How much does it cost to build a house in Malaysia? Here’s a step-by-step guide

As with any DIY project, constructing your own residential property requires extensive planning, organising and budgeting. Check out our 12-step guide which outlines the entire process. 

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Choosing to build your own home from scratch is a bold decision. That being said, it is an exciting opportunity to see your dream house turn into reality. However, before you dive into it, you have to understand that constructing your own home is very different from buying one. There are various phases and costs involved, approvals that you have to seek and numerous stakeholders which you have to work and coordinate with.

A property’s selling price and its construction cost could vary greatly according to its location or land cost, size, build quality as well as the extent of fixtures and fittings. Just to provide some context, according to the National Property Information Centre (NAPIC) – The 2018 median price of a house in Selangor is RM382,000 while in Perak it is RM210,000.

To provide a clearer picture of the various costs involved, we will be breaking down the steps involved in building your own home in Malaysia, with costs estimates where applicable.

Let’s dive right into it:

Step 1: Calculate your estimated budget (construction, services and fixtures & fittings)

For the construction cost budgeting purposes, we have gotten some help from a renowned construction company, Arcadis Malaysia. Their 2019 Construction Cost Handbook provides a rundown on the construction costs for various residential landed property types in Malaysia. These data points (average sum) are based on the latest fixed construction tender prices in the market.

The construction cost range per sq ft (PSF) for the top 5 cities in Malaysia is as follows. This table will help you calculate a rough cost estimate for the building and construction services you require. Do note that the sums quoted here include the cost of building the house exterior and interior fit-outs only and excludes site formation works, external works, land cost, professional fees, finance and legal expenses. We will discuss the interior costs of the building further below.

Type of Houses KL Johor Baru Penang Kota Kinabalu Kuching
RM/PSF RM/PSF RM/PSF RM/PSF RM/PSF
Detached houses (mass housing) 224-306 223-288 220-256 183-203 154-180
Detached houses & bungalows (high end) 287-381 283-353 257-272 313-382 243-366
Terraced houses 85-134 93-137 81-123 100-129 111-120

NOTES: 

1. The above costs are as of Q42018, inclusive of preliminaries (10%) but exclusive of contingencies. 
2. The costs per square foot are based on Construction Floor Areas (CFA) measured to the outside face of the external perimeter including stairwells, balconies, plant rooms, water tanks and the like.
3. All buildings are assumed to have no basements and are built on flat ground, with normal soil and site conditions. 

We would think that detached houses and bungalows (high-end) would be the go-to option for individuals who are considering building their own home. These houses are defined by Arcadis as homes with quality fit-outs including air-conditioning units, kitchen cabinets and home appliances, but excluding decorative light fittings, loose furniture, garden and parking lot.

To illustrate a simple example, let’s say you want to build a 1,200 sq ft, single-storey detached house in KL. Taking the average of RM287 and RM381, your per sq ft price will be RM334. Thus, your approximate building, construction service and basic fixtures and fittings cost will be: RM334 PSF x 1,200 = RM400,800.

Comparatively, the same home will cost you RM317,400 in Penang.

Rather buy your own house instead? Read How to buy a house in Malaysia in 12 steps

Step 2: Set a timeline

It can take anywhere between 1-2 years from the time you purchase a land, hire your consultant team, design the house, finalise your blueprints, obtain a bank loan and finally building the house to completion. Design the schedule as such that it meets your project timeframe and budgeted cost.

Step 3: Hire a team of consultants       

© Kwangmoozaa | Getty Images

You will need a set of skilled professionals to help plan and execute your home building project. They include:

Architect

An architect would design the detailed blueprint/floor plan of your house. You need to express your vision of your dream home in detail for him to produce an accurate floor plan. If the architect has to design the floor plan from scratch, then you will have to fork out roughly 5-10% of the construction cost for this service. However, if you have an existing house plan that is close to the design you want, this cost will be lowered down to only 2% of your construction cost.

Structural Engineer

The structural engineer will be involved in designing, planning and overseeing the construction of a new house.

Mechanical Engineer

This engineer’s job is to plan out the mechanical, electrical and plumbing system of the house with the help of the architect and structural engineer so that you will have a fully functional house.

Surveyors

You need to hire surveyors to approve different phases of your project.  For example, you can hire a geotechnical engineer  to test the soil of your land to ensure it is suitable to build a house. It is also recommended to hire a building surveyor, whose job scope includes ensuring quality of workmanship, areas that need improvement, the specifications of materials used, and construction compliance according to approved standards.  This surveyor must be certified by the Royal Institution of Surveyor Malaysia (RISM). 

Builder

If you are a working individual, then you won’t have the whole day to spare on your house project. A builder will act on your behalf to run the project smoothly and oversee all the construction activities.

Lawyer

Last but not least, don’t forget to engage an efficient lawyer to oversee the obtaining of your permits and approvals and confirm that all your construction initiatives are law-abiding. As you will be working or dealing with various stakeholders, a lawyer can assist you with any legal issues that may crop up and save you from potential lawsuits or penalties.

Step 4: Find a suitable piece of land

The land is the holy ground of your house, so a lot is weighing upon it. It’s a given that you should not purchase slanted land or a plot that has an odd gradient. Nevertheless, not all flat plains are safe – some lands hold excessive water. This may add to your cost of installing a pump to disperse excess water from your land. Hence, make sure to test the soil before you sign the papers.

As for location, select a house with friendly neighbourhood and public facilities and infrastructure, preferably with a low crime rate. Also do some research on whether the land is safe from earthquakes, floods or landslides to build a long-lasting house for generations to come.

Once the land checks all the boxes above, have your lawyer check the dotted lines and register at the Land and District Office of your state. Once you purchase the land, you are liable to pay stamp duty on the Memorandum of Transfer.

Cost of Land Stamp Duty
First RM 100,000 1%
RM 101,000 – RM 500,000 2%
Above 500,000 3%

MORE: How to buy land in Malaysia?

Step 5: Finalize floor plans and details

© marctran | 123rf

Next, you will need to finalise your floor plan or design blueprint to get ready for construction. Advise the architect to make the plan as detailed as possible. Sketch out where the kitchen and bedrooms will go, how many windows you want, how your living room will look like and where you’d want your entry and exit passageways.

The architect must adhere to the local housing and zoning guidelines or building codes, which includes leaving enough space between your house and the one beside yours. Your driveway must not eat up the road space and there must be adequate ventilation for sunlight and airflow. Remember, once the floor plan is approved, there’s no going back. So, double-check with your architect before finalising everything.

Looking for inspiration? Check out Before and after: 8 remodelled Malaysian homes you need to see to believe

Step 6: Apply for a loan

The land is ready and so is your floor plan. Now, you will need to secure some financial back up to get the construction ball rolling. You have 2 options, one is to take a land financing loan which will only pay for your land. The second option is taking land + construction financing loan which will fund your overall project – including construction materials, labour costs and even permits and approvals.

If you have a prior good standing with the bank and have at least 25% of your estimated construction cost as a deposit, then securing a loan won’t be a problem. You can get as much as 75-90% of your cost covered by the loan. The better your credit score, the higher the margin of financing.

Banks like OCBC, Maybank, UOB, Alliance, all have loan packages to help you build your dream house. Depending on your chosen bank, the interest rate may vary from 6-7%. Once you have selected a bank, get ready the following documents to speed up your loan approval process:

  • Pictures of the land from different angles
  • Land title
  • Consent document form land office
  • Blueprint of the house certified by Architect
  • Summary of the total cost billed for the construction
  • Architect firm’s profile and financial statement
  • Certificate of completion and compliance (CCC) from the land office

Once your loan is approved, you have 2-3 years to start construction. You can draw up the money in phases and the lending officer will pay an occasional site visit to ensure that the building works are progressing accordingly.

Step 7: Finalise the building plan and get the necessary permits 

house-document

© 123rf

Once you have secured the funding you require, you cannot simply pick up a shovel and start digging. You will need to obtain certain permits from the local authorities to build your house, where your plan and building proposal must comply with the Malaysian planning and building standards drawn by the Ministry of Housing and Local Government (KPKT) and the Department of Town and Country Planning (JPBD).

The building plans have to be prepared and submitted to the local authority and it needs to be issued by a principal submitting person (PSP) – either a professional architect, engineer or building draftsman. According to the Kuala Pilah Local Council (MDKP), these are the 4 main stages for permit approvals and the respective authorities who will issue them:

Construction Permits Authority
Application for land matters District Land Office/ Department of Land and Mine
Application for planning permission (Kebenaran Merancang) Planning Department
Application for building plans Building Department
Application for Earthworks, road and drainage plans Engineering Department

You would want to contact your specific District Council for a more accurate list.

Step 8: Prepare the construction site

You have jumped through the right hoops to get your building approvals and now you can break ground and get building! Before that though, you have to get the site construction-ready:

  • Set up a storage place for construction materials and tools
  • Prepare a resting place and lavatory facilities for the construction workers
  • Demolish any existing buildings on site and clear off debris and unwanted trees/shrubs
  • Grade and level the land to prepare it for construction

Step 9:  Select your preferred building materials

© Bogdan Mircea Hoda | 123rf

At this step, you will be fleshing out the structural and interior designs that have been mapped out on paper. Preferably, you would want to ensure your contractor uses simple and ecological materials to reduce your carbon footprint. For instance, wood is a popular flooring option as it looks elegant, versatile and is also easy to work with. When it comes to selecting building materials, cost and durability are the two main deciding factors.

To help you gauge material prices for budget planning purposes, check out this quantity survey site which lists down the unit price for essential items including cement, plaster, bricks, plywood and timber.

Step 10: Design your home’s interior

Here comes the fun part – designing the interior of your home! We recommend sticking with a neutral colour palette when it comes to paint and furnishings to give your home a fresh look. Or you could adopt the minimalist style for your home too. When hiring an interior designer, it is best to ask friends or family for a good referral to ensure you get your money’s worth.

Here comes the fun part – Designing the interior of your home! We recommend sticking with a neutral colour palette when it comes to paint and furnishings to give your home a fresh look. Or you could too. When hiring an interior designer, it is best to ask friends or family for a good referral to ensure you get your money’s worth.

If you’re wondering about the cost of basic interior designing, wonder no more. A local interior designing firm, Qanvast, has laid out the average cost estimates for home renovations in Malaysia.

Type of House Cost Range
Bungalow  RM 150,000 – RM 600,000
Semi-detached RM 100,000 – RM 300,000
Terrace houses RM 60,000 – RM 250,000

Here is the average price for flooring, wall/panelling and other miscellaneous interior work.

Flooring RM/ sq ft Feature Walls RM/ sq ft
Parquet 10-30 Painting 40
Vinyl 4.5-12 Plywood Laminate 80
Carpet 4.5-15 Stone veneers 10-30
Tiles 9-60 Wall hacking 20

 

Miscellaneous Interior Cost Average Cost in Malaysia
Plaster Ceiling RM 2-5/ sq ft
Light through RM 7-30 per foot run
Study table RM 200-300 per foot run
Wardrobe RM 350-600 per foot run
Kitchen Cabinet (base/wall) RM 100-300 per foot run
Shoe Cabinet RM 300-500 per foot run
TV Console RM 150-300 per foot run
Installing water heater Around RM 250
Installing sink and tap Around RM 300
Installing toilet bowl Around RM 400

In addition to other interior costs, you should also take into account the mechanical and ventilation (M&V) cost of a house, in particular, the fitting of air conditioning units. According to Arcadis’ Construction Cost Handbook, on average, it costs RM 11 PSF of floor construction area.  As for refrigeration air-cond units in residential houses, it comes out to RM4,600-5,000 per tonne of refrigeration. However, this estimated figure is based on homes in the KL area – your actual M&V costs may vary depending on location.

Step 11: Obtain the Certificate of Completion and Compliance (CCC) before moving in

© Zuraisham | Getty Images

Once your house is ready, there is the matter of obtaining this document which will indicate that your building is safe for occupation. The CCC is one of the conditions set by the government to ensure that newly-constructed buildings are built in accordance to the required standards.

It is issued by your PSP, where the CCC can only be given out after the following six services have been confirmed:

  • Confirmation for electricity supply from Tenaga Nasional Berhad (TNB)
  • Confirmation of water supply from the state water authority
  • Proper connection for sewage treatment plant/mains from Jabatan Perkhidmatan Pembentungan (JPP)
  • Clearance for lifts from Jabatan Keselamatan Dan Kesihatan Pekerjaan (JKKP)
  • Fire safety confirmation from the Fire Department

READ: What to do if your ‘new’ property has defects & 4 other must-knows about Defect Liability Period (DLP)

Step 12: Sort out your property tax and insurance

The last lap in your home project may not be building related, but is important nevertheless. Once you occupy your new home, you are liable to pay certain taxes to the government, which includes:

Property Assessment Tax (Cukai Pintu)

This annual tax which is paid to the local authority is a necessary evil for all land and homeowners. The Government uses this money for the cleaning and maintenance of public infrastructure.

Tax calculation = Estimated rent value of your house for 12 months multiplied by a set of rates.

(For residential houses, the usual rate is 4% whereas for commercial property the rate is around 10%.)

Quit Rent (Cukai Tanah)

All private property owners are required to pay this tax to the State Government via the land office or Pejabat Tanah Dan Galian (PTG). Quit Rent is paid on the 1st of January annually, and the amount depends on the size of your house.

For example, if you have a 1,000 sq ft house in Kuala Lumpur and the Quit Rent for KL is RM0.035 per sq ft, your sum payable for each year will be (1000x 0.035) = RM 35

Indah Water Bill

Indah Water Konsortium (IWK) is a sanitary disposal service, that manages the public sewage systems and water treatment plants. You need to fork out RM8 per month for their service and if you have an individual septic tank, the rate is RM6 per month.

And that’s a wrap for the basic steps involved in house construction. Obviously, this is not a comprehensive list, but it should suffice as a quick overview on what the whole process entails. Here are a few parting tips:

  • Consult with Government building laws to make informed decisions
  • Use MBAM to hire professional builders for your house
  • Ensure you hire a Certified Architect as you will be relying on them for your floor plan design and for the CCC issuance.

If you enjoyed this guide, make sure to check out A beginner’s guide for strata property owners in Malaysia.

Edited by Reena Kaur Bhatt

 

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