Seller directly as the first 2% as a commitment to buying the property, but in most cases the Agent holds onto it. Once the transaction is completed the Agent keeps that 2% cheque as their commission and the Seller doesn't need to pay anything more to the Agent. Of course the Agreements should stipulate that if the deal falls through due to no fault of either party then the 2% should be paid back to the Buyer.

I have never thought of an Agent as being on the side of the Seller. An agent's main concern is often to conclude a deal by almost any means possible and the wording in their Agreement may be such that if either Buyer or Seller backs out that the Agent keeps the commission cheque or even double the commission cheque as well as the defaulting party having to pay double the deposit to the other party. That might mean spinning stories to either Seller or Buyer in order to make them go for the deal. And it is why you shouldn't sign anything put in front of you by the Agent until it has been revised by your lawyer. That is based on my ten property transactions in Malaysia (both buying and selling).

My last property sale was earlier this year and I'd known the Agent for about ten years, she even lived in the same condominium as I did. She earned RM31,000 commission but still tried to wrangle a little more to the point that I told her the deal was off, and my lawyer told the Buyer's lawyer that I had decided to call off the deal due to the tricky actions of the Agent. Finally the Agent stopped her tricks and we continued and completed the sale. The problem was basically that the Agent was trying to play off one against the other and telling a lot of lies. The Agent received her commission once the transaction completed.

But I must also say that many Agents are indeed excellent and use more professional business ethics. I think just two out of ten transactions involved a bad Agent experience. But the point I made in my first post and above about getting everything checked out by your lawyer before signing should be a must.

Let me explain a little about some of the problems that I had with the Agent.

We had agreed on an Agency commission of 2% net (no GST to be included). Later, when the Agent had a buyer and the Sales price had been agreed upon, the Agent started insisting that she now wanted the GST. I refused.

Another problem, I had told the Agent that I would need to give the Offer to Purchase letter to my Lawyer because there were several clauses that I did not agreed with. She agreed. Yet later on the same day she told me that the Buyer had already signed the Offer to Purchase and paid a 3% Earnest Deposit and she asked me to sign the Offer to Purchase. My problem with this is firstly that my lawyer was still working on the amendments to that document, and secondly that if the buyer had paid a 3% Earnest Deposit, it probably means that the Agent had asked for 3% hoping that with a cheque in hand I would accept 3% and the terms in the Offer to Purchase. The Agent told me that on completion that she would refund me that balance less her commission (but I suspected she would want to keep the GST) so I refused and told her that I both rejected the 3% and I refused to sign the Offer to Purchase until my lawyer had made the amendments.

After going backwards and forwards for a couple of days I emailed her to say I would not proceed with the sale. The Agent had also been contacting my lawyer continuously and my lawyer was fed up too. In the meantime the buyer's lawyer kept pushing my lawyer and we said there were problems with the Agent being greedy and trying to increase her commission. By the way, the Buyer was himself a lawyer in a big law firm in KL so we had to be cautious as his first draft SPA was excessively unreasonable.

From that point onward my lawyer and I stopped all communication with the Agent. I did receive a demand from her to sign a Letter of Authorization appointing her as my agent but i just ignored it as we had passed that stage, and in any case, all the terms were unfair and only benefited the Agent.

The Agent was with one of the most reputable property firms in Malaysia. She didn't have to split the commission with any other agents, yet she tried her hardest to trick her way into making an extra RM1800, and failed.

After that, the SPA was negotiated quickly and the deal completed in about 2 months from start to finish. I didn't have a loan and the Buyer was a Cash buyer so it was fast. My lawyer is a gem, her total fees were RM6k, approximately half the normal rate.

1. Does any law state that agreements to pay commissions must be in writing to be effective?  Are oral agreements effective?

2. Sellers pays the commission but there is no rule that says someone else could pay, correct?
a.  If the seller enters into an agreement to sell and pay the agent, and the agent also gets money from the buyer, does the agent have to disclose this to the seller or are secret commissions allowed and none of anyones business?
b. If the agent has an agreement for the commission from the seller, must this be disclosed to the buyer?
c. If the agent has no agreement to sell and is co-marketing a property they see available for sale on a street, must that agent procure an agreement from the seller or primary agent of the seller and also disclose all of this to the buyer?
d. If there is no agreement with anyone for anything, will the agent insist the buyer pay the commission?
e. If the agent who has no agreement carries an offer for a buyer, who gets the commission, the primary agent or the new agent and who pays at that point?

3. In Penang they appear to lie, they say Penang is a separate place in the country and does not follow the rules of the rest of the country. They say buyer pays the commission, irregardless of whether any agent has already been hired by a seller.
a. Penang agents say that telling you about a property for sale or rent, even if they never show you the property or create any written offer, is deemed "a commission earned event" and if the buyer buys, the buyer also has to pay the introducing agent the commission they would otherwise be entitled to had they had an agreement with the seller.

These are all very good questions.

1. Whenever I have sold a property I consider a verbal agreement to be sufficient. However, the Agent usually wants more than that. I don't mind stating in the Letter of Offer that the agent's commission is 2%, but as I mentioned, the other terms need to be careful amended to prevent the Agent from taking advantage. I will never sign a Letter of Authorization appointment a particular Agent as my agent, as I see no need for it and usually those Appointment Letters are just full of advantages for the Agent at my expense.

a. Sure if the Agent manages to get a commission from the Buyer as well as from the Seller without the Seller's knowledge then that is up to them. But if I as a Seller find out about it I would tell the Buyer as I think taking from both sides is unethical.

b. It is usually mentioned in the Letter of Offer that the Seller will pay a specific commission percentage to the Agent. The Letter of Offer will be signed by Seller and Buyer so both will know who pays what to the Agent.

c. Agents very commonly cooperate together, even Agents from different firms. I think that trust between Agents is important as one's reputation can easily get ruined if the primary Agent tries to cheat a co-Agent. I don't think it matters to the Buyer how many Agents are working together since it is usually the Seller who pays commission.

d. If there is no Agreement at all, then the Agent can try to get commission from whoever he or she likes. But without an Agreement it's difficult. Also, since it is not standard for Buyer's to pay the commission then the chances are even lower.

e. Usually a co-Agent will introduce the buyer to the Primary Agent, and since the Primary Agent is the one who works with the Seller, it is the Primary Agent who gets the commission from the Seller. The Primary Agent should share the commission with the co-Agent.

3. Sounds like a nightmare. I've never bought or sold a property in Penang, but it sounds complicated if it works that way.

I mentioned some examples to help you educate readers more, and also because each one of them is illegal in the USA. When this stuff happens everyone will find themselves in court and agents will be losing their licences.

1. Everything must be disclosed to everyone.
2. Disclosure itself isnt the end. "i murdered someone and im telling you so im clear now." No, you admitted murder and you are going to jail for murder!
3. Commissions have to be in writing. Oral agreements are VOID and have no effect.
4. There are many types of selling agreements available which would decide who get paid what, and when, and under what circumstances.
5. Primary agents (called Listing Agents in US) can cooperate with anyone for splitting-- provided they have a licence.
6. You must by law have a licence. You will go to jail if you sell (or co-op to sell) property for commission OR  no commission because people who sell have to be educated and trained.

I mentioned these only because this is an area I wouldnt mind seeing Malaysia adopt US methods to raise professionalism. What I have seen here is what I would call violations on every level and I wonder how the system works at all. To the Chinese anyway, everything can be negotiated, even works of business evil and thats how they work through their endless scrapes---just like your GST agent. But wouldnt a set of rules and professional guidelines work better to avoid disputes in the first place?

By having oral agreements for everything, you open yourself to misunderstandings, unplanned negotiations and litigation too. In US anyway, Agreements to Sell are typically 90 days duration and if you have a good agency it would be fine to sign with them. Obviously, an agent armed with a written agreement is going to work harder because they know their efforts WILL be rewarded. Personally, I would never conduct any such business without firm writings from the first day. Too much to go wrong and it does.

The National Association of Realtors, the US trade group from which Malaysia (it would appear) illegally stole the trademarked name "Realtor", created a set of rules that were adopted as state laws across the whole USA. With very few exceptions there is complete uniformity of real estate dealings and it has smoothed the way for the creation of a gigantic industry.

Last thing here, there is nothing stopping a person from creating rules and writings where none otherwise exist. Like my lying Penang agent, if person doesnt know what should happen or what they want to happen, bad agents will run roughshod over consumers  to everyones detriment. Im aware that there is some sort of a licensing agency but there are also phony agents running rampant who dont tell the consumer they are actually at no higher level than a phony taxi driver. The Penang agent who lied, I never told him I was in the business, just seemed an idiot consumer to him and he went wild.

Anything you can think of to add is appreciated and maybe you will wind up with complete handbook here. Should get some pro agents to join the forum!

Haha... I see Agents pop in here from time to time, but mostly to offer their services and not much else.

For me, either as a Buyer or Seller, I want to protect myself, and I mean against unscrupulous Agents.That is my bottom line, to protect myself. That is also why I absolutely urge all buyers and sellers to have every document checked by their lawyer before signing.

Forgot to comment about your agent offering you a refund of GST after you pay the full amount first. As you know, that would be impossible because money only flows one way in Asia and there are no refunds. Youd be taking her to court to get that refund and with nothing in writing it would not go well. Its very interesting how much that people fight firm writings.

I didnt mean to be negative in my post but there is too much at stake. People cant lose capital nowadays--if they ever could.

I know that agents come to offer services but there are some very fine agents out there. One is an Indian chap in KL who was interviewed in the news and he appears to say and do all the right things. People like that should come in the forum and give pro advice about how to properly buy, sell, rent, options.

Yes absolutely true about the GST refund from the Agent, something I never for a moment believed. Since the Agent commission can be negotiated and whether it includes GST can also be negotiated here in Malaysia, everything has to be written out clearly. Despite an email not being a legal document, I nevertheless obtained ed an email confirmation from the Agent confirming 2% commission net and no GST to be paid. That was a condition I demanded if the deal were to continue. And with my insistence that the Earnest Deposit was 2% and not 3%, I knew I had basically blocked the Agent from having a chance to cheat. Agents who behave dishonestly can be reported to the official body that handles property agents, but that is a last resort.

You are totally right about there being many excellent, honest and super helpful property agents out there. I know many great ones that I regularly use. many even work for the same firm as the one who I had to deal with. My mistake was in trusting one who lived in the same condominium and block where my apartment was for sale.

They do other things that are highly improper.

1) bait and switch. The one you are calling on from an advert was just sold one hour ago but they just happen to have, or know of another one  ---at a higher price.

2) They refuse to tell you the price, they insist you tell them your budget first. If they are actually marketing a property at $350,000 and you tell them you budget is $500,000, they will tell you the price is $425,000.

3) You see a huge variety of stickers on vacant properties, indicating the agents phone number. Try calling any one of them and each agent will say they are the primary agent or even the owner.

4) This is in a class by itself. They offer to sell property that they dont officially represent and wouldnt even know who or where the owner is located, or even if there is an owner at all. You buy, and later are sued for occupation of the property by someone claiming to be the owner and who has real or phony paperwork to prove it. This requires the cooperation of a crooked lawyer and bank officer but they are doing it. It happens most frequently on vacant land, and condos/houses that are vacant with an absentee owner.

There was a condo next to me. It was 13 years old and someone from HK first bought it and never returned. That condo was repeatedly sold and the owner never knew until he was sued by the Association for back maintenance payments. Who knows how many lawsuits sprang out of that intense example of monkey business.

You may remember a case in the news in which someone bought land, i dont know, maybe it was 100 hectares, and they farmed it for 40 years. Then the city spread out and they were approached to sell the land for a large building like a skyscraper, which was built. Then a fellow showed up with papers indicating the granting of the land to his family by a Sultan in 1880 or something and laid claim to the skyscraper. Last I knew, he won his case.

I love real estate fraud stories, they are usually full of drama and excitement!

Haha.....hence my recommendation to have everything checked by your lawyer before signing any document or paying a cent to the agent. The same advice applies for both buying and selling.

Agreed, BUT.....

A few examples stand out for which im not sure a lawyer would have helped.

1. You take the mortgage on a new property and begin paying while the building isnt built yet. The builder runs off half-way through construction and never comes back, You remain liable to pay.

2. You take the loan, they finish the building and you move in on schedule. Six months on, the building begins cracking (like Ampang area in the hills) and the builder is gone, the city tells you to move out for safety reasons or you otherwise cannot get relief and stay in the building and live your life.

3. You pay, build and move in and all is well. But 20 years on, you still have no title or firm proof of ownership.

How would a lawyer help when there are not even firm laws to protect you and under which you would at least have a valid suit?

The suggestion here isnt to avoid investing but i think the countrys consumer laws and building laws need to first evolve to create a sounder footing of security. People coming from the first world have a different perspective about consumer protection, thats all im saying.

For your first point, yes, when buying from a developer before a project is built, you really need to check out the developer carefully. I mean check their ratings and see which projects they have completed. There is a list of I think the top 30 or 50 developers in Malaysia each year and you can read up on their background and past projects. I would only ever buy from those well known and successful ones.  But I know in the past, I mean even 20 years ago, many foreigners and locals got cheated by investing in projects being built by unproved developers, some lost their money while some tripled their investment when the project was completed. I currently have a couple of investments that should be completed in 2017, one with MRCB & Quill at KL Sentral, and the other with Suez Cap in Bangsar South, both are reputable developers and those projects are progressing nicely.

Did you ever hear about Quadro Residence near KLCC about 6 years ago? It was being built just outside of KLCC Park and was being promoted quite heavily with lots of early bird discounts. I remember that there was a rumour that it was being built by a crooked developer from Penang and I spoke with my mortgage manager at the bank about it, and you could read about it on The rumour turned out to be false, but you can still read about it in Propwall if you enter the condo name. That scared me off at the time.

So absolutely, you MUST check out the developer and their past projects and their ratings in Malaysia before making a commitment to buy.

For your second point, I remember well that building collapse. I believe there was a drainage problem with a lot of water coming down the hill and the foundations were getting washed away. I don't remember who the developer was but it appears on the surface that they were negligent.

What is important is to check the conditions in the building's Insurance Policy to see if the damage is covered. It's a nightmare situation and I don't remember what happened in the end. My initial concerns would be about people getting killed or injured, whether the building was adequately insured, and how much compensation would be given.

Condominium Insurance policies are notorious for not having their insured value regularly reviewed. That is because buildings don't often collapse or burn down, and also everyone is quite happy when their annual insurance premium is so low. I consider it negligent when a Developer or Management Corporation or JMB do not have an annual building valuation made and announce the latest premium increase to the owners at an AGM. However, MC's and JMB's usually have an Indemnity Insurance that limits their liability should they get sued.

Anyway, for building collapses, you'd need a lawyer specialized in both litigation and buildings, not the normal lawyer that we use for buying and selling transactions.

In your third point, most new freehold condos have a Strata Title pretty quickly so when you buy the unit your name will be on it or soon afterwards. If the property is an older condominium and a Master Strata Title has already been issued then as long as no outstanding payments exist with the Developer and Management then your are eligible for a Strata Title which your lawyer can help you with. Your name will be mentioned as the owner of the property. If it is under a bank mortgage then the bank will be the owner until the loan has been paid off. However, one may need to check back to the original owner to see if any debts are outstanding with the Developer as you may need to settle those yourself in order to get the Strata Title changed to your name.

If a Master Strata Title hasn't yet been issued then this is something for the Management to chase up on and to keep you informed. I've never owned a property that wasn't freehold and there was always a Strata Title in either my name or my banks name. I know that owners do get concerned when a Strata Title hasn't been issued but I don't have any experience on that.

For Leasehold property, I am buying my first, so again not experience in ownership.

Frankly I think it takes guts and nerve to rely on the reputation of a developer and not law or other consumer protections that would give a developer some incentive to make good on their promises.

I had forgotten but some years ago there was a project I was interested in buying off of a brochure but I asked for a completion bond in which my money would be returned (or debt paid off) if the project was never completed. They laughed at me and said they didnt have to consider such a request as the demand was so high and if I didnt want the deal they had 50 people behind me ready to take it without any guarantees. I believe that was the truth.

People I have known had had good luck and bad luck. One of my oldest friends bought a unit in a service apartment on Jalan Pudu. It was being converted from a hotel and the renovations were extensive. Everyone bought the units and midway through, the developer ran off. My friend angrily moved in anyway because there was a mortgage to pay and soon after, Tenaga shut the electric to the building  because the developer owed  RM80,000. When I used to visit her she only had candles for light. Eventually she walked away and lost the whole investment. In another case, a friend bought a semi-D for RM500,000 from a brochure and before a year had passed (which is right now) the houses rose to RM1 million and he is struggling with making a choice to stay in or sell out. They are partially completed right now. He took this deal on both a deferred payment loan plan and a very low deposit. If he sold now he would be turning less than RM50,000 out-of-pocket into RM500,000 profit in not even one year. Amazing.

What do I think of this? To me personally, myself, common sense dictates the need for laws and protections. But the reality is that greed-in-speculation has long since overrun and stomped on the need for common sense. For a chance for cash people will tolerate almost anything and appear to have a very high pain threshold. Their attitude seems to be, well there isnt a guarantee in a roulette wheel so why here? So they figure that if they go into ten deals and three go bad, well seven didnt and thats good enough. Welcome to Malaysia.

Since I do not own I dont have experience in strata titles. However, there appears to be little concern. A friend in KL owns a condo and after 10 or 12 years now, there is still no title issued. But he says not to worry, he can sell with no problems, He says Malaysians are used to this and properties frequently change hands with no titles. He also repeats what you say, there can be delays because the developer owed some sort of debt but the condo owner, even if compelled to pay in order to get a title, can defer that almost indefinitely and hence, consumers just dont care. He says eventually, in the long run, it all gets sorted (which to me means people keep passing the buck until some last, final guy pays the debt). But to me, Id want that title attached to my purchase and not ever be "that final guy."

Well I think there are about 20 or 30 major Developers that I would have no qualms about buying from. These are the big guys and I see no risk with them. You need to read up on them, talk to the bank about them, and see the list of past and current projects. It's usually enough. Any Developer that I've never heard about and which my friend at the bank would not recommend then I wouldn't be interested in. The really big Developers won't run off with your money. It's the smaller ones that might do it. But usually the bank will know which are the risky ones because the guys at the mortgage department know everything.

Anyway, when you buy from a major Developer, you basically accept all their terms so I would only buy from one of the biggies. But these days I am not at all interested in buying any more property in Malaysia. I don't think there is much fast money to be made anymore.

Developers can also be a little tricky. You know the one about guaranteeing you a fixed rental for 5 or 8 years after the building has been completed. Some hotel group rents half of the apartments in the building and furnishes them to their standard. Later when the hotel group moves out, your apartment is worn out, and you find you cannot get a high enough rent to pay the mortgage. That's because the Developer has built in a excessively large profit into his selling price of the apartment that you bought. A friend who worked at a Developer explained that one to me and told me to stay away from those projects. Then at the same time, the Manager at my lawyers kept calling me to tell me someone had dropped out and a great apartment had become available. I think the price was RM2.2 million with 5 years guaranteed high rental. And that condo backed onto a Malay Cemetery in the KLCC area. I stayed well away from that one.

For sure there are risks, not so much of Developers running off with your money as long as you stick with the big ones, but more in whether you can flip the apartment  for a decent profit or find a tenant to pay a rent that covers the mortgage once the building is completed. These days that is becoming more and more difficult as there is a big oversupply of residential property in the city. The golden rule of location, location, location has never been so important and now that includes being in a CBD, and close to an MRT station.

Well, i think the prices have run up far ahead of where they should be.  I dont know about UK but US prices are much less and for better property. A dollar doesnt go far in Asia anymore.

I do agree about the right developers. Personally I think the best way is to buy when the (CF?) is issued and you see what you really get. You pay more but there it is.

The guaranteed rental always seemed like a scam. When you think about it, why would anyone offer such a property unless there was some huge incentive or advantage for them? But thats really true of anything, something offered is for someones advantage and that someone isnt you.

I love cemetaries because they are dead quiet (no pun intended) and so peaceful and pretty with green and flowers....but i know its considered bad luck for chinese at least and so you have to stay away unless you plan to live there yourself forever. Years ago I rented a condo at Taman Tun overlooking a cemetary. It had been vacant for a very long time at $3000/mo. The agent begged me to make an offer, I said $1500 and the owner grabbed it so fast it made my head spin. I was so pleased, it was a wonderful place, view of the hills, wide open spaces, monkeys in the trees, myna birds on my balcony. That time, my chinese fiance refused to step onto the balcony and look out, she was sure ghosts were scaling the walls to wreck our lives. Thing is, when the condos were built there was no cemetary and the mostly chinese buyers tried to sue the government for destroying property values when the cemetary was later built. Research is needed before buying anywhere.

can any1 answer this thread.

Anishkumarv :

can any1 answer this thread.

Yes, as long as you do not promote any properties here. The thread is a discussion with advice on buying (and selling) property in Malaysia.

I'm actually buying an apartment in this building at KL Sentral. It's got two towers that join on the roof and two swimming pools also on the roof, one saltwater and olympic size, and a theatre as well as restaurants and private lifts. I already paid the first 40% downpayment and the bank will pay for the rest. This pic was taken just a few weeks ago. So while I do not worry about the developer running off, I do worry about whether I am going to make or lose money if I flip it. I might just keep it for holidays and friends or rent it out.

You brought up a good point. What is the age limit for having a mortgage? Previously Maybank told me mortgages have to be settled by 55 years old. This means if one expects to pay for 20-30 years you have to be quite young when you start, true?

Building looks great which reminds me of another good point about developer reputation. KL Sentral is a prime location as Brickfields continue to evolve and its highly unlikely that funding for a rotten developer would have ever occurred in a such a good location. This doesnt mean a person shouldnt consider outlying areas but the further out you go, the less controls bankers will put on the developer and it will be easier to lose money to a corrupt company. Best locations are reserved for the best developers. This applies to design, ability to complete, surrounding amenities, etc.

Flipping. This is a sore subject with me because in my experience with people condos are the hardest to flip and houses are the easiest. Frankly I think you have had extraordinary luck. I know people in KL who were unable to off condos for love or money, and house owners who always had too much buyer interest, particularly if the houses were located near schools and had lots of bedrooms. Im looking at that large project of yours and am imagining 85% of the buyers are flippers. Who will everyone keep flipping to when many projects dont even totally sell out on the first round? How many projects remain 30% vacant even after some years? KL Sentral is a great place and maybe it doesnt fall into that category. What I personally see in Penang and KL also is over-abundant supply. Penang is undergoing the biggest explosion of housing development humanity has ever seen since the beginning of time and in all of the universe and I stare at these projects in disbelief that the worlds population is even enough to take up the supply! Hmm...6.5 billion people....nope...not enough! Goodness what are they going to do....and then you talk flipping!? I commend your bravery!! One thing in your favor though is that if the demand is there and an easy bank loan is available people will buy and dont care what they pay because they also know the next buyer will think the same.  In this way the bankers are your best friends to keep prices jumping because they are so greedily anxious to lend. One day this will change and when the banks shut off the cash hydrants, voluntarily or involuntarily, a whole lot of people wil be left holding the bag and the market will collapse. Every prime minister has so far kept Bank Negara mightily busy in the printing of money in a race to catch the economy up and get out out of the third world but I know that everything has a limit sooner or later. The higher and faster the prices rise, the sooner a collapse. What I have seen is a very greedy and disorderly market and coming from US which has experienced many crashes, I know how good or bad things can be. The geometric and exponential progression of prices cannot be mathematically maintained. What, condos in twenty years will be $100 TRILLION dollars, and wages still low and the banks still happily lending? Cmon.

Now.........having said all that i've made a case for condos not being housing at all but a commodity like wheat or pork bellies. Consider that nobody has to live in a condo to give it value. In fact living in it would hurt its value because of wear and tear. Put finished condos in the same plane as shares in a company and it straight away takes on a different look. People can buy and sell condos just like they would any stock and even many times in a month. They can buy yours and next week sell it if the "stock" upticked Rm10,000 or something, or sell it at a minor loss to take another one. In this way it doesnt matter who buys to live in something, living isnt needed. Interesting.

Yup you're exactly right about the age limits, but for HSBC they set the limit at 70 years of age.

The above apartment in KL Sentral is bought under joint names with my wife. So we have a 30 years mortgage. One I am buying in Bangsar South is also joint but I am only taking a shorter term mortgage as the price was under a million so repayment isn't too much.

Yes usually the best Developers have the financing to get the best plots of land. KL Sentral is a good area as close to town, has LRT and will have the MRT and Airport Express as well as Train Station, Shopping Mall and lots of offices and apartment building, not to forget several hotels including the new St. Regis which will be my neighbour.

It's funny though, several times I nearly bought from a Developer called Tropicana Corp Bhd. They build so many shopping malls and apartment buildings, and more recently in Damansara Mutiara and their prices are always quite reasonable. I saw their locations are always out of town but not too far away. Then suddenly they are building directly in front of KLCC on possibly the best plot of land in KL.

In the past I've always kept my apartments and tried to rent out to tenants, usually rents of RM5 - 7K. That's a good range to pick up many expats as it is not too high. Even Japanese expats who have a lower rental limit can sometimes afford to pay. One of my earliest tenants was the Sales Manager for Panasonic back in 2005. Japanese are fantastic tenants. But in one condo I'm charging RM2,600 and every month I need to cut the water or block the access cards to get my rent. That apartment is for sale now. I used to have another one there but sold it a few years ago. Terrible condo but was cheap and freehold and downtown.

So I sold many apartments but now that I am buying new developments will try to flip. I never bought house before because the prices were higher than condos and the rents low, but maybe I should have bought landed property, probably my mistake.

Yes definitely flipping is a risk these days. But then you gotta buy in the right location. That's why I bought at KL Sentral. But I don't know if I will make or break. Last resort is I'll keep it.

And yes absolutely there is an oversupply of residential property in Malaysia as a whole. That's why I sold off many apartments and now am buying in Indonesia. I'd like to sell a couple more apartments and then stick with one or two and I'll be happy. I really feel these days that unless you buy for your own usage and plan to keep the property for 10 or more years, then it's risky and no guarantee of making a good profit.

Hi Hansson
If I want to rent property must I pay in advance a Deposit to the vale of the term of the contract eg, rent for 12 months as deposit. Plus my monthly rent
I am reluctant to talk to an Estate agent as they will make me pay for information even if I do not take up the offer
Will I be able to get accommodation directly with the owner  without the help of an Estate Agent and where do I look for these properties As I think internet advertised properties can be expensive
Is it safe to work directly with the owner, do I have to have an attorney for the contract 
I want to rent a house or ground floor townhouse in Penang be if not to expensive otherwise I will have to take up a pet friendly condo
Does semi furnish means stove and light fittings  included
Do all accommodation have aircon Can one get by without an aircon
Tks Mmiki

Hi Mmiki,

Firstly it is standard to pay a 2 months security deposit whether your tenancy Agreement is for 1 year or 2 years. You will also usually need to pay a half month utilities deposit. Then aside from those deposits you just need to pay your rent month by month in advance. In Malaysia you don't pay for the entire period up front, at least, I've never heard of that.

Estate Agents will not make you pay any information. They only want to make a deal and will show you around in the hope that you will like a place that they might show you. Remember, they get their commission from the landlord and they earn nothing from you. Their commission earned from the landlord is typically one month's rent. You can just use the Agent to show you around. They might agree to pick you up and bring you to different places, so don't worry about that. Agents usually work together, so they search for places based on your requirements and contact other agents who may have something suitable and they split their commission.

The places advertised on websites such as the Star, Propwall and IProperty and in newspapers are not necessarily more expensive. And in anycase, it is always worth making an offer if you like a place. A smart landlord should always accept a lower offer rather than lose a few months rent leaving his place empty.

In my opinion it is safer to work through an agent. Landlords are usually clever and may put strange terms or clauses in an Agreement, but property agents commonly use a standardized agreement. I do not know of anyone using an attorney for a rental agreement, but you should read the Tenancy Agreement carefully and slowly and not just skim over it. Take your time and ask the Agent for changes if you find something which you feel is unfair.

Semi-furnished usually includes all lighting, aircons, some kitchen appliances such as fridge and oven and microwave, but you'd need to check that with the agent or landlord. At the end of the Agreement there should be a detailed list of all the items included in the apartment. If you feel that something should be there which isn't then it's worth to ask for it.

Malaysia is hot, and Penang is near the sea and hot. I think you will need aircon. At the very least you should have it in the bedrooms and best to have it in the living room too. Split aircons are best, not the old box type. Make sure the aircons work well before you sign the Agreement.


Thank you for your valuable information

Mmiki9 :

Thank you for your valuable information

My pleasure,  If you find a nice place and the Agent gives you a Tenancy Agreement to sign, then ask them for a day or two to check it through, or ask them to email to you in advance so you can read through it.

You'll need to make sure there is a clause stating that you will get your deposit back at the completion of the Agreement, less any damages and outstanding utility bills, but the landlord should not deduct for normal wear and tear. Also there should be a clause about extending the Agreement (how many months notice is required) and also should either party wish to terminate the Agreement early then how many months notice is required.

Some other things to note. Landlords should ensure the aircons work well when you move in. You should try them out open the lids and see if the filters and blower are clean or dirty. If dirty then ask the landlord to have the aircons serviced. Once you move in then you will be responsible for servicing the aircons usually once every 3 - 6 months.

Another advice, home contents insurance is very cheap, with a premium of about RM170 - RM200 per year for a coverage of up to RM30,000. Since you are contemplating renting a townhouse, it is worth taking out a policy. Most insurance companies in Malaysia offer a similar rate.

I am a landlord myself, so if you need help to look over a Tenancy Agreement quickly then just let me know. I'd be happy to do the favour.

Thank you Hansson, I will  take up your offer if our application gets approved by Nov. We will come to Penang for a month for our relocate arrangements

My pleasure....Have a good evening :)

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