Property Buying and Selling Guides
A-Z of Property-Related Terms
Condominiums, also commonly known as condos, have common areas such as walkways as well as recreational facilities such as a swimming pool, gym, clubhouse, CCTVs and so on. They are jointly owned by the unit owners. The owners and occupiers of condominiums are subject to the rules and regulations of the condominiums.
A legal document conveying the title to a property.
First right of refusal
A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.
The tenure of freehold land is for life. You own the land, the unit, the building and anything that is on the land. There is no time limit for the owner and the freehold land lies with the titleholder until the property is transferred to someone else.
Flippers purchase a property for a resale profit. These properties are usually the ones with the highest capital appreciation / gain in the shortest amount of time. The duration can range between a few months to a few short years.
Gated and guarded community
These developments have controlled access with a guardhouse and perimeter fencing.
These developments are often guarded and do not necessarily have perimeter fencing.
Gross development value (GDV)
The GDV of a property / site is the figure that is based on the total value possible from the sale of all the units within that proposed development.
Income before taxes are deducted.
Keepers usually hold on to properties for at least a year, often for many years, with the intention of profiting from renting the property out. These properties are usually the ones that fetch rental returns higher than 6% and are usually high-rise developments such as apartments and condominiums.
Land which usually belongs to the government and is returnable after the expiry of the lease period, which is often 99 years. When the lease expires, the government can take back the land or lease it further. At the end of the lease, it is fairly easy to renew the lease for a further 99 years upon payment of a premium based on the current market value of the property. It is also possible to arrange for a new lease during the period of the existing lease.
Letter of Offer (LO)
A contract between the borrower(s) and the bank stating the terms of the housing loan package.
The period of time that a person will take to fully repay their loan.
The number of years that a person is tied to their lender aka financial institution. If the loan is fully redeemed within this period, there will be a full redemption penalty that is equal to a percentage of the loan quantum. Lenders may also charge a penalty for making partial payments within this period.
Malay Reserve Land
Land that is exclusively for Malays or Bumiputeras. It cannot be sold to other races including foreigners.
Margin of Financing (MOF)
The amount of financing provided by a financial institution depends on the market value (for completed properties only) or purchase price of the house, whichever is lower. For example, if a property is priced at RM700,000 and the Margin of Financing is 90%, the amount that must be paid is RM70,000.
Mortgage Reducing Term Assurance (MRTA)
A term insurance which reduces over the tenure of the loan. This form of insurance is used to provide cover for the outstanding loan amount, in the event of the death or total permanent disability of the insured. The MRTA is normally calculated to meet the outstanding loan amount.
My First Home Scheme
My First Home Scheme was announced in Budget 2011 by the government to assist young adults who have just joined the workforce in purchasing their first residential property. The scheme allows young adults to obtain up to 100% financing from financial institutions.
Malaysia My Second Home (MM2H)
MM2H is a programme offered by the government which allows foreigners who fulfil certain criteria to stay in Malaysia for as long as possible on a multiple-entry social visit pass. The social visit pass is initially for a period of 10 years and is renewable.
The value of a person's assets minus liabilities.
Off the plan
Buyers purchase a property before it is completed after having only seen the plans.
A facility with a credit line granted based on a predetermined limit. There are no fixed monthly instalments as the interest is calculated based on the daily outstanding balance. This provides borrowers with the flexibility of repaying the loan anytime and the freedom to re-use the money. The interest charged is generally higher than the term loan.
PR1MA (Perumahan Rakyat 1Malaysia)
PR1MA was established to plan, develop, construct and maintain affordable lifestyle housing for middle-income households (average monthly household income of between RM2,500 to RM7,500) in key urban centres. The government plans to build affordable homes in cities and towns in Malaysia.
Real estate agent fees
Fees that are due to real estate agents for services rendered and to be agreed between the estate agent and the client. The fees due are a maximum fee of 3% for all sale and purchase of properties
Real Property Gains Tax (RPGT)
Citizens and permanent residents must pay the RPGT if they sell their property within a five-year window starting from the date of purchase.
The process of paying off a portion or the entire amount of the existing loan with the intention of obtaining another loan from the same or another banking institution.
Shophouses are a row of terraced houses but with one major difference: The ground floor is usually where a shop / business is operated.
Sales & Purchase Agreement (SPA)
A legal contract that obligates a buyer to buy and a seller to sell a product or service.
SOHO / SOFO / SOVO
SoHo is small office home office, SoFo is small office flexible office and SoVo is small office virtual office. Each is relatively similar but differs in terms of functionality.
In a business or asset sale, stamp duty is charged on all instruments conveying the assets, meaning movable or immovable property. It is payable by the purchasers / transferees at these rates:
• 1% on the first RM100,000 of the value of transfer;
• 2% on the value of transfer of the next RM400,000; and
• 3% on the value of transfer of more than RM500,000.
Also known as Semi-Ds, these are two houses which are built side by side and connected on one side of each house. Semi-D houses have open spaces at its front, rear and any one side. These houses often have generous gardens and backyards.
A title to a unit or lot on a plan of subdivision associated with townhouses as well as units and blocks of apartments / condos which are based on the horizontal and vertical subdivision of air space. Owners have a certificate of title, are absolute owners of a freehold unit and have an undivided share of the common property.
Existing properties that are available and are usually occupied by owners or renters, or vacant.
A standard tenancy agreement stipulates that the tenant is obliged to pay two months’ rental in advance as a security deposit, one month’s rental as advance rental and a refundable utility deposit that is normally fixed at one month’s rental (subject to both parties’ agreement). It is important to remember that the tenancy agreement is for the benefit of both parties concerned and should be irrefutable.
A facility with regular predetermined monthly instalments that do not change during the entire term of the loan. Each instalment payment consists of the loan amount plus the interest.
Terraced houses are all connected to each other in a row and usually have open spaces at the front and back. The corner lots are quite similar to semi-detached houses as one side will have more open space compared to the rest. Each row may consist of 10 to 12 units depending on the size of each house, as it must comply with the regulations of the Fire Services Department which state that each row shall not exceed 130 feet in length.
A check of the title records to ensure that the seller is the legal owner of the property and that there are no other claims or liens outstanding.
Generally, townhouses are not as popular as other types of houses in Malaysia. They are two properties built on the same piece of land with the lower unit usually occupying the ground and part of the first floor, while the top unit occupies the remainder of the first floor and the second floor. Most of the time, the owner of the lower unit is different from the owner of the top unit.
Ownership of an unoccupied property, where the previous owner or tenant has vacated the property.
A written analysis of the estimated value of a property prepared by a qualified valuer or appraiser.
The seller of a property.
The interest earned by an investor on an investment, stated as a percentage of the amount invested. The rental yield that most investors would accept is a minimum of 6% for residential properties. The basic formula for calculating rental yield is: Annual rental income divided by property price.
Zero Entry / Moving Cost Loan Package
A loan package where borrowers do not have to pay for all or certain charges and fees involved in obtaining / refinancing a loan such as legal fees, stamp duty and disbursement charges.
Consumer experiences may differ depending on location or other factors.