Malaysia Hartanah

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Tips on Buying Property

16 Tips on Buying Property in Malaysia

1. Before you decide to buy a house or property, please ensure that:

• The housing developer has a license and it is still valid.
• The housing developer has an advertisement and sales permit and it is still valid.

2. Determine the house type that you plan to get:

For landed property such as bungalows, semi-detached houses and terrace  houses, the expected date of completion is 24 months from the date of signing of the Sales and Purchase Agreement. For subdivided building such as condominiums, flats, apartments and  townhouses, the expected date of completion is 36 months. Buyers are advised to obtain from the housing developer the complimentary brochures with all the pertinent information about the project such the development’s license number, and advertisement and sales permit.

3. Land status

Please ensure whether it is:-
• Freehold land – it is in perpetuity.
• Leasehold land – check the number of years left.
• Malay Reserve.
The status of the land can be checked at the Land Office or the State Land Registrar.

4. Brochure Information

Brochures are given free by the developers. Please ensure the brochure has the following information:

1. The Housing Development’s License number and the expiry date.

2. The advertisement and sales permit number and the expiry date.

3. Name and address of:

i. The licensed housing developer
ii. Authorized agents (if any)
iii. Those holding power of attorney (if any)
iv. The project management company (if any)

4. Land status

i. Freehold
ii. Leasehold – number of years left
iii. Encumbrances – whether the land has been mortgaged to the bank for a loan

5. Location description

i. Building material specification
ii. Size of building
iii. Amenities and/or Services

6. Name of housing project (if any)

7. Expected date of completion

8. Price of each type of house

9. Number of units for each type

10. Reference number of the approved building plan and name of the local authority.

The rights of buyers must be understood as contained in the Sales and Purchase Agreement as per schedules G and H of the Housing Development (Control and Licensing) Regulation 1989.

5. First Payment

The first payment of 10 per cent must be made upon signing of the Sales and Purchase Agreement. Please ensure the date of signing of the SPA and the date of first payment are the same. Be aware that the housing developer is not allowed to collect any form of payment without a Sales and Purchase Agreement being signed.

6. Architect Certification

Make sure any demand by the developer for installment payment is supported by a certificate duly signed by an architect or a certified engineer.

7. Interest on Late Payment

If the buyer or end financier for the buyer fails to pay the developer the progressive payment or installment within 21 working days from the date of the written notice of payment from the developer, the buyer will be charged an interest of 10 per cent per annum on the installment not paid.

8. Termination of the Sales and Purchase Agreement

Be aware that failure to make the progressive payment or interest charged on late payment for a period of more than 28 days will give the developer the right to terminate the Sales and Purchase Agreement. The developer must serve the notice in writing by AR registered post of its intention to terminate the SPA.

9. Infrastructural Maintenance Fee

Buyers must pay the cost of maintaining the infrastructure from the date of vacant possession till the date the responsibility is taken over by the local authority or management corporation (in the case of a subdivided building).

Infrastructure is defined as:
1. For land and building – Road, driveway, drains, sewerage, pipelines and sewerage tank for the housing development.
2. For subdivided building – Road, driveway, drains, sewerage, pipelines and sewerage tank for the building.

10. Maintenance and Management Fee

From the date of vacant possession the buyer shall be responsible for paying for services such as:

1. For land and building

i. Refuse removal, upkeep of drains and grass-cutting on the road reserves.

ii. The buyer is responsible for such payment until such responsibility is taken over by the proper authority.

iii. The buyer must pay a six months’ deposit upon being handed vacant possession for the services to be rendered. After six months, if the services are still not taken over by the relevant authority, any subsequent payment shall be payable on a monthly advance.

2. For subdivided building

i. Payment is for the cost of maintaining and managing the common area and payment starts when vacant possession is handed over.

ii. The buyer shall pay one (1) month’s deposit and three (3) months’ advance in respect of the maintenance service charges and any payment thereafter shall be payable on a monthly advance.

iii. Maintenance fee must be paid to the developer from the date of vacant possession up until the formation of a management corporation under the Strata Title Act 1985.

iv. Once the management corporation is formed under the Strata Title Act 1985, maintenance services will be handled by the management corporation and the buyer must pay the maintenance fee to the management corporation and not to the developer.

Reminder: Maintenance fee must be paid as long as the buyer owns a parcel in the said maintained building.

11. Sinking fund

For subdivided building only

The buyer shall upon the date he takes vacant possession of the said parcel contribute to the sinking fund an amount equivalent to 10 per cent of the service charges.

The buyer shall pay one (1) month’s deposit and three (3) months’ advance in respect of the service charges to the sinking fund and any payment thereafter shall be payable on a monthly advance.

12. Payment of Quit Rent, Rate Assessment, etc

From the date of vacant possession or date of assignment, whichever is earlier, the buyer is responsible for the quit rent, assessment, rate payment and other charges relating to the property bought.

13. Vacant Possession

Vacant possession on the building complete with water and electricity connection must be handed over within 24 calendar months from the date of signing of the SPA for landed property and 36 calendar months for subdivided building

According to Regulation and Rights of House Buyers during the Handing over of Vacant Possession, the buyer have to ensure the property is free from any encumbrances before accepting notice of vacant possession. If the developer leases the land or the property, the developer must settle
the balance payment before handing over vacant possession.

Conditions that must be followed by housing developers:

1. Certificate from the developer’s architect stating that:

i. The building is completed.

ii. Water and electricity are ready for connection.

2. The developer has applied for:

i. The issue of the Certificate of Fitness for Occupation (CFO) through Form E**

ii. The local authority has issued a notice stating that Form E has been checked and accepted by the relevant authority.

** Form E is an application from the developer’s architect to the relevant authority for the issue of the CFO.

The buyer is entitled to enter into occupation of the property only upon issue of the CFO by the relevant authority. Likewise, any renovation can only be carried out upon issue of the CFO and approval of the plan by the relevant authority.

While inspecting the building, any defect is recorded and handed over to the developer to be rectified. Make sure you obtain a copy of the report.

14. Damages

The buyer is entitled to claim for late delivery from the developer. If the developer fails to deliver vacant possession of the building as stipulated by the SPA, it must pay damages calculated on a daily rest, 10 per cent per annum of the purchase price.

15. Defect liability period

The defect liability period is 18 months after the date of vacant possession.

16. Creation of Management Corporation for Subdivided Building

A management corporation will be created once the strata title of each individual parcel is issued to the owners. Other functions of the management corporation include insuring and maintaining the building.

*** Sources:
House Buyers’ Guide to Buying a Property in Malaysia – Juanita Chin

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