When buying a house in Malaysia, understanding the different types of property titles is crucial. The title affects ownership, eligibility for purchase, and the ease of transfer. Here’s a simple guide to help you understand the basics.
Land Usage
First, check the land usage. Properties can be built on residential or commercial land. For instance, service apartments, SOHOs (Small Office Home Office), and SOVOs (Small Office Versatile Office) are built on commercial land. These properties have higher taxes and utility rates compared to residential properties. Additionally, first-time homebuyers won’t get a stamp duty discount for these types of properties. However, they can be advantageous if you want commercial units like shops and restaurants in the same building.
Freehold vs. Leasehold
Understanding the difference between freehold and leasehold is vital. Freehold means permanent ownership of the property. You own the land indefinitely unless the government reclaims it through a specific act. Freehold properties are generally easier to transfer because they rarely require consent from state authorities. This makes the transfer process quicker, usually within 90 working days from signing the sale and purchase agreement. In contrast, leasehold means you lease the land for a specific period, usually 99 years. The state government owns the land, and you need to renew the lease when it expires by paying a premium. Transferring leasehold properties often requires consent from the state, making the process longer and more complicated. Typically, it takes 6-7 months to complete a leasehold property transfer.
Bumiputera and Malay Reserve
Malaysia has specific property titles for Bumiputera and Malay Reserve lands. Bumiputera Lot properties are designated for Bumiputera buyers and come with a discount. Regardless of whether the property is freehold or leasehold, a Bumiputera lot can only be transferred to another Bumiputera buyer. Malay Reserve properties are even more restrictive, as only Malays can own them. Both freehold and leasehold properties can have Malay Reserve status.
Title Types
Knowing the different title types helps in understanding ownership and transfer processes. Master Title indicates that the developer still owns the land and has not subdivided it. Buying a master title property that’s over 10 years old can be difficult as most banks are reluctant to finance them, often signaling issues with the developer. Individual Title is common for landed properties like houses and means the property has been subdivided and the title is in the owner’s name. Strata Title is used for high-rise buildings like apartments and condos, indicating ownership of a specific unit within the building.
Transfer of Ownership
The process of transferring property ownership depends on the title type. Leasehold properties and Bumiputera lots often require state authority consent, which can delay the transfer. Understanding these requirements helps in planning your purchase timeline effectively.
By understanding these property titles, you can make informed decisions and navigate the buying process more smoothly. It’s always wise to consult with a real estate lawyer to clarify any uncertainties and ensure a smooth transaction.
