Foreign Acquisition of Properties in Selangor

The new guidelines on acquisition of properties in Selangor by foreigners and foreign companies came into effect quickly and without prior mention on 1st September, 2014.

A quick summary of what the guidelines cover can be found in the Star’s article by clicking: here.

The most important thing to come out of this new ruling is that foreigners can no longer acquire landed and individually titled residential properties in Selangor, no matter where it is located or how much it is valued.

This effectively rules out Singaporeans and other expats from buying terrace houses, land or bungalows in Petaling Jaya, including gated and guarded communities with individual titles such as Tropicana Golf & Country Club, Glenmarie Residence, Glenmarie Court and Ara Damansara.

They can, however, still purchase landed properties with strata title. An example of this would be The Grove Waterscape Villas in SS23, Taman Megah. Such gated and guarded developments normally share facilities such as a clubhouse and swimming pool, have no fencing between one house and another (no big pets are allowed) and contribute a monthly maintenance fee.

While I agree to some sort of limitation for foreigners to acquire properties in Selangor, I believe that the it should be restricted to a monetary threshold (e.g. foreigners can only purchase properties above RM3mil) and on a case by case application basis (e.g. foreigner to show proof of connection to Malaysia other than for investment), instead of a blanket ban.

Since the ruling came into effect, I have met many genuine Malaysian clients with foreign spouses that find it difficult to buy a home. As their partner is no longer able to put their name on the property, they can only proceed if they have sufficient cash or if they approach a bank that is willing to provide 3rd party loans (i.e. husband and wife jointly take a loan using their income documents and assets, but only wife’s name is on the property).  Certain banks do not accept 3rd party loans due to internal risk policies.

This is a no-win situation especially for basic bungalows of large land size or renovated bungalows in Selangor going for RM4mil and above. Due to the state of our economy and currency, I find that it is only genuine foreigners with Malaysian spouses who will be interested in a house in Selangor and can afford to buy a home of that value. Instead, owners are now stuck because no one else can afford to purchase their property, and such couples may decide to look at properties in Kuala Lumpur due to the new ruling.

I hope somebody comes to their senses soon. This is my personal feedback from dealing with higher-end properties in Petaling Jaya.