Regulations, Rules or Guidelines on Purchase of Selangor Residential Houses by Foreigners

Dear Readers,

(Updated on 26.1.2010): When we talk about regulations, rules or guidelines on the purchase of Malaysian properties by foreigners or foreign interests (non-Malaysians including MM2Homers), generally we refer to the following regulations, rulings or guidelines namely:
1) the FIC rules (Foreign Investment Committee's rules) (applicable only before 1 July 2009 thereafter superceded by EPU Guideline effective 1.Jan.2010 - FIC was disbanded on 1.7.2009);
2) the National Land Code rulings: e.g. that of Sec 443(e) of the NLC 1965 (Act 56).

Before 1 July 2009, the FIC rulings were set by the Foreign Investment Committee of the Prime Minister's Economic Planning Unit (EPU); on 1 July, the FIC was disbanded; and on 1 Jan 2010, the EPU has come up with a set of new Guidelines - please click on the EPU Guideline link given in the preceding paragraph to know the details.

Both the FIC rules and the new EPU guidelines were are set by the Federal Government which since independence has been under the control of the Barisan National; so also almost all the States of Malaysia until the last General Election on March 8, 2008,

Since March 8, 2008, five (5) States were no longer under the control of the Barisan National -- it is only to be expected that the FIC rules of the Barisan National Federal Government may not be followed by the States under the Pakatan Rakyat's control, namely: Selangor, Perak, Penang, Kedah & Kelatan.

Incidentally, towards mid-2009, the Federal Government has (please read this report) decided to liberalise the FIC rules including those on foreigners or foreign interests buying properties or real estate in Malaysia. By this, it does not mean that after the aforesaid liberalisation, any foreigner or foreign interest can freely buy any Malaysian property without any restrictions. NO, this is not the case -- because, there are now EPU Guideline effective 1 Jan 2010 and another set of applicable regulations set by the state authority on the purchase of properties by foreign parties under Sec 443(e) of the National Land Code (Act 56) which section remains intact or unchanged.

Sec 443(e) states clearly that for any "land" (a technical term defined in NLC which for the purpose of this post, it may be taken to mean "real estate") which is not categorised as "industry" - that is, which is categorised as "agriculture" or "building" (residential, commercial or other types of non-industrial properties such as educational institutions, hospitals, etc) - prior approval of the state authority must be obtained by any non-citizen or foreign purchaser before the Registrar (of the land office or the land registry) may endorse any memorial of transmission on the Register Document of Title of the property in favour of the foreign party.

What section 443(e) of the NLC means is: that the purchase of any real estate in Malaysia by any foreign party (other than the purchase of industrial property /land) requires the approval of the State in which the property is located, failing which, its ownership by the foreign party cannot be duly registered on the title of the property -- that is, cannot be recognised in law under our Torrens system of land ownership; and is to be considered null and void. Sec 443(e) therefore clearly recognises that land matters fall under the purview of the respective State authorities.

In the case of Selangor, notwithstanding the FIC rules and their subsequent liberalisation by the Federal Government, the State Government under the Pakatan Rakyat originally decided that foreigners or foreign interests may only buy Selangor residential units priced at RM250,000 or above for PR spouses of Malaysians; and, RM500,000 or above for other foreign parties, to be effective from June 1, 2009. However, the Selangor State Government shortly thereafter deferred implementation of these new threshold limits until the economy improves - please read the official document from the Selangor Government on this.

However, what is interesting is that: even this deferment which restored the lower thresholds in Circular 5/2009 of the Pengarah Tanah & Galian Selangor has now been superceded by a subsequent Circular 8/2009 issued and effective on 10 Dec. 2009 which raised the lower thresholds to RM250,000/=  and above for purchase of Selangor residential properties by foreigners including permanent residents.  

Puan Rahmah (Tel: 03-55447824) of the Pejabat Tanah & Galian Selangor has, this morning 11:30am (26.1.2010), verbally confirmed that the applicable threshold is that announced in Circular 8/2009 effective 10 Dec 2009. As at today, there is no review to the RM250,000/= threshold yet. Thus, if the date of your SPA is prior to the next reviewed threshold, then the RM250,000/= threshold in Circular 8/2009 shall apply.

To recap, as far as the purchase of Selangor homes or residential houses by foreigners or foreign interests are concerned, the threshold is now RM250,000/= and above - meaning, 1) permanent residents of Malaysia; and 2) any foreigners (including MM2Homers) are allowed to buy residential units priced at RM250,000 or above with effect from 10 Dec. 2009.

The above should answer the query of a reader of this blog who asked in Jan 2010: Whether the thresholds for foreign buyers of Selangor residential properties have, with effect from 1 Jan 2010, been reviewed upwards to RM500,000? (Answer: No. Circular 8/2009 merely raised the lower thresholds set in Circular 5/2009 to RM250,000/= with effect from 10 Dec. 2009 and this Circular is still in force as at today - you can call: 03-55447824 (Puan Rahmah) or 0355447765 (Enc. Hanafi) to confirm on/verify this.); And, what is the position of foreign buyers under the Malaysia My 2nd Home (MM2H) programme? (Answer: MM2Homers are governed by the same set regulations, rules or guideline foreigners buying Selangor or other Malaysian properties.)

Go to "comments" section of this blogpost to follow the email exchanges between me and the reader on his queries. Your credible inputs are also most welcome!

A public service article by,
Douglas GT Tan
Proprietor/CEO
GT REALTY

H/p No.: 012-288 6993 / 6-03-7958 8821
Email: tanhalim1@gmail.com