We will take you through the general overview of the complexities of Bumi-lot ownership for mixed-nationality couples in Malaysia, focusing on the legal aspects surrounding this issue.
Q: I’m a Malaysian Malay married to a Singaporean Malay, and we’re interested in buying a newly launched property listed as a Bumi-lot. Can you help clarify whether we can purchase it under both our names, considering our different nationalities?
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As a Malaysian Malay married to a foreign national, the idea of purchasing a Bumi-lot property may sound ideal. After all, the discounts and exclusive rights that come with being Bumiputera make this type of property highly desirable. But what happens when you’re in a mixed-nationality marriage? As a couple, can you co-own a Bumi-lot if one of us isn’t a Malaysian Bumiputera?
We will take you through the general overview of the complexities of Bumi-lot ownership for mixed-nationality couples in Malaysia, focusing on the legal aspects surrounding this issue.
What Is a Bumi-Lot?
For those unfamiliar with the term, a Bumi-lot (short for Bumiputera lot) refers to properties in Malaysia reserved exclusively for Bumiputera individuals. These are part of affirmative action policies under the New Economic Policy (NEP), aimed at promoting equitable ownership of assets among Bumiputera.
Interestingly, the term “Bumiputera” doesn’t actually appear in the Federal Constitution, which means its definition isn’t set in stone. However, it’s commonly understood to refer to ethnic groups in Malaysia such as the Malays, the native people of Sabah and Sarawak, and the indigenous Orang Asli of Peninsular Malaysia.
The key benefits of owing a Bumi-lots include:
- Exclusive rights: Only Bumiputera can purchase these properties, at least for a specific time before they may be released to the open market.
- Discounts: Bumi-lots often come with discounts, usually around 5% to 15% off the market price.
- Preference: In certain developments, Bumi-lots may also be more strategically located or have better features.
Hence, it’s clear why Bumiputera seeks these properties highly. The discounts, priority in allocation, and exclusivity attached to these properties make them an attractive option for many.
Looking for A Bumi Lot Properties to Buy? Explore Our Listings Here!Can We Co-Own a Bumi-Lot as a Mixed-Nationality Couple?
The short answer?
No, not directly.
Here’s why: under Malaysian law, only Bumiputera individuals or entities are allowed to own Bumi-lot properties. Even though you, as a Malaysian Malay, are entitled to purchase such a property, your foreign spouse doesn’t enjoy the same privilege. Bumi-lots are not available for purchase by foreigners, and that includes foreign spouses of Malaysian Bumiputera.
As a result, you can’t jointly own a Bumi-lot property if you plan to include both of your names on the property title. This rule protects the integrity of the Bumi-lot system, ensuring that such properties remain within the Bumiputera community as intended by the policies.
What If My Spouse is a Bumiputera from Another Country?
Some people in mixed-nationality marriages may wonder if the rules are different if their spouse is also a Bumiputera but from a different country. In Malaysia, Bumiputera refers specifically to Malaysians of Malay or indigenous descent, as described above. Even if your spouse is a “Bumiputera” in their own country, they don’t qualify as a Bumiputera under Malaysian law. Therefore, the restriction still applies, and a non-Malaysian spouse cannot co-own a Bumi-lot with a Malaysian Bumiputera.
Other Restrictions on Foreign Ownership of Property in Malaysia
Under Malaysian law, foreign individuals can own property, but several key restrictions and conditions must be met. These restrictions are aimed at protecting local interests and ensuring that property remains accessible and affordable to Malaysians, especially for high-demand property types like Bumi-lots. These limitations are especially important to understand for mixed-nationality couples, as they can affect decisions on co-ownership or joint purchases.
1) Minimum Purchase Price
One of the most significant restrictions for foreigners buying property in Malaysia is the minimum purchase price rule. Foreigners are typically only allowed to purchase properties above a certain price threshold, which varies from state to state. For mixed-nationality couples, this restriction means that even if you both wanted to co-own a property that falls below the minimum price threshold, the fact that your spouse is a foreigner could prevent you from being able to co-own it.
Explore New Properties in Malaysia, Click Here!2) Approval from State Authorities
Foreigners who wish to purchase property in Malaysia must also obtain approval from the state authorities. This approval is typically required to ensure that the purchase complies with state regulations, and there may be additional conditions attached to the purchase. In the context of joint ownership with a foreign spouse, even if the property meets the minimum price threshold and isn’t a restricted type, you will still need to seek approval from the relevant state authority before completing the purchase.
3) Limited Access to Government Housing Schemes
Foreigners are also not eligible for various government housing schemes and programs designed to make homeownership more affordable for Malaysians. This includes projects under PR1MA, RUMAWIP, and other affordable housing schemes. As a result, mixed-nationality couples are generally excluded from these programs if one partner is a foreigner.
4) Types of Properties Restricted to Foreigners
Foreigners are also restricted from purchasing certain types of properties, even if they meet the minimum purchase price. For example, foreigners cannot typically buy Malay Reserve Land or Bumiputera-reserved properties like Bumi-lots. These properties are reserved for Malaysians who qualify as Bumiputera under Malaysian law, ensuring that these special rights and benefits are preserved for locals.
Is There a Workaround? Exploring Alternative Ownership Structures
The most straightforward option is for the Malaysian Bumiputera spouse to purchase the Bumi-lot in their sole name only. This way, the property remains compliant with the laws restricting ownership to Bumiputera individuals. While you can’t co-own a Bumi-lot as a mixed-nationality couple, there are alternative arrangements to consider.
1) Granting Power of Attorney to the Foreign Spouse
An alternative option for is for the Bumiputera spouse to grant the foreign spouse a Power of Attorney (POA) to act on their behalf regarding the property. While this gives the foreign spouse some control over the property, it does not provide co-ownership rights. Additionally, POA can be revoked, so this isn’t a permanent or absolute solution.
2) Creating a Trust
Some couples might consider establishing a trust in which the Bumiputera spouse holds the property in trust for both spouses. This option can give some control to the non-Bumiputera spouse without violating the laws restricting ownership. However, trusts can be complex to set up and manage, and they require careful legal drafting to ensure they are valid under Malaysian law.
3) Transferring Property Upon Release
Bumi-lots are often subject to a release condition, where after a certain period or after meeting specific criteria, the property can be sold to non-Bumiputera. While this may sound like a solution, it’s important to note that once a Bumi-lot is released to the open market, it is no longer considered a Bumi-lot. This means the original benefits, such as the Bumiputera discount, no longer apply.
In principle, a Bumiputera spouse could purchase the Bumi-lot and then transfer it to their non-Bumiputera spouse after the release period. However, this would likely incur additional costs, such as stamp duties, and you might lose out on some of the original benefits of the Bumi-lot purchase.
4) Joint Ownership of Non-Bumi-Lot Properties
Another option is for mixed-nationality couples to opt for non-Bumi-lot properties that aren’t subject to Bumiputera restrictions. While these properties won’t come with the same discounts or privileges, they do allow for joint ownership without the same legal limitations. However, the foreign partner is still subject to other requirements.
Is It Worth the Complication?
While purchasing a Bumi-lot may seem like a great deal for Bumiputera, mixed-nationality couples face may face significant hurdles when trying to co-own such properties. The restrictions imposed by Malaysian law are strict, and rightfully so, as they aim to preserve the integrity of the Bumiputera ownership system. While the benefits of owning a Bumi-lot are tempting, the legal hurdles make it clear that co-ownership is not a straightforward path for mixed-nationality couples.
Best Regards,
Tsu Jean Yinn, Legal Associate, Melissa Lim & Associates