Step-by-Step: How to Buy a Subsale Property in Malaysia
A Layman Guide for First-Time Individual Buyers (By a Lawyer)
1. Find the Right Property
- Browse property portals, speak to agents, or get referrals.
- To confirm the following details before deciding to purchase:-
- The Location & neighbourhood;
- The Market value;
- Whether the property is Freehold or leasehold;
- Tenure left on the Property (if the property is leasehold); and
- Monthly maintenance fees (for strata properties)
2. Negotiate & Sign the Offer to Purchase
- Once you find the right property, negotiate the price.
- The Seller and you will sign an Offer to Purchase (OTP)
- You will need to make payment of 3% of the Purchase Price as earnest deposit – amount may vary based on mutual agreement with the real estate agent and the Purchaser (usually payment made to the real estate agent or stakeholder lawyer).
- The OTP should mention the purchase price, vacant possession terms, and time frame to sign the SPA.
3. Get Loan Pre-Approval (if needed)
- Before you commit to any property, you should get a housing loan pre-approved from a bank.
- This tells you how much they can borrow and helps you set your budget.
- You can also use online mortgage calculators or speak to a mortgage broker.
4. Appoint a Lawyer (and Valuer, if needed)
- Choose a licensed conveyancing lawyer to handle the legal process
- Your lawyer will:-
- Conduct title and land searches;
- Draft and review the Sale and Purchase Agreement (SPA); and
- Advise you on costs and risks.
- If you choose to get a housing loan, the bank will appoint their own lawyer to prepare the loan documents (can be the same lawyer in many cases).
5. Sign the Sale and Purchase Agreement (SPA)
- The SPA is the official contract that binds you and the Seller.
- You will pay the next 7% balance deposit (total 10% including the earlier 3%).
- For leasehold or strata property: the SPA might include certain conditions such as LPHS, state authority or developer’s consent.
- After both parties sign the SPA, the SPA will then be stamped.
6. Pay the Legal Fees and Stamp Duties
- Typical costs:-
- Legal fees: Scale rate under the Solicitors’ Remuneration Order 2023
- Stamp duty on Memorandum of Transfer Form (Form 14A): 1%-3% depending on property price
- Loan agreement stamp duty: 0.5% of the loan amount
- Disbursements: search fees, registration fees, application of consent fees, travelling and postage costs, miscellaneous, etc.
- First-time buyers may get stamp duty exemptions (check with your lawyer).
7. Compliance with the Conditions Precedent (if applicable)
- At times, there are certain steps that must be completed before the sale can proceed to completion, known as conditions precedent (CP).
- When it comes to the property title, these conditions are especially important to ensure that the buyer receives legal ownership free from any issues.
- Below is a summary of key CP related to the title that you should be aware of:-
- Perfection of Transfer
If the individual or strata title is issued but still under the developer’s or previous owner’s name, it must be transferred to the seller first or may be transferred to you by way of direct transfer. - State Authority Consent
For certain properties (e.g., leasehold or bumi lots), consent from the State Authority is required before the transfer can proceed. - Developer’s Consent
For properties under master title (especially in sub-sales), consent from the original developer is usually required.
- Perfection of Transfer
- All conditions precedent must be fulfilled within the time specified in the SPA, usually within 3-6 months.
8. Payment of the Balance Purchase Price
- Your lawyer will help coordinate the balance purchase price payment (within 3 months or as agreed in the SPA).
- This includes your loan amount and any differential sum amount (the difference between the loan amount and the Balance Purchase Price) that you may need to top up.
- The Memorandum of Transfer (Form 14A) and Memorandum of Charge (Form 16A) documents will usually be stamped during this time.
9. Filing of CKHT Forms (LHDN)
- Under the Real Property Gains Tax Act 1976 (RPGT), both you and the seller are required to file CKHT forms when a property transaction takes place in Malaysia.
- These forms help the Inland Revenue Board (LHDN) assess any tax payable on gains made from the sale and will be filed by your lawyer. Even if you’re the buyer and not liable to pay tax, filing is still mandatory.
- Below is a summary of what you need to know as a buyer:-
- What is CKHT?
- CKHT stands for “Cukai Keuntungan Harta Tanah” or Real Property Gains Tax.
- It applies to the disposal of real property such as land or buildings.
- Forms to be Filed (Buyer):
- CKHT 2A – Buyer’s declaration of acquisition.
- CKHT 502 (if applicable) – Notification of withholding retention sum.
- When to File: within 60 days from the date of the SPA being signed.
- What is CKHT?
10. Presentation of Documents at the Land Office
- Your lawyer will present the following documents to the relevant land office to register your name as the new owner of the property:-
- The original Title together with the Plan (for strata properties);
- Memorandum of Transfer (Form 14A) & Memorandum of Charge (Form 16A) [if purchase by loan];
- The Property’s current quit rent and assessment tax statement; and
- The Seller’s and your Identification Card copy (coloured and clear).
- Timeline of registration at the Land Office: 1 – 3 weeks
11. Vacant Possession & Change of Ownership/Name
- Once full payment of the Balance Purchase Price is received by the Seller:-
- Vacant possession: you will receive the keys, access cards, car stickers for the Property, etc
- For strata property: you will need to ensure Management Office is informed of the Vacant Possession
- Change of ownership/name: you will be required to inform relevant authorities to change your name as the new owner for the Property – Assessment Tax and utility bills (TNB, Indah Water, Syabas)
