Purchase of Land in Malaysia

In this economic circumstance, buying land may be considered as a risky decision. As a wise investor, you have to follow some guidelines which will help you to make the best deal whenever you want to buy a land.
We have sorted out some essential steps to show you the best way on “how to buy a land” in Malaysia successfully. Follow these steps before buying any land in Malaysia.

1. The Purpose of buying land

Before buying a piece of land, the best thing you can possibly do for yourself is to question the purpose of said land. By identifying the questions, you’ll recognize the common land choices such as Residential Land, Agriculture Land, Commercial Land, or Bungalow Land.

2. Type of Land

First of all, pay attention to the physical aspects of the landscape, such as the desired size.

If you are going with the green thumb route, check the fertility of the land to see if anything can be planted there. If not, do ensure the location is prime for whatever investment you are planning.

Secondly, determine whether it is a leasehold (owned for a fixed time before returning to the government) or freehold (the owner has complete control until the land is transferred to someone else).

Freehold – outright ownership for an undefined period.
Leasehold – ownership held for a set period up to 99 years, with the lease expiring or requiring renewal.

Remember, in Malaysia, there are certain types of land can only sold to Malay individuals under the Malay Reservations Enactment, so be aware of this when searching for land. If not, try looking into the types of land below.

3. Get a copy of the Issued Document of Title

The title represents a set of rights on a piece of land that a party can use to obtain any legal or equitable interest. It is a type of deed which is both registered and issued by the Malaysian government. Before purchasing any land in Malaysia or elsewhere, the first thing you have to do is obtain a copy of this deed, also known as the issued instrument of title (or commonly known as land title). This document will provide crucial information to investors interested in that particular piece of property. At the land office, you can conduct a private or formal search.

4. Estimate the cost

When purchasing land, cost is a significant consideration. The actual price of a piece of land is determined by various factors, such as the size, its location, accessibility to transit, and profitability based on future value and development. Residential and development areas are always more expensive than other types of property, such as agricultural land. Prices are usually calculated on a “per square foot” basis.

5. Surveying the Land

A proper study of the area performed by a certified land surveyor, as it will highlight all restrictions, services, utility collections, public or other privileges, risk of flood and etc. A check of the contour of the particular land is required for hilly terrain. Land surveyors also play an important role in conducting feasibility studies or ecological impact testing on potential sites to determine whether plans are appropriate or not. One of the most significant advantages of having the land properly surveyed is that the Issued Document of Title is often obsolete and the boundaries of the land have a pattern of modifying over the years. Look for professionally accredited land surveyors when choosing a land surveyor.

6. Get the plan of the land from survey department:

There are three primary circumstances you will find when purchasing land as planning authorization is concerned:

  1. The area has no permission for planning.
  2. The land has Outline Planning Permission.
  3. The land has Detailed Planning Permission for developing for which a bundle of plans has already been submitted and accepted.

7. Check the tenure of Land

Get to know about the category and the zoning of the land you are interested in. Ask the appropriate questions about the land and be sure that the land is convenient without any kind of restrictions, especially check the tenure of leasehold land, Special reserved land and State/Federal marked land.

8. Sign agreement with land owner:

During signing the sale and purchase agreement, ask the land owner to represent other necessary documentation in front of your agents and brokers. Unlike the other agreement, the seller or land owner is not responsible for up-keeping the property when you sign the agreement.

9. Insert a Private Caveat to protect your interest

A caveat document notices that an individual can claim unregistered interest on a particular land. As a purchaser, you need to provide details and a claim to protect the seller’s interest. If not done correctly, the purchaser of the land won’t be the legal authority of said land if their interest isn’t registered with any Land Title Office in Malaysia.

10. Payment

Inquire with the seller about the typical purchase price and any associated professional expenses. If you make a deal with a broker, you have to pay a charge for the broker. Calculate the costs to determine the profit from your investment. Before continuing to buy that land, it is important to set up with the regional authority that they will eventually allow you to carry your plan to execution. Sign Form 14A (Transfer of land) upon the payment of full purchase, which later need to be sent to stamp office for adjudication.

11. Presentation of form

Conduct an all-purpose due diligence on the land offered, such as- address, title, picture etc. the date of presentation of form 14A to the land office will be the date of registration. According to Malaysian law, the instrument of purchasing the land has to be presented for stamping within 30 days of the execution of the deal.

12. Collection of Land Title:

For safekeeping purposes, collect it from the land office. If the land is charged to the bank, the bank is responsible for maintaining the title.