Read this before Buying any Property in Malaysia

Are you considering to buy a new home in Malaysia?

If your answer to that question is in the affirmative, then this guide is for you. There is a myriad of property choices available in the market now, so before making the big decision, don’t limit yourself to just a few options and do adequate research. Here are a few things you should consider before making the final move on the property of your choice.

1. Know your location

The one most important thing that any aspiring homeowner should do before placing a booking is research. It doesn’t matter if you’re a local in Penang or a foreigner looking to invest or settle down in Kuala Lumpur, you should always begin your research on the project’s location, nearby amenities and future developments.

i. Location
Ask yourself how much distance you are willing to cover to travel to and fro from your daily destinations. Is the traffic nearby that property tolerable? Is that project at a desirable location for resale? Are you willing to travel a bit more daily to have some peace from all the hustle and bustle in major cities? Asking yourself these questions will help you to decide on a search radius for your new home.

ii. Nearby amenities
Look out for nearest grocery stores, shopping malls, cafes and restaurants - If the property is where you need to travel a great distance to get to anything, it is likely to make it less attractive. Are you a nature lover? If so, a property with a recreational park or lake nearby might be a good fit for you. Even if you don’t have kids, schools are still a valuable amenity to consider – especially if you want to sell your house in future, your prospects might be on the lookout for good schools.

iii. Future developments
When you are considering to purchase a property, try to find out if there is any development plan for nearby schools, hospitals, and other public infrastructure. These additions might dramatically improve the property values in that area.

2. Know Your Budget

Budget is no doubt one of the most vital deciding factors when shopping for a property. Understanding the costs incurred when purchasing a property will prevent you from exerting your financials.

i) Down payment - In Malaysia, most banks offer loans at around 90% of the property’s price for first-time buyers, which means in typical cases you’ll have to be prepared to pay 10% of the property price as an upfront payment. However, if you don’t have that much cash at hand, don’t fret. Many property developers in Malaysia are offering zero-entry packages to help buyers secure a property with them. The government is also doing their part to help by introducing several initiatives, such as BSN MyHome (Youth Housing Scheme), My First Home Scheme and more. (1) (2).

ii) Additional costs - On top of that, consider other additional charges such as legal fees, stamp duty, taxes, and if you’re buying from a property agent, the real estate agent’s commissions – These will add up to the total amount required for the initial investment. If you’re buying from a property developer, the good news is usually these fees will be absorbed by the seller. Also, with the re-introduction of HOC campaign effective 1st June 2020 (3), specific stamp duties are exempted for eligible properties.

iii) Monthly loan repayment - The next factor to consider is the monthly loan repayment. The rule of thumb is that your monthly loan repayments should not exceed one-third of your monthly income. For instance, if you have a monthly income of RM10,000, your monthly repayments should not exceed RM3,333. This will help you decide the price range of properties that fits your financials.

iv) Move-in costs – To make sure you have a habitable home that you can stay in comfortably, you might need to spend some cost to connect the water supply and electricity, install some fittings, get some electrical appliances and beddings. These are unavoidable costs, so it’s a good idea to have some cash at hand for this.

3. Know the developer

Before placing a booking for any property, you should do some research on its developer. A reputable property developer will guarantee the quality of your new home. If the property is a new launch and yet to be completed, checking the track record of the developer will give you an insight on the outcome of the property when it is built. Have their previous projects certified by Green Building Index? Look out if the property developer has won awards by reputable institutions like FIABCI, StarProperty, EdgeProperty, etc. These are indicators whether you will receive a good quality home when you get your keys to your new home.

4. How about timing?

You might have heard from speakers in online webinars or read from news articles about the current market trend. How things are bad to make any investments in recent years, including property investments – these are mostly applicable when you’re buying a home as an avid investor. If you’re confident with your financials, especially if you’re in an industry that might not have been severely impacted by the COVID-19, the current market trend is a lesser concern for you. In fact, the bottomed market situation will even benefit you as this is when the property developers and sellers are offering promotions and giving freebies like never before. Do your own research and make an informed decision. The value of your property that you’ve secured during a weak market will appreciate even further when the market is recovered. There’s no blanket bad or good timing, only the right time for you.

Conclusion

There are so many home choices available right now, although sometimes you might notice there’s a hype going on for some new property launches, don’t rush into making a decision. Instead, take a step back, assess your own affordability and look around for options. Try to avoid following the hype of property launches before you’ve done enough research and has decided that the property is indeed a good fit for you.

References:

1. https://www.mybsn.com.my/content.xhtml?contentId=1522
2. http://www.srp.com.my/en/faq.html
3. https://www.nst.com.my/news/nation/2020/06/598567/hoc-lift-property-market

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