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Stamp duty and legal fees calculation for SPA when buying a house in Malaysia

Despite what many people think, the cost involved when buying a house is not limited to the 10% down payment. Find out the 7 other costs homebuyers need to consider when owning a house including stamp duty fees, legal fees for the SPA and loan agreement as well as property valuation fees.

Hunting for a dream home is an experience that a first-time home buyer is not likely to forget. However, you might overlook certain critical elements in calculating the total expenditure of acquiring your home as many buyers are likely to focus only on the biggest expenditure involved – the property’s 10% down payment or deposit. You might be further enticed by promotions, discounts and rebates by developers. 

However, there are other important costs in the home purchasing process that you need to factor in, especially towards the end of the transaction. These are variable, third-party fees that are often referred to as closing costs. Ignore them and you may risk financial setbacks and disappointment in realising your dreams of owning a home.

Below are a few significant closing costs that you need to include in your property budget planning: 

 

1. Stamp duty fees

An unavoidable cost in real estate purchases, stamp duty is the tax placed on your property documents during the sale or transfer of the property – as specified under the First Schedule of Stamp Duty Act 1949. The sale or transfer of properties in Malaysia which are chargeable with stamp duty must be stamped within 30 days from the date of the execution (property transaction). The tax includes:

  • stamp duty on the Sale and Purchase Agreements (SPA) of your property – this costs only RM10
  • stamp duty on the instruments of transfer – Memorandum of Transfer (MOT) or Deed of Assignment (DOA)The stamp duty is calculated based on a tiered system as shown in the table below.
  • stamp duty on your loan agreement – a flat rate of 0.5% of the total loan. 

Latest stamp duty fees on the MOT or DOA 

Price TierStamp Duty (% of property price)
First RM100,0001%
Next RM400,000 (RM101,000 – RM500,000)2%
The following amount up to RM1 million (RM500,001 – RM 1 million)3%
Thereafter (> RM1 million)4%

How is stamp duty calculated in Malaysia?

For instance, when purchasing a property which costs RM750,000, you will have to pay a total of:

{(First RM100,000 X 1%) + (Next RM400,000 X 2%) + (Remaining RM250,000 X 3%) } + 0.5% of loan amount (90% of RM750,000) + RM10 for stamp duty on SPA
= {RM1,000 + RM8,000 + RM7,500} + 0.5% X (RM675,000) + RM10
= RM16,500 + RM3,375 + RM10
=RM19,885

Payment of stamp duty for MOT

The Memorandum of Transfer or MOT has to be signed by a new property owner (strata or individual ownership) to transfer ownership of the property from the developer or old owner, for secondary or subsale properties. For an MOT to be valid, the document must be stamped and adjudicated at the Inland Revenue Board and stamp duty paid accordingly. This stamp duty will usually be paid by a law firm appointed by the homebuyer.

Payment of stamp duty can be now done online on the LHDN official website through the Stamp Assessment And Payment System or STAMPS.

Stamp Duty Exemptions in 2024

1) Stamp duty exemption for first time homebuyers

During the recent tabling of Budget 2024, the government announced that it first-homebuyers who purchase residential properties worth between RM500,001 to RM 1 million will enjoy a 75% stamp duty exemption up to 31 December 2023. This stamp duty holiday was increased from the 50% exemption announced in July 2022, under the Keluarga Malaysia Home Ownership Initiative or i-MILIKI.

Besides that, it was announced in end of 2020 that a full stamp duty exemption will be given to both instruments of transfer and loan agreement for the purchase of a first home worth not more than RM500,000 – the home can either be a new-launch or a subsale property:

To receive this exemption, the following criteria must be met:

  • This exemption will be for a SPA that is completed between 1 January 2021 to 31 December 2025.
  • It is only applicable to residential properties, excluding SOHO/SOFO/SOVO types, as well as serviced residences built for commercial use.
  • First-time homebuyers must be Malaysian citizens.
  • The buyer must not already own a residential property; if he/she has inherited a property or was given one (no matter if it’s an individual or joint ownership), then he/she is no longer eligible.
  • The exemption is given at 2 stages of transfer, i.e. from the property developer to a qualifying financial institution/bank, and from the bank to the Malaysian citizen.

2) Stamp duty exemption for property transfer between family members

For the transfer of property by way of love and affection between parents and children, grandparents and grandchildren – Stamp duty on the instruments of transfer of property will be fully exempted, limited to the first RM1 million of the property’s value.

The remaining balance of the property’s value is subject to the existing stamp duty tier and a 50% remission is provided on the stamp duty imposed. This exemption applies for instruments of transfers executed from 1 April 2023 and is only applicable for Malaysian citizens.

3) Stamp duty exemption on abandoned housing projects

A stamp duty exemption also applies to instruments executed by a rescuing contractor or property developer on or after 1 January 2013 but not later than 31 December 2025. This is described as a contractor or a developer who is appointed or approved by the Minister of Housing and Local Government to carry on rehabilitation works for an abandoned project.

The instruments are loan agreements approved by the approved financier and instruments of transfer for the purpose of transferring a revived residential property in relation to the abandoned project.
 

2. Legal fees

lawyer-property-malays

Unless you have a legal background and possess some of the required expertise and knowledge, you are most likely to engage in legal assistance for your real estate purchase. Your appointed solicitor will prepare all the necessary documents and contracts to facilitate the transfer of the property.

The legal fees for preparation of the Sale and Purchase Agreement are calculated as a percentage of the purchase price, varying from 0.25% up to 1% depending on the value of the homes.

How are legal fees calculated in Malaysia?

The legal fee rates in Malaysia are as below:

PRICE TIERLEGAL FEE (% of property price)
First RM500,0001%
Next 500,000 (RM500,001 – RM 1 million)0.8%
Following RM2,000,000 (RM1,000,001 – RM 3 million)0.7%
Next RM2,000,000 (RM3,000,001 – RM 5 million)0.6%
Thereafter (> RM 5 million)0.5%

Say for instance you are purchasing a residential property which costs RM750,000, you will have to pay a total of:

(First RM500,000 X 1%) + (Next RM250,000 X 0.8%) 
= RM5,000 + RM2,000 
= RM7,000 

Note that some developers may absorb the legal fees but you will always need to pay the stamp duty yourself as a buyer. Find out what a lawyer can do for you when buying a house in Malaysia.

 3. Real Property Gains Tax (RPGT)

rpgt-new-2019-malaysia

Beyond owning your own residential property, a first-time homebuyer should also look ahead to the possibility of eventually selling the property in the future.

This might be for a number of reasons – you might want to upgrade, leave the area for a new job, find a home better suited to your preference or just sell it to profit from capital growth when the market is booming. Regardless, disposing your home to a new buyer will entail paying real property gains tax (RPGT). RPGT is a form of Capital Gains Tax in Malaysia levied by the Inland Revenue (LHDN) and is chargeable upon profit made from the sale of your land or real property.

Having some knowledge of RPGT could help you sell your property at the right time and save you a lot of money! 

RPGT exemption in 2022 and 2023

Under the recent Budget 2022, Finance Minister Tengku Zafrul announced that the government will no longer impose Real Property Gains Tax or RPGT for residential property disposals by individuals comprising Malaysian citizens and permanent residents starting from the sixth year. This means that the RPGT rate for property disposals in the 6th year and subsequent years of property ownership is to be reduced to 0%, effective from 1 Jan 2022.

RPGT rates effective from January 1, 2022

RPGT RatesIndividuals (Citizens & PRs)Individuals (Non- Citizens & Foreigners)Companies
Disposal in 1st year30%30%30%
Disposal in 2nd year30%30%30%
Disposal in 3rd year30%30%30%
Disposal in 4th year20%30%20%
Disposal in 5th year15%30%15%
Disposal in 6th year & beyond0% (Reduced from 5%)10%10%

Those who dispose of their home after less than 3 years will be still charged 30% RPGT; 20% in year 4 and 15% in year 5. 

Bear in mind that there are other RPGT exemptions for the following conditions:

  • An exemption of 10% of profits or RM10,000 per transaction for Malaysian citizens and permanent residents (whichever is higher) for these 2 scenarios:

1. If an asset is transferred as a gift by a donor who is a Malaysian citizen and the acquirers are either husband and wife, parent and children or grandparents and grandchildren. This exemption is not applicable for transfers between siblings.
2. Once-in-a-lifetime exemption on the chargeable gain on disposal of 1 private residence by a Malaysian citizen or Permanent Resident (PR).

  • Homeowners who own low or medium-cost housing priced below RM200,000 are exempted from RPGT when disposing of their property.

4. Property agent fees

real estate agent house

If you engage property or real estate agents, especially in securing residential property in the secondary market, their fees will be an additional cost on top of the price you pay for your home. Although most buyers nowadays are aware of this, there are some who do not factor agent fees into the total cost. This could be a setback, especially if you are on a tight budget.

The maximum fee chargeable on services provided by agents on the sale of any land and building is normally 3%, although many brokers and agents charge less than that on a case-to-case basis.

As a buyer, make sure that you negotiate and confirm your estate agent fees before officially engaging them to represent you in any property transactions. This will help when calculating your total cost in advance.

5. Property valuation fees

Unless you’re paying for the property in cash, you’re likely to be looking for a housing loan from banks to fund the purchase. Financial institutions will usually require a valuation of the property before approving the loan amount, and most banks will charge a fee for these valuations.

How are valuation fees calculated?

Similar to the legal fees, the valuation fee for real estate is usually borne by the buyer and is calculated as a percentage of the purchase price.

For first RM100,000.00 =0.25%
Next residue up to RM2 million = 0.2%
Next residue up to RM7 million = 0.167%
Next residue up to RM15 million = 0.125%
Next residue up to RM50 million = 0.10%

Factors which determine your property valuation

Understanding the factors which make a property more (or less) valuable will help to assist purchasing/investment decisions. Usually, a residential property’s valuation is impacted by the following:

Location

The value of a property is generally higher the nearer it is to the city centre.  On the flip side, if the home is within the vicinity of something undesirable such as a cemetery, power stations or a waste disposal area – that could bring down the property’s value.

Accessibility and amenities

The value of a property is generally increased if it is near major highways, public transit nodes such as the MRT and LRT, and conveniences such as clinics and private hospitals, educational institutions, banks and shopping malls, as well as international or private schools.

Maintenance and renovations

This would apply for subsale properties – Valuers will take into account maintenance and renovation works done which enhance the livability and aesthetic value of the property.

Quality of construction

A building that is made of high-quality materials might hold together longer before having any issues, thus these will be valued higher. Homes that were constructed over a decade ago can still fetch a premium price due to the quality of the building materials, workmanship and structural design.

MORE: Is buying a home near the MRT3 circle line a smart move?

6. Home insurance 

MRTA or MLTA?

Most banks will require buyers to purchase insurance on their homes as part of the housing loan package to protect the value of the property. The common option includes:

Mortgage Reducing Term Assurance (MRTA)

MRTA is the most popular and economical option for property loan borrowers and is usually packaged as an option when applying for a home loan at a bank. It is a single premium group term life insurance that pays your outstanding home loan in event of your death or total permanent disability (TPD).

The costs of MRTA are dependent on the age of the borrower (usually the older the borrower, the higher the MRTA) and the total mortgage on the property (usually estimated at 3% to 5% of the total mortgage).

Mortgage Level Term Assurance (MLTA)

MLTA offers repayment of your outstanding home loan as well as a guaranteed cash value back at the end of the scheme. This cash benefit will help keep your family afloat in the event of your death or total permanent disability (TPD). Unlike the MRTA, anyone can be a beneficiary for an MLTA, the policy-holder can nominate any family member to receive the pay-out should something happen to him or her.

An MLTA’s sum assured remains constant or level throughout the policy’s tenure period. The most important thing about this mortgage insurance is that the insurance proceeds are credit-proof and will not be frozen.

Term Life insurance

This is the oldest and most common life insurance which offers your family (beneficiary) a lump sum payment (sum assured) in event of your death or TDP during your policy tenure (similar to MLTA).

However, the premium structure is akin to the MRTA but is more flexible as you and your loved ones will be protected as long as you pay the premium and it can be terminated at any point in time. Policy-holders can also extend the coverage by adding critical illness into the condition in return for a slightly higher premium.

READ: MLTA vs MRTA: Which mortgage life insurance to pick

7. Home renovations

For example, after you have completed the purchase of the house, you might want to change wall colours, doors, floorings, windows, fences, roofing, rooms and other elements of the house to suit your preferences. These could easily add up to your total costs, depending on whether the renovations involved are major or minor.

Here’s a tip: Most experts recommend not spending more than 10% of your home value on renovations. Check out our simple guide on how much does a home renovation cost in Malaysia?

Stamp Duty Exemption in Malaysia for First Home Buyers’ Homeownership

When you purchase your first home, there are additional costs to consider on top of the property price. These extra costs often sneak up on home buyers, causing much stress and financial strain.

One of these additional costs includes stamp duty charges. These charges can rack up to tens of thousands of Ringgit, so it’s important to be aware and financially prepared for them.

Although this sounds daunting, we have good news for you first-time home buyers – you can enjoy stamp duty exemptions as part of the Malaysian Home Ownership Initiative!

What are Stamp Duty Exemption Acts and How Do They Affects Homebuyers?

Stamp duty is a fee charged on legal documents such as instruments of transfer and loan agreements.

For instruments of transfer, stamp duty is charged in tiers:

Property priceStamp duty (% of property price)
First RM 100,0001%
From RM 100,001 – RM 500,0002%
From RM 500,001 – RM 1,000,0003%
Above RM 1,000,000 onwards4%

For example, for a property with a price of RM 450,000, the stamp duty for the instrument of transfer would be calculated as follows:

1% of the first RM 100,000 = RM 1,000

2% of the next RM 350,000 = RM 7,000

Total stamp duty = RM 8,000

For loan agreements, on the other hand, the stamp duty charged is 0.5% of the loan amount. Let’s go back to the earlier example. Typically, you would pay a down payment of 10% and take a loan for about 90% of the property price.

Hence, for a property valued at RM450,000, you would normally apply for a 90% loan of RM 405,000. For a loan of this amount, the stamp duty charged on the loan agreement would be: 0.5% x RM 405,000 = RM 2,025.

In this example, the total stamp duty would add up to be: RM 8,000 + RM 2,025 = RM 10,025.

However, first-time home buyers can enjoy a 100% stamp duty exemption for property purchases up to RM 500,00 and a 75% exemption for property purchases between RM 500,001 and RM 1 million.

Stamp Duty Exemption on Housing Loans

In Malaysia, the provision of stamp duty exemptions on housing loan agreements serves as a significant financial relief for homebuyers. This exemption offers a valuable opportunity for individuals, especially first-time home buyers, to maximize savings. The funds saved through this exemption can subsequently be allocated towards enhancing the living space, whether through renovations or furnishing, thereby turning your dream home into a reality.

By taking advantage of this government-provided benefit, first-time home buyers not only ease their immediate financial obligations but also gain the means to enhance and personalize their new abode.

Who’s Eligible? Decoding the Stamp Duty Exemption Criteria in Malaysia

Malaysian citizens who have never owned any residential properties are eligible for the stamp duty exemptions. If you fit the bill, you can enjoy stamp duty exemptions, provided that:

  • You purchase a residential property from a property developer,
  • The sales and purchase agreement (SPA) is executed between 1 June 2022 and 31 December 2023, and
  • The property purchased is under RM1 million for a 75% exemption and under RM500,000 for a 100% exemption.

This scheme offers a 100% stamp duty exemption on the instrument of transfer and loan agreement for your first home until the end of 2025, with a 75% stamp duty exemption applicable until 31st December 2023 for properties under RM1 million.

Stamp Duty Exemptions and Saving for Your First Home with LBS’ Projects

LBS Bina offers a wide range of residential properties for first-time home buyers who are excited to take advantage of these stamp duty exemptions.

For example, Kita @ Cybersouth by LBS Bina is a beautiful gated and guarded township with a variety of property options to choose from. Stand to enjoy 100% stamp duty exemptions with this affordable yet strategically located housing development in the up-and-coming southern corridor of Greater Klang Valley.

Begin Your Journey to Home Ownership with Stamp Duty Exemptions

Purchasing a property can be a costly affair, so being aware of any cost exemptions that you are eligible for is incredibly important. Take advantage of this amazing initiative and buy your first home at a cheaper price! Check out LBS Bina’s website to find your dream home today.

Everything You Need to Know about Condominium Investment in Malaysia

There has been a growing demand for condominiums in Klang Valley over the past decade. The growth and development in this urban area have created ample job opportunities, causing an influx of working adults who require housing.

With their central location, accessibility, and myriad facilities, condos have become incredibly popular among these urban dwellers. As such, investing in condos can be very lucrative for investors.

Here are some tips for choosing the right investment condo in Malaysia.

Factors Making Malaysian Condos a Prime Investment Opportunity

Condos are an ideal choice for those looking to buy an investment property in Malaysia for many reasons, including:

  • Condos are often strategically located with easy access to expressways and in proximity to commercial hubs, transport networks, and amenities. This location advantage makes condominiums very attractive to potential renters. For example, LBS Bina’s Prestige Residence has everything residents may need – educational institutions such as SJK(C) Bukit Serdang and SMK Taman Desaminium, and shopping amenities like AEON Mall Taman Equine and Giant Hypermarket – all just a stone’s throw away.
  •  The Malaysian property market offers competitive pricing compared to global property markets.
  • Condos can provide strong rental yields for investors, especially in key cities. Many working adults in urban areas prefer staying in condominiums due to their attractive location and facilities, which boost demand and rental yields.

Evaluating the ROI on Condo Investments in Malaysia

For investors, a crucial aspect of purchasing a condo as an investment property is evaluating its potential return on investment (ROI). The ROI for properties is typically derived from rental yields and property appreciation.

Luxury condominiums strategically positioned in prime locations hold significant potential for generating high rental income and experiencing property appreciation. The key to securing a favorable ROI lies in making informed choices, particularly in selecting the right condo in the optimal location. This strategic decision-making process is essential for maximizing returns on your investment in the property market.

Tips to Consider When Buying a Condo for Investment in Malaysia

Doing comprehensive market research is vital before undertaking a significant investment such as purchasing a property. Here are some important things to consider when buying a condo for investment:

  • It’s all about location. Investors should identify prime locations based on potential growth and future development plans. For example, up-and-coming areas with increasing commercial activities and public transport links are a great choice.
  •  Investors should look into property valuation and the factors that influence it to avoid purchasing a condo at an inflated price. To safeguard your ROI, you need to make sure that you pay a fair price for your property.
  • There are also legal and regulatory aspects to keep in mind during the buying process. For example, making sure that a strata title is obtained for your high-rise investment is crucial as it provides proof of ownership.

Purchasing your condo investment property from a reputable developer like LBS Bina will save you a lot of headaches by ensuring a smooth transaction process.

Diverse Condo Investment Properties for Varied Investment Goals

There are different types of condominiums available for investment in Malaysia. The type of condo you invest in will depend on your budget and investment goals.

Standard condos with basic amenities are cheaper and can garner a fairly good rental income, making them suitable for those who want to secure modest additional income over the long term.

Luxury condominiums with fully equipped amenities, on the other hand, tend to be more expensive but have great potential for high rental yield and property appreciation. This is a good choice for investors with the intention of reselling their property at a profit.

SkyLake Residence, LBS Bina’s new investment condos for sale, offers the best of both worlds – all the elegance and facilities of a luxury condominium coupled with an affordable price tag.

Begin Your Condo Investment Journey with LBS Bina Now

Here are two key takeaways to bear in mind when buying a condo for investment in Malaysia:

  1. Always go for a reputable developer with a stellar track record to ensure quality construction.
  1. A well-located condominium with easy access to amenities can boost the desirability of a condo unit for both rental and resale purposes.

Start your investment journey with strategically located luxury condominiums by LBS Bina, a trusted developer in Malaysia. Contact us today to learn more.

Introduction to the Malay Reserve Land and Property Development in Malaysia

Malay Reserve Land, also known as “Tanah Rizab Melayu”, is one of the privileges granted to Malays in the Malaysian constitution. These properties are an excellent choice for Malay home buyers looking to purchase their dream home.

However, confusion about Malay Reserve Land often hinders buyers from exploring this option. Here’s a guide to help you learn more about Malay Reserve Land and why it’s a good choice for Malay home buyers.

What is Malay Reserve Land and How Does it Differ from Regular Property?

Malay Reserve Land refers to land that can only be sold to and owned by Malay Muslims.

One of the major benefits of purchasing a property in a Malay Reserve Land in Malaysia is that you get to enjoy cheaper prices compared to other similar properties in the area. The cost of Malay Reserve Land is generally lower, translating into more affordable property prices for buyers.

There is a common misconception that because property prices are lower, the properties on Malay Reserve Land are somehow subpar compared to others. This, however, is completely untrue. When you purchase property from a trusted developer like LBS Bina, exceptional quality and design are guaranteed.

The Benefits of Malay Reserve Land Compared to Bumi Lots

People often think that Malay Reserve Land is just another term for Bumi Lots, but this isn’t the case; there are distinct differences between the two.

Bumi lots can only be sold to the Bumiputera community in Malaysia, which comprises Malay Muslims, the indigenous people of Peninsular Malaysia, Sabah and Sarawak, and non-Malay Muslims. This differs from Malay Reserve Land, which can only be sold to Malay Muslims.

It is almost impossible to release ownership of a Malay Reserve Land to a non-Malay, unless another piece of similar land of equal value is provided as a replacement. Bumi lots, however, can be sold to non-Bumi buyers under certain circumstances.

Exploring How LBS Bina Balances Land Development with Cultural Preservation

In its commitment to harmonize land development with cultural preservation, LBS Bina presents a thoughtful exploration of housing projects tailored for Malay home buyers in Malaysia.

For those seeking to invest in property, LBS Bina introduces several Malay Reserved Land housing projects, exemplifying a delicate balance between modern development and the preservation of cultural heritage. Among these projects, KITA Sejati and KITA Bestari stand out as integral components of the KITA @ Cybersouth development.

These meticulously planned developments provide a diverse range of double-storey terrace houses, single-storey terrace houses, apartments and townhouses, catering to the preferences and needs of Malay home buyers. Nestled within a gated and guarded township, KITA @ Cybersouth is not just about acquiring a property; it is a visionary concept designed for families aspiring to realize their dream home while fostering a strong sense of community.

Prime Amenities and Lifestyle at this Malay Reserve Land Project

LBS Bina’s impressive Malay Reserve Land project provides easy accessibility to expressways such as Putrajaya-Cyberjaya Expressway, Maju Expressway (MEX), South Klang Valley Expressway (SKVE), and Damansara-Puchong Highway (LDP), making it easy for you to move around the Klang Valley area.

The strategic location of KITA @ Cybersouth ensures residents have convenient access to a range of amenities, including shopping centres like D’Pulze Shopping Centre, educational institutions such as UiTM Kampus Dengkil, and healthcare facilities like Putrajaya Hospital. This location strikes a harmonious balance between convenience and serenity, offering residents the best of both worlds. Residents can also enjoy a wide array of facilities such as gymnasiums, swimming pools, playgrounds, and BBQ lounges.

It’s the perfect place for those who want the perks of city convenience along with the tranquillity of a suburban paradise.

KITA Sejati & Bestari: Your Dream Properties on Malay Reserved Land in Malaysia

LBS Bina is committed to developing Malay Reserve Land and building quality homes for Malay property seekers. Our properties, with their unique blend of convenience and serenity, are a great choice for those looking to put down roots and create a lifetime of family memories.

Check out KITA Sejati and KITA Bestari to find your dream home today.

Getting a Housing Loan in Malaysia as a First-Timer? Here’s a Guide for You

Buying your first home is exciting! However, the process of securing a housing loan can be nerve-racking. More and more Malaysians are experiencing challenges in securing housing loans, which makes the process all the more daunting.

However, the best way to tackle this issue is to learn about the options available to you and make an informed decision that best suits your financial situation. Here’s what you need to know about the housing loans available in Malaysia:

Understanding the Basics of a Housing Loan and Its Interest Rates in Malaysia

Housing loans are funds borrowed from a financial institution to help you cover the cost of purchasing a home. Borrowers then repay these funds over a certain period, with interest.

There are typically two types of housing loan interest rates, namely fixed rates and variable rates. For fixed rate loans, the interest rate remains the same throughout the loan period.

For variable rate housing loans in Malaysia, on the other hand, the interest rate varies depending on the Base Rate (BR). A decrease in the Overnight Policy Rate (OPR) set by Bank Negara Malaysia can lead to lower variable housing loan rates and vice versa.

Types of Housing Loans Available for Homebuyers in Malaysia

Banks offer various types of housing loans to cater to the diverse financial needs and preferences of borrowers, including:

Basic Term Loan

With basic term loans, you pay a fixed monthly installment throughout the loan period. This makes it easy for you to plan your finances as there are no changes to the monthly installments.

However, this type of loan lacks flexibility as you cannot make additional payments to reduce the loan principal and interest. In fact, banks often charge a penalty if you want to settle the loan early. 

Semi-Flexi Loans

Semi-flexi loans are the most common type of housing loan offered by banks in Malaysia. They offer more flexibility than basic term loans. You can make additional payments to reduce the loan principal and interest whenever you have extra money.

You can also withdraw these additional payments if you are strapped for cash. However, withdrawals may be subject to the bank’s approval and processing fees. 

Also, the interest rate for semi-flexi loans may be higher than basic term loans, but you can try to shop around for the best rate.

Full-Flexi Loans

As the name suggests, flexi-loans are incredibly flexible. Just like semi-flexi loans, you can make additional payments to reduce the loan principal and interest at any time. These additional funds can be easily withdrawn without any hassle when you are in a pinch.

However, flexi-loans often incur a small monthly maintenance fee, which is an additional cost to you. Also, the interest rates for these loans are typically higher than basic term loans. Do take note that flexi-loans are not offered by many banks in Malaysia.

Islamic Loans

Unlike the conventional loans listed above, Islamic loans based on Shariah principles do not charge interest. Instead, Islamic housing loans work on the basis of a partnership.

You and the bank jointly purchase and own the property, with the bank having a higher ownership holding. You then pay the bank in installments until you acquire full ownership, almost like a rent-to-own concept. The bank earns a profit by selling its share of the property to you at a higher price than it originally paid.

You don’t have to be a Muslim to apply for Islamic housing loans; it is open to all Malaysians.

Government Housing Loans

Lembaga Pembiayaan Perumahan Sektor Awam (LPPSA) offers this special loan for civil servants. With government housing loans, you can opt for a longer loan tenure (up to 90 years of age) to reduce your monthly installments and enjoy a fixed interest rate of 4%. 

Refer to the LPPSA website to calculate your loan eligibility.

Factors to Consider Beyond Housing Loan Interest Rates for Your Dream House

While securing a housing loan is a pivotal step in the property buying process, several other crucial factors warrant careful consideration when selecting your dream home. Beyond the housing loan interest rates, aspects such as location, amenities, accessibility, and property size play pivotal roles in making an informed decision.

The location of your prospective home is not just about proximity to work; it also involves assessing the neighbourhood, nearby facilities, and the overall ambience. Accessibility is another critical factor to weigh. Consider the proximity to public transport, major highways, and essential services. 

Property size is a personal preference that aligns with your lifestyle and future plans. To assist your decision-making process, make a comprehensive list of what you are looking for in a home. This list will serve as a valuable guide, allowing you to prioritize your preferences and find a property that not only fits your financial goals but also aligns with your lifestyle and aspirations.

Progressing Toward Your Ideal Property in Malaysia with a Housing Loan

Securing an advantageous loan to purchase a quality property is every homebuyer’s dream. Having a clear idea of what you want in a home and shopping around for the best rates will help you turn this dream into a reality.

LBS Bina offers a diverse selection of residential properties throughout Malaysia, catering to buyers searching for their dream home. One notable project is KITA @ Cybersouth by LBS Bina, featuring a range of options such as KITA Mekar – Double Storey Terrace House, KITA Bestari – Townhouse, and KITA Sejati – Serviced Apartment.

 Check out LBS Bina’s website to learn more.

The Journey to Homeownership: Mercu Jalil’s VP and LBS Perks & Plusses Rewards Program

Recently, Mercu Jalil, an apartment complex nestled in the heart of Bukit Jalil, initiated the Vacant Possession (VP) process for its homeowners. This vibrant apartment boasts two blocks, each with 680 units, making a total of 1,360 units. With two distinct unit types, Type A at 1,000 square feet and Type B at 1,200 square feet, Mercu Jalil offers modern living on 5.43 acres of strata-titled land. What sets it apart is its strategic location, near major highways like KESAS Highway, Maju Expressway, and Bukit Jalil Highway, as well as close proximity to Tzu Chi Kuala Lumpur International School, Pavilion Bukit Jalil, and Alam Sutera LRT Station. The apartment complex also offers 16 facilities, with 9 on the ground floor and 7 on the 9th floor.

The VP process marks the handover of a vacant unit to homeowners, void of any equipment or furniture beyond what’s specified in the Sale and Purchase Agreement (SNP). However, before this transfer occurs, the developer must obtain the Certificate of Completion and Compliance (CCC) and ensure that water and electricity services are operational. In essence, this process assures homeowners that their new abode is ready and safe to occupy. Interestingly, Mercu Jalil has embraced a digital approach for the entire VP process, promoting sustainability by eliminating paper usage.

On October 6, 2023, Mrs. Alicia and her partner received the long-awaited call from LBS Bina to take possession of their new home in Mercu Jalil. It marked a historic day for the couple who had purchased their unit during the 2020 pandemic. This was their first experience buying from LBS Bina Group, and they chose Mercu Jalil after careful consideration of location, pricing, and offers. For them, the strategic location, excellent access to public transportation, and proximity to major highways were the key factors influencing their decision. The homeownership process proved to be straightforward, with Mrs. Alicia and Mr. Clarence only having to wait for the keys, as the housing project was still under construction at the time of purchase.

The couple’s unit is a Type A with 1,000 square feet of space and two parking spots, situated on the 36th floor of the A block, which boasts a total of 46 floors. They were delighted with the quality of the finishing and the breathtaking view from their elevated residence. They plan to hire contractors to inspect their unit for any defects or finishing issues, making full use of the 24-month Defect Liability Period (DLP), which began on September 7, 2023. Mrs. Alicia intends to personalize the unit to her liking and will move in once everything is in place.

Thrilled with their decision to purchase in Mercu Jalil, Mrs. Alicia and her family were further delighted to learn about the LBS Perks & Plusses loyalty program. This program rewards LBS property buyers with a range of privileges, including referral programs, cash rebates for second home purchases, early access to new project launches, and invitations to exclusive events. Members of this program also enjoy special offers and benefits from 39 LBS Perks & Plusses strategic partners, such as Watsons, Coway, Acson, Goodnite, and many more. The program is complimentary for any individual or corporate buyers who have purchased LBS properties or its subsidiaries with a minimum purchase price of RM150,000.

On October 28 and 29, 2023, LBS hosted a “Mini-Fest” for the LBS Perks & Plusses rewards program at Mercu Jalil apartment, Bukit Jalil. The two-day event featured a variety of engaging activities. One of the highlights was a lucky draw with prizes from Watsons, Gintell, Acson, and Goodnite. The event also included free gifts from strategic partners of the rewards program. With 16 strategic partners participating, homeowners collecting their keys at Mercu Jalil, Bukit Jalil added to the festive atmosphere. The event successfully introduced the LBS Perks & Plusses reward program to the homeowners under LBS Bina Group, offering a glimpse of the many benefits awaiting them in their new Mercu Jalil homes.

Sinking Fund vs Maintenance Fee

Management Fees and Sinking Funds are both familiar terms for those residing in condos and apartments, and they serve distinct purposes in the proper functioning and maintenance of high-rise buildings. However, what distinguishes Management Fees from Sinking Funds, and how are they determined? Why is it imperative for high-rise property owners to contribute, and what are the repercussions of non-compliance?

Every high-rise building is equipped with shared amenities that are accessible to all residents, such as elevators, sidewalks, swimming pools, gyms, and community halls. All of these amenities require meticulous maintenance and efficient management to ensure their smooth operation and functionality. Therefore, high-rise unit owners are obligated to make monthly payments for management fees and sinking funds. These funds are allocated specifically for the upkeep and preservation of common facilities, public assets, and essential services.

These funds are collected and overseen by the Joint Management Body (JMB) before strata titles are issued, and responsibility for their management transfers to the Management Corporation (MC) after the issuance of strata titles.

What is a Maintenance Fee?

Maintenance fees serve as a financial resource that covers various foreseeable daily expenses, including cleaning, security, utility bills for the building, and the salaries of management and administrative staff. The management of a property entails substantial costs, and your monthly management fee is strategically structured to encompass these ongoing expenditures, as well as the costs associated with maintaining shared facilities and addressing minor repair needs.

Maintenance fees play an essential role in directly contributing to the maintenance and upkeep of common areas and facilities within a high-rise building. This diligent maintenance not only ensures the property’s visual appeal and operational efficiency but also acts to either sustain or boost property values. On the contrary, neglecting the maintenance of common areas can lead to a depreciation in property values.

Moreover, the routine maintenance funded through the collection of maintenance fees is instrumental in safeguarding the safety and security of residents. Timely repairs and maintenance of critical systems, such as fire alarms and elevators, substantially mitigate the risk of accidents and emergencies, thereby promoting a secure living environment.

How Management Fee calculated?

The maintenance fee is shared among unit owners, and fee varies by development projects. Some of the factors that determine the management fee are:

  • Unit size: The larger unit, the more you will have to pay.
  • Type of usage: Retail units cost higher than residential units
  • Type of service: Typically includes security, cleaning, elevator maintenance, etc.
  • Facilities: The more facilities, the more you will have to pay.
  • Size and type of common area: The larger the common area, the more expensive it will be to clean and maintain. 
  • Number of units: Owners who own units in a high-density development cost lower, or vice versa.

What is a Sinking Fund?

Sinking funds accumulate over time to provide financial resources for significant future maintenance and repairs. High-rise buildings require periodic updates and major repairs, such as repainting, roof replacement, or elevator modernization. Without a sinking fund, the cost of these projects may need to be covered by special assessments, which can be financially burdensome for residents.  Recurring expenses such as security services, cleaning services, utilities and elevators maintenance are required, monthly.

Sinking fund is important because it provides a financial support for future maintenance and repairs, promotes stable financial planning, preserves property values, prevents emergency situations, ensures compliance with regulations, and smooths fair cost allocation. It is a sensible financial tool that benefits both individual property owners and the overall health of the high-rise building or condominium.

How Sinking Fund Calculated?

The sinking fund cost is typically assessed at 10% of the total maintenance fees. Changes to this percentage can only be made during the Annual General Meeting. Even after a review, the minimum amount required must remain at least 10% of the management fee.

What Happens If You Don’t Pay Maintenance Fees?

It’s crucial to understand that when you contribute, everyone else is also fulfilling their financial obligations. If you are a unit owner in a strata property, you are obligated to pay both management fees and the sinking fund. According to The Strata Management Act 2013, the respective management body has the authority to determine, invoice, and ensure the collection of these fees. As you are legally required to pay maintenance fees, the management has the option to initiate legal action against you if you do not comply.

If you don’t pay it however, you might get stuck with the following penalties:

  • Interest charges: The management can legally charge interest for any common charges outstanding.
  • Lose voting rights: As an owner, you have certain voting rights under the JMB, but you lose those rights if you fail to pay the bills.
  • Criminal charges: In the most extreme circumstances, you can be charged for failure to pay maintenance charges. 
  • Seizure of assets: The Act lays out the right to seize movable assets in order to recoup moneys owed for overdue fees. 

Understanding the Importance of Vacant Possession in Property Transactions

When it comes to real property transactions, the word “Vacant Possession” is frequently used in contracts and agreements. While it may appear simple, its significance cannot be emphasized. Vacant possession is an important term in real estate transactions, and both buyers and sellers must fully comprehend it. In this entry, we’ll take a closer look at what vacant possession is and why it is important.

What does Vacant Possession mean? According to Lexisnexis.co.uk, Vacant Possession can be defined as:

“Property sold with vacant possession must be empty of existing tenants or other occupiers (whether or not occupation is authorized), and all goods and rubbish (subject to the de minimis rule) that substantially prevent or interfere with the enjoyment of a substantial part of the property on or before completion.”

Vacant possession, in the context of property transactions, means that the property must be physically empty and available for the new owner to take immediate possession upon the completion of the sale. In simpler terms, when you purchase a house or a property with vacant possession, you should expect the property to be completely devoid of any occupants or belongings, ensuring a clean slate for your occupancy.

While vacant possession is the norm, there can be exceptions, particularly in cases of tenanted properties or commercial real estate. These exceptions should be clearly defined in the sales contract, ensuring that both parties are aware of the property’s status at the time of purchase.

Understanding the importance of vacant possession is crucial for anyone involved in property transactions, whether as a buyer or seller. It ensures a smooth and legally compliant transfer of ownership while providing peace of mind and a clean slate for the new property owner. When buying or selling a property, always clarify the terms of vacant possession in the contract to avoid potential disputes or misunderstandings down the road. The knowledge of vacant possession is important because it ensures that property transactions proceed smoothly, legally, and to the satisfaction of both buyers and sellers. It helps clarify rights, responsibilities, and expectations, reducing the potential for disputes and complications in real estate transactions.

A Guide to Landed vs High-Rise Properties

Finding the right residential property can be a daunting task – there are so many factors to consider. As to whether a landed or non-landed property is better, this is often a matter of personal preference. We have compiled a list of advantages of both property types to help you make a decision.

Hand holding magnifying glass and looking at house model, house selection, real estate concept.

The Advantages of Landed Living:

  • Bigger Living Space

In general, a landed property is more spacious, usually have a reasonable amount of yards around them. Making landed properties the better choice. Especially for people with a bigger family.

It provides the much-needed space and ground to grow a garden! Something that individuals with green thumbs would definitely appreciate.

  • Enjoy total freedom

Living in high-rise homes usually comes with a set of limitations such as strict rules against the keeping of pets, no shoes and plant outside, not allowed to display and placement of any item in common area, or else will be fined? Not to worry. Your house, your rules. You don’t need to deal with regulations and house rules, if you’re staying in landed property.

  • No limitation on exterior design

You can’t change the exterior facade or extend your space as per your wish in a high-rise building. Even with permitted renovation work, you will be subjected to the rules and regulation of the management. Exterior (such as wall & gate color) required to be consistent among all units. However, you have complete control in creating or renovate your landed dream home, be it interior or external design. 

For those that have a growing family and are looking for a long-term home, then landed property is the best way to go.

  • Privacy 

Unlike high rise living where you have more neighbours due to higher density. Landed living allowed you to keep comfortable distance with your neighbour. 

  • Convenience

High-rise properties have numerous floors, and because of this, elevators are installed for easier flow of movement. This usually leads to residents waiting for extended periods of time while the elevator goes down to their floor. In addition, it also takes some time to go to the parking area due to the distance. This takes more time and effort when transporting groceries or supplies home.

In contrast, if you’re staying landed house, you can park your car right Infront your doorstep, easy access to the car porch. And, you don’t need to take the elevator to pick up heavy groceries and parcel, especially when you’re in a hurry.

  • Zero maintenance fee 

With the added amenities in high-rise buildings, you will have to pay the maintenance fees regularly irrespective of what services you use.

In contrast, no maintenance fees, no sinking fund if you’re living in landed house. In other words, more disposable income which you can spend or invest in.

The Advantages of High Rise Living:

  • Facilities & Amenities

Planning for healthy activities, but don’t want to take risk which may stuck in traffic jam? Looking for car park at gym room or shopping mall could be frustrated too.

Condos and apartments usually feature a wide range of facilities. Hence, condo living could be hassle free, which you could enjoy facilities and amenities including gym room, swimming pool, futsal court, badminton court, movie rooms, playground, multifunction room and etc. just within the vicinity. In an affluent neighbourhood or city centre, it is also more affordable than living in a landed property.

Cheaper to buy-in. If you are a first-time homebuyer who’s looking for something more affordable and probably wants to enjoy all of the facilities, then high-raised condos are the ones to pick.

  • Socializing 

As you will be sharing all the amenities with your neighbours, it is a great way to meet people who are interested in the same things you are. Highrise development with ‘lifestyle convenience’ in mind to cater to community living.

  • Security

When it comes to ensuring peace of mind for you and your loved ones, high-rise developments are generally safer as they are equipped with multi-tiered security system that includes CCTV, secured access card, secured parking lots, perimeter patrol, and a guard entrance.

  • Great views

You also have a bird’s eye view of the city, skyline, greeneries, sunrise and sunset. The higher you go, the better the views. This is something that ground-dwellers will never experience.

  • Worry no more on maintenance

Do not having to monitor and carry out maintenance activities. The management office or Joint Management Body (JMB) will settle things out for you.

With great space comes great responsibility – you will be footing the bill for repairs, maintenance, and other upkeep. Moreover, if you have a large garden, consider lawn care and mowing fees too.

OPR Rates In Malaysia

OPR (Overnight Policy Rate) is the interest rate at which a central bank lends money to commercial banks in the overnight market. In Malaysia, the OPR is determined by the Monetary Policy Committee (MPC) of Bank Negara Malaysia, the country’s central bank. The OPR serves as a benchmark for other interest rates in the Malaysian financial system.

To understand the OPR rates in Malaysia, you can follow these steps:

Stay updated with financial news: Stay informed about the latest developments and news related to the Malaysian economy, monetary policy, and central bank announcements. Regularly read reputable financial news sources, such as local newspapers, online news portals, or financial publications, to get insights into the current state of the OPR.

Visit the central bank’s website: Bank Negara Malaysia provides information on its official website about the OPR, monetary policy decisions, and related announcements. Visit their website and look for dedicated sections on monetary policy or OPR rates. This information is usually found in the “Publications” or “Monetary Policy” sections of the website.

Read monetary policy statements: Bank Negara Malaysia issues periodic monetary policy statements that provide details about the central bank’s decision on the OPR and the rationale behind it. These statements explain the economic conditions, inflation outlook, and other factors considered by the MPC in setting the OPR. By reading these statements, you can gain insights into the central bank’s thinking and factors influencing the OPR rates.

Analyze economic indicators: OPR rates are influenced by various economic indicators, such as inflation, GDP growth, employment data, and others. Monitoring these indicators can help you understand the direction in which the OPR may move. Look for reports on inflation, GDP growth, consumer price index, and other relevant economic data published by reputable sources like government statistical agencies or financial research institutions.

Seek expert opinions: Financial analysts, economists, and researchers often provide insights and analysis on the OPR rates in Malaysia. Follow renowned experts in the field who specialize in Malaysian economics or monetary policy. Their opinions and forecasts can provide valuable perspectives on the OPR and its potential impact on the economy.

Remember that OPR rates are subject to change based on economic conditions and central bank policy decisions. It is essential to regularly monitor the information sources mentioned above to stay updated on the latest OPR rates in Malaysia.