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How to buy a subsale house in Malaysia in 7 steps


*This article was updated on 18 August 2022.

If you are thinking of purchasing a subsale house in the secondary property market, this complete beginner’s guide is for you! We list down the costs to consider, how to check for current market value and include tips on securing a housing loan.

© Dinis Tolipov | 123rf

What is a subsale house?

A subsale house is a second-hand property that is sold in the secondary market. Unlike new properties or under-construction properties, a subsale property usually has a pre-existing owner who previously possibly bought it from a developer during a property launch.

It could be the right time to buy the sub-sale home you have been eyeing for some time. The Malaysian government recently announced that effective January 1, 2022, RPGT will no longer be imposed on disposals by property owners starting from the 6th year. This means that the RPGT rate for property disposals in the 6th and subsequent years after acquisition will be reduced from 5% to 0%. Thus, owners who were previously holding off from selling their property might be more willing to settle for lower selling prices as they will be enjoying significant savings from the RPGT exemption.

Nonetheless, purchasing a sub-sale home could be an intimidating process for a first-time homebuyer, but it does not have to be if you understand the process involved.

Let’s dive into our step-by-step guide on securing your dream home:

1. Calculate the costs of buying a subsale house and set a budget

The purchase of a sub-sale home in Malaysia typically requires a minimum of 10% downpayment. It involves 2 stages, where the buyer will first pay a simple earnest deposit (about 1-2% of the purchase price) upon signing the Letter of Offer or Booking Form. This booking fee indicates the buyer’s commitment to ensuring the deal goes through while waiting for their loan application to be approved by a financial institution. Usually, a third party such as a property agent or lawyer is engaged to hold the earnest deposit in escrow ahead of the completed transaction. The remaining of downpayment (about 7-8%) and stamp duty fees will follow once you sign the Sales and Purchase Agreement (SPA).

On top of that, you will need to fork out monies for the closing costsstamp duties, valuation fees, and legal fees. Although it is not obligated by law, it is encouraged to hire a lawyer when purchasing a sub-sale residential property to ensure that you end up with a fair deal. A legal professional will assist you in preparing all the legal paperwork related to your property purchase and will be able to advise you on the best legal recourse if things don’t go according to plan. Legal services include finding out any hidden clauses in the SPA that you will be signing off on and carrying out due diligence work on your behalf, such as land title checks at the local Land Office.

There is also the mortgage insurance cost, which is roughly 3% of your property value – there are 2 options to pick from, Mortgage Reducing Term Assurance (MRTA) and Mortgage Level Term Assurance (MLTA).  Lastly, you should remember to have some funds in reserve for your renovation cost. The extent of renovation and refurbishment will depend on the overall condition of the subsale house – but most experts recommend not spending more than 10% of your home value on renovations.

Let’s say your target property has a transaction price of RM600,000 – your budget estimate will be as follows:

Costs Involved


Cost Calculation (RM)

Down paymentMinimum 10%.

Note: Those purchasing their second or third property can expect a lower margin of financing from the banks, hence the downpayment can range from 20-30%.

  • RM600,000 X 0.1 = RM60,000
Stamp Duty

Stamp Duty on SPA = RM10

Stamp Duty on Memorandum of Transfer (MOT) or Deed of Assignment (DOA)

  • First RM100,000: 1%
  • RM101,000 – RM500,000: 2%
  • RM500,001 – RM1 million: 3%
  • Above RM1 million: 4%

Stamp Duty on the Loan Agreement 

  • 0.5% of loan amount (90% of property value)

Stamp Duty on SPA = RM10

Stamp Duty on Memorandum of Transfer (MOT) or Deed of Assignment (DOA)

  • First RM100,000: RM100K X 0.01 = RM1,000
  • RM101,000 – RM500,000: RM400K X 0.02 = RM8,000
  • Next RM100,000: RM100K X 0.03 = RM3,000

Stamp Duty on the Loan Agreement 

  • 0.5% of loan amount: 0.005 X RM540,000 = RM2,700
Mortgage InsuranceTypically 4% of property valueRM600,000 X 0.04 = RM24,000
 Valuation fees
  • First RM100,000 = 0.25%
  • Next residue up to RM2 million = 0.2%
  • First RM100,000 = RM100K X 0.0025 = RM250
  • Residue of RM500,000 = RM500K X 0.002% = RM1,000
Legal fees

Sale & Purchase Agreement (SPA) legal paperwork fees

  • First RM500,000: 1%
  • Next RM500,000: 0.8%
  • Next RM2,000,000: 0.7%
  • Next RM2,000,000: 0.6%
  • Next RM2,500,000: 0.5%

Loan Agreement legal fees

  • First RM500,000: 1%
  • Next RM500,000: 0.8%
  • Next RM2,000,000: 0.7%
  • Next RM2,000,000: 0.6%
  • Next RM2,500,000: 0.5%*Plus, a few hundred Ringgit in disbursement fees for SPA and Loan Agreement.

SPA legal paperwork fees

  • First RM500,000: RM500K X 0.01 = RM5,000
  • Next RM100,000: RM100K X 0.008 = RM800

Loan Agreement legal fees

  • First RM500,000: RM500K X 0.01 = RM5,000
  • Next RM500,000: RM100K X 0.008 = RM800
 Real estate agent’s feesAbout 2% to 3% of property priceRM600,000 X 0.02 to 0.03 = RM12,000 to RM18,000
Repair and renovation costs Up to 10% of property valueRM600,000 X 0.1 = RM60,000

TIP: Most booking forms for the purchase of subsale properties are prepared by property agents and have a standardised format. You should look out for the phrase  “subject to XX% loan approval” as this would determine if the earnest deposit is recoverable in the event that your housing loan is rejected and the booking form becomes void.

FIND OUT: New launch or subsale property in Malaysia – Which is better?

2. Determine the right subsale home for you and your family

Do take into consideration factors such as the location of the property and its neighbourhood; the size of the property; the proximity and accessibility to your workplace, essential amenities such as schools, hospitals, leisure and religious facilities; and if the subsale house is located in a safe and clean environment.

© baona | Getty Images

Another important factor that you should consider is the age of the subsale house and also find out the remaining duration of the land tenure before you make your purchase. Subsale homes with leasehold titles may turn out to be less attractive to many as their lease expiry might be within the next few decades. Hence, it is always good to check the status of the sub-sale residential property with the local land office as part of your due diligence process.

Also, be sure to check the property title and the names of the official owners at the land office to ensure that your property seller is a legitimate one. There are some instances where conmen have tried selling properties that do not officially belong to them and buyers only found out about the scam when it’s too late.

It would be best if your target property is located in a neighbourhood you are familiar with, however, if you are planning to move to a different location, it is best if you could:

  1. Find a trusted agent who is familiar with the area that you are interested in to obtain as much helpful information as possible.
  2. Talk to friends or colleagues who might live there.
  3. If it is a condominium/apartment, do get in touch with the management office (JMB/MC) to gather information about the property and its surrounding neighbourhood.
  4. Seeing is believing. Find out by exploring the area yourself. Viewing the actual subsale units will enable you to make a more informed decision.

Note: Subsale properties do not come with a defect liability period (DLP). A DLP refers to a warranty that is provided by the developer for brand new properties. Under the defect liability period, the developer is required to fix any defects in the newly bought property within a given period. You do not have the same luxury when purchasing a sub-sale residential property. Therefore, it is important to take note of the smallest details when you are viewing the unit, while also keeping an eye out for any common defects such as roofing problems or water leakage.

3. Find the best property deal within your budget

How can you evaluate the current market value of subsale homes in the neighbourhood that you are interested in and see if the pricing falls within your budget? For Malaysian properties, has a good wealth of information for you to start out with. It provides the latest transaction price of landed houses and high-rise units of secondary properties in all suburbs within the country.

Via the website, a property buyer or a home seeker can get reliable, accurate and up-to-date transaction price information for the subsale market in Malaysia. You can also instantly see the property’s latest sales history, its sale value, per sq ft price, as well as median prices of properties in the area that you are interested to purchase. By having transparent sub-sale property data easily available, it gives home buyers like yourself an upper hand in negotiations.

You can also check out subsale listings here, and enjoy a streamlined search experience via features such as the Transactions Section which allows you to view the latest transaction data of a particular property in the past 12 months. Capital Growth and Estimated Rental Yield information are also made available to help buyers in their decision-making.

TIP:  Find a reliable property agent who specialises in the area you are interested in – besides having good market knowledge, they will try their best to secure you a home which has the best balance between your wants/needs and financial capability.

What you should know about property valuation 

When applying for a home loan from a bank for your subsale property purchase, the bank will appoint one of its panel valuers to value your target property and prepare a written valuation. Banks may be financial providers but they do not have the authority to value your property. Assuming that the property valuation report states that the house is valued at RM580,000 instead of RM600,000. In that case, you can only obtain a loan-to-value of 90% based on the lower amount (RM580,000).

How to check a subsale home’s market value?

A common challenge most subsale property buyers face is the higher selling price being requested by the property seller. Negotiating for a reasonable selling price can be challenging especially if you are not familiar with the local property market. Fortunately, there is one convenient way for you to check the current market value of similar properties in a certain neighbourhood using iProperty’s Transactions Section. The data is accurate as it’s powered by brickz. my, and allows consumers to view the latest transaction data of a particular property in the past 12 months. So, how does it work?

Step 1: Go to iProperty’s Transactions Section

Step 2: Input a specific location/neighbourhood

After selecting “residential property” type,  inputting a location (e.g. state, city, or township) in the search box. You will be shown a list of developments and the pricing details of each project – thus giving you an idea of how much a condominium or terrace house costs in the area. For example, if you type in Taman Desa, you will be able to view all the latest transactions in the neighbourhood, by project:

taman desa

Step 3: Filter by property type, tenure and price to help you with your research

One cool feature is that you can filter your search results by property type, tenure (freehold or leasehold) and even price. This makes it easy for you to find properties that fit your budget and requirements. With this, you can pinpoint homes whose market value is within your means.

4. Secure a housing loan

Once you have found your dream property, you can start shopping for a housing loan after paying your earnest deposit. It is essential for you to get your financing ready before signing the SPA.

© 123rf

A typical mortgage tenure is about 30-35 years long. Using the RM600,000 property as an example, a 30-year home loan with an interest rate of 3.4% would mean a monthly instalment payment of RM2,395 for the next 360 months or 30 years. Hence, making the right choice to fit your repayment abilities is important.

Also, you might end up getting a smaller margin of financing than expected. An RM600,000 home might turn out to be worth RM550,000 in the eyes of the bank after their valuation assessment. Consequently, you will be eligible for only RM495,000 instead of the expected RM540,000, which could put a dent in your prepared budget. Hence, it is always good to have a little more budget on hand for unforeseen circumstances.

To avoid any nasty shocks when applying for a home loan, make sure to find out what your debt-to-service ratio (DSR) is beforehand. The DSR is used by banks in Malaysia to assess your risk profile and to determine your borrowing power. Try our free home loan eligibility tool, LoanCare to gauge the property price that you can actually afford based on your income level. This tool will also compare your home loan eligibility instantly across 17 banks in Malaysia.

TIP: The Base rate set by banks may be fixed but you can negotiate on the spread/interest rate to obtain a lower Effective Lending Rate on your home loan. However, you should ensure that you have a good credit rating beforehand as the spread largely depends on the borrower’s risk profile.

Bank Negara Malaysia recently introduced a new Reference Rate Framework, called the Standardised Base Rate or SBR. The SBR will apply to all new retail floating-rate loans in the country effective 1 August 2022. It replaces the Base Rate (BR), a reference rate that was introduced in 2015. The BR itself was introduced to replace another reference rate, the Base Lending Rate (BLR). Find out more here.

? Housing loan: How to apply as a first-time homebuyer in Malaysia

5. Prepare the Inventory List and sign the Sale and Purchase Agreement (SPA)

The Sale and Purchase Agreement (SPA) is a complex legal document that details the terms and conditions of the sale. Do ensure all the details about the subsale home are properly described and spelt out – these include details on the renovations, additions, upgrades or extensions that were performed previously. It is essential to ensure all details correspond to what you have seen with your own eyes. For instance, the number of car park bays that comes with the condo unit that you are purchasing is clearly stated on the SPA to avoid any future dispute.

Before drawing up your SPA, do decide with the property seller which moveable items or fixtures will be removed or left in the home. You may do so by doing a site visit of the property and noting down all the items you want the seller to remove or leave within the property.

For example, you might want to keep an existing antique clock for your new house, and may request for the seller to retain it for you. Once these items are agreed upon, they will be listed in the inventory list which will be set out in the SPA. The inventory list depicts the items that you will expect to find when you take over the vacant possession of the property. This document also forms part of the SPA that you will be signing off. Good communication with your seller is crucial and an agreement should be obtained before the real sign-off happens.

CHECK OUT: Sale and Purchase Agreement in Malaysia: What is SPA in property

6. Confirm your loan agreement and property transfer

At this stage, your home loan agreement should be ready for you to sign off to confirm the financing from the bank. Assess and ensure the amount, interest rates, tenure and other terms and conditions on the agreement are accurate and conform to your financial abilities. It is worthwhile to have your lawyer take a final look through to ensure legality and fairness. Once completed, you’re on your way to officially owning your home – to get it transferred to you by way of a Memorandum of Transfer (MOT) between you and the seller.

© Catherine Falls Commercial | Getty Images

The MOT is a document that every property buyer must sign in order to transfer the ownership of the property from the property seller to its new owner – this document lists down the particulars of the property seller and buyer and land title details for the knowledge and reference of the local land authorities. However, the MOT will only come into play when the name of the new owner needs to be registered on the strata or individual title by the local land authorities. 

At this point, you will pay the remaining 7-8% of your home deposit to the bank. Besides that, other relevant fees (mentioned above) such as stamping fees and legal paperwork fees should also be paid.

TIP: If you are a first-time home buyer, you will be eligible for a full stamp duty exemption on the memorandum of transfer and loan agreement for a residential property priced up to RM500,000. This initiative was announced by the Malaysian Prime Minister in July 2022 and falls under the Keluarga Malaysia Home Ownership Initiative (i-MILIKI). The exemption will apply to sales and purchase agreements that are completed from June 1 2022 to December 2023.

The stamp duty exemption rate is as the following:

  • 100% exemption for homes valued at RM500,000 and under
  • 50% exemption for properties priced over RM500,000 to RM1mil

7. Delivery of vacant possession (VP) of your subsale residential property

Vacant possession (VP) is when you can expect to receive your keys to the property. The delivery of VP depends on the payment of the balance purchase price for the property as well as the Agreed Apportionments, which is a list detailing all the bills which have been prepaid by the previous owner including the sinking fund, water bills and management fees. You will have to reimburse these additional monies to the owner as you have taken over the vacant possession and the seller will no longer be utilising the property and its facilities.

Usually, a 3+1 months timeline will be incorporated into the SPA to provide both the buyer and seller ample time to secure funding, move out and transfer the property ownership. Delivery of Vacant Possession is confirmed once the property seller delivers the keys to the buyer either personally or through the buyer’s lawyers. Upon which, you may move into the property. You are now officially a proud homeowner!

? List of legal documents required when buying a house in Malaysia
?‍⚖️ Are you a subsale homebuyer? Don’t forget to change names to these 3 things

This article is written by Geraldine and edited by Reena Kaur Bhatt.

Disclaimer: The information is provided for general information only. Malaysia Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.

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Frequently Asked Questions About Buying Subsale Homes

It is crucial to consider several factors before buying a house. You need to know your preferred property type and location, and take into account proximity to amenities and market trends. Know your financial capacity, explore financing options, and establish a realistic budget. Familiarize yourself with legal aspects, obtain pre-approval for a home loan and research the developer's reputation if applicable. Conduct a thorough property inspection, consider structural elements and potential repairs. Investigate planned developments in the area, assess resale value, and factor in ongoing homeownership costs. It is advisable to engage with a professional for guidance throughout the buying process.
"Project" refers to properties within a new development sold by a developer, involving direct purchases during or before construction. "Subsale" refers to the resale of a property that has already undergone the initial sale from the developer. In subsale transactions, the seller is typically the original purchaser.
"Undercon" is a colloquial term that is short for "under construction." In the context of real estate or property, "undercon" refers to a house or property that is currently in the process of being built or developed.