Common Mistakes When Buying Property in Malaysia

Published on October 1, 2025 and written by Cyril Jarnias

Here is a detailed article about common mistakes when purchasing real estate in Malaysia:

Malaysia attracts many foreign investors thanks to its dynamic real estate market and attractive prices. However, buying property in this Southeast Asian country carries certain risks for the uninitiated. Here are the main mistakes to avoid for a successful real estate investment in Malaysia.

Not knowing restrictions for foreign buyers

One of the most common mistakes is failing to research the specific rules that apply to foreign buyers in Malaysia. Indeed, the Malaysian government imposes certain restrictions on real estate purchases by non-residents.

Among the main rules to know:

• Foreigners can only purchase properties with a minimum value of 1 million Malaysian ringgit (approximately 200,000 euros) in most states.
• Certain types of properties like village houses (kampung houses) or low-cost properties are reserved for Malaysians.
• Land purchases are generally prohibited for foreigners, with some exceptions.
• Prior approval from the local government is required in most cases.

Therefore, it’s crucial to thoroughly research these restrictions before embarking on a real estate purchase in Malaysia. Hiring a local specialized lawyer can help you navigate these complex rules.

Underestimating the importance of location

Choosing the right location is crucial for your investment’s profitability, but many foreign buyers neglect this aspect. In Malaysia, location has a major impact on a property’s value and rental potential.

Here are some key points to consider:

• Proximity to public transportation, particularly the expanding metro network in Kuala Lumpur
• Access to international schools for expatriates
• Availability of shops and services nearby
• Future development projects in the neighborhood

For example, areas like KLCC (Kuala Lumpur City Centre) or Mont Kiara in Kuala Lumpur are highly sought after by expatriates and generally offer good appreciation potential. Conversely, some more remote areas may seem attractive in terms of price but prove difficult to rent or resell.

It’s recommended to thoroughly study different neighborhoods and visit the area at different times of day before making your choice.

Overlooking additional costs

Many buyers focus only on the purchase price and forget to account for additional costs, which can be substantial in Malaysia.

Among the main costs to anticipate:

• Notary and registration fees (approximately 1-3% of the purchase price)
• Capital gains tax for non-residents (up to 30% on the profit)
• Property valuation fees
• Real estate agent fees (typically 2-3% of the sale price)
• Condominium fees for apartments

It’s crucial to include these costs in your overall budget to avoid unpleasant surprises. Don’t hesitate to ask your real estate agent or lawyer for a detailed estimate of all fees.

Blindly trusting real estate agents

Relying entirely on a real estate agent’s recommendations without doing your own research is a frequent mistake among foreign buyers. Although many agents in Malaysia are professional and honest, it’s important to remain vigilant.

Here are some precautions to take:

• Verify that the agent is licensed by the Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEP)
• Ask for references from other foreign clients
• Compare prices with similar properties in the area
• Don’t hesitate to ask questions about potential negative aspects of the property or neighborhood

It’s also recommended to hire an independent lawyer to review all documents before signing anything.

Not verifying the property title

A potentially costly mistake is failing to thoroughly verify the property title of the desired property. In Malaysia, there are different types of land titles that can affect your rights to the property.

The main types of titles are:

• Individual title: you own both the land and the building
• Master title: common for apartments, where you only own the unit
• Leasehold: you lease the land for a specified period, typically 99 years

It’s crucial to understand what type of title you’re buying and its implications. For example, a leasehold property may be more difficult to resell as the lease term decreases.

Also pay attention to usage restrictions that may be recorded on the title. Some properties may have limitations on their use (residential, commercial, etc.) or on modifications you can make.

Underestimating risks related to construction projects

Buying off-plan may seem attractive in terms of price, but carries specific risks that many buyers underestimate. In Malaysia, many real estate projects are sold before construction, which can be risky for inexperienced buyers.

Here are some points to watch for:

• Check the developer’s reputation and financial stability
• Ensure the project has all necessary permits
• Carefully examine the sales contract and warranties offered
• Be prepared for potential delivery delays

It’s also important to understand that reality may differ from the attractive 3D renderings presented by developers. If possible, visit other projects completed by the same developer to get an idea of construction quality.

Ignoring tax implications

Many foreign buyers neglect the tax aspects of their real estate investment in Malaysia, which can have significant consequences on profitability.

Among the main tax considerations:

• Capital gains tax for non-residents (Real Property Gains Tax) which can go up to 30% on the profit
• Rental income tax, which applies even to non-residents
• Annual property taxes

It’s crucial to fully understand these tax implications and incorporate them into your profitability calculations. Consult a local tax expert to optimize your investment strategy.

Not planning an exit strategy

A common mistake is focusing only on the purchase without thinking about an exit strategy. Whether you’re buying to invest or to live in, it’s important to think long-term.

Some points to consider:

• Market liquidity in the chosen area
• Demographic and economic trends that could affect future value
• Potential resale restrictions for foreigners
• Costs associated with selling (taxes, agency fees, etc.)

Think about your investment horizon and how you might resell or transfer the property in the future. This will help you make more informed choices at the time of purchase.

In conclusion, investing in real estate in Malaysia can be an excellent opportunity, but requires careful preparation and a good understanding of the local market. By avoiding these common mistakes and working with experienced professionals, you’ll significantly increase your chances of making a successful and profitable investment in this dynamic Southeast Asian country.