Malaysia Property - Frequently Asked Questions

Malaysia Property - Frequently Asked Questions

What economic and political situation will I find in Malaysia?
Malaysia is a member of the Commonwealth of Nations. A constitutional monarchy since 1963, Malaysia has been independent since 1957. In Malaysia, the bicameral Parliament operates through an elected lower house and a non-elected upper house. The head of state is elected every five years from the nine rulers of the Malay states and best described to westerners as the “King of Malaysia”, while the Prime Minister is the head of government.



The King is elected from and by the nine rulers of the Malay states through a secret ballot following a pre-established cycle. During the election process, the nominated ruler (according to the cycle) is named and a vote of confidence is requested from the other rulers. A majority of five votes is required, however if the number of votes is not reached or the nominated ruler declines, the next ruler in line is nominated and process repeated. Once a decision has been reached, the King is nominated for his 5 year term. Immediately following his nomination, a deputy King is elected following the same process. The deputy will be responsible for carrying out his functions if the King should become unable to do so (for example due to absence or infirmity).

Prime Minister Tun Dr Mahathir bin Mohamad was welcomed as Prime Minister of Malaysia in 1981, with the Tun title being bestowed on both the Prime Minister and his wife upon his retirement in 2003. The title is conferred only to public figures who have contributed significantly to the nation and even then is limited to a maximum of 25 living holders of the title locally, a very great honour.

One of the main reasons for receiving this prestigious title, indeed the most senior of federal titles, may be the staggering economic growth which the country experienced during his term in office, having shifted from a more agricultural focused economy to an economy focused on industry and the manufacture of computers and consumer electronics.

From 1990 to 2006, real GDP increased by 162%, an average of 6.2% increase per year steadily for 16 years. While there were, of course, years with higher GDP growth than others, (for example 10% in 1996) since 2003 the growth has remained consistently healthy. Financial analysts are optimistic about the continuation of the trend for the coming years, despite high worldwide crude oil prices and increasing inflationary pressures. GDP (by aggregate demand) growth for 2005 and 2006 was 10% and 10.7% respectively, according to the Malaysian Treasury Department’s recent report.

Unemployment is very low, below 4% since 1992 while inflation was kept at 2% annually between 2002 and 2004 but which slowly rose to 3% in 2005 and again to 3.9 in 2006 largely due to the increase in retail prices in petroleum products. However the government made a commitment not to raise the retail price any further and the inflation is being controlled carefully by the government

One of the most significant driving forces of the Malaysian economy is the expansion in domestic demand, largely due to the private sector, a key player since 2003.

Are foreign nationals allowed to own property in Malaysia?
Since late 2006, the Malaysian government are actively promoting the purchase of Malaysian real estate by foreign nationals, initially by removing obstacles which were preventing investors from purchasing (removal of the FIC approval requirement which was a lengthy process) and more recently by abolishing Capital Gains tax on any sale after 31st of March 2007.

There are some restrictions, such as minimum property prices subject to area and certain property is restricted to Malay nationals only. Low-cost or Medium-cost property can not be purchased by foreign nationals, neither can they purchase property which is part of the Bumiputra quota (Malay and other indigenous peoples of Malaysia).

In Malaysia it is necessary to ascertain with the land offices whether the property you are considering is leasehold or freehold, as both situations are available in the country.

Which is the best way to get to Malaysia?
Numerous travel agents and tour operators organise flights, holidays and package deals to Malaysia all year round.

The multiple award-winning International Airport of Kuala Lumpur is one of the largest airports in the world and welcomes international flights from all around the globe on a daily basis, able to cater to 35 million passengers a year.

Malaysian Airlines operate direct flights from the UK to Kuala Lumpur twice a day and the trip takes around 12 and a half hours. Many indirect flights from the UK to Kuala Lumpur are operated on a daily basis with many airlines, including Qatar, Singapore Airlines and Emirates.

UK nationals require a valid British passport to visit Malaysia however a visa is not required.

Do I need a VISA to enter the country?
No, UK nationals require a valid British passport to visit Malaysia however a visa is not required. As a member of the Commonwealth of Nations, Malaysia only requires a visa from the following members: Bangladesh, India, Pakistan, Sri Lanka and Nigeria.

Which are the taxes applied to property?

• Since April 2007, property sales are exempt from Capital Gains tax
• There is no inheritance or gift tax
• There is no wealth
• Non-residents are liable for income tax on Malaysian source income only. Residents in Malaysia must pay income tax on all income, both from Malaysian and International sources.
• Real Estate tax, calculated as a percentage of the capital value or taxable value of the property and charged by state authorities
• Malaysia has numerous double tax elimination treaties with other countries