Can Foreigners Buy Property in Malaysia? Complete Guide

Yes, foreigners can buy property in Malaysia. But the headline "Malaysia welcomes foreign property buyers" hides a layer of restrictions, price floors, and approval processes that trip up investors who walk into a showroom expecting Singapore or Thailand-level simplicity. Every state sets its own minimum purchase price. Certain property categories are off-limits entirely. And the tax treatment for non-residents turns a decent-looking yield into a marginal one once you run the full numbers.

This guide covers the actual rules — state by state, property type by property type — so you know exactly what you can buy, what you cannot, and what it costs.

Minimum Purchase Price by State

Malaysia does not have a single national threshold for foreign property purchases. According to the Economic Planning Unit (EPU) guidelines, each state government sets its own minimum, and these have been revised upward multiple times over the past decade. As of February 2026:

Selangor's RM2M minimum for landed property is the highest barrier in the country. If you are a foreigner looking at landed houses in the Klang Valley, budget accordingly — or look at strata-titled units where the threshold drops to RM1M.

These thresholds mean that budget-conscious foreign investors are effectively locked out of the affordable segment. You cannot buy a RM400K apartment in Cheras as a foreigner, even if the cashflow numbers are excellent. The minimum price floor forces foreign capital into the mid-to-upper market segment, where yields tend to be lower.

What Foreigners Cannot Buy

The restrictions go beyond price floors. Certain property categories are completely off-limits to non-Malaysian buyers regardless of budget:

Malay Reserve Land. Properties built on land gazetted under the Malay Reservations Enactment. These can only be owned by Malays. No exceptions for foreigners.

Bumiputera lots. Developers are required to allocate a percentage of units (typically 30-50%) as Bumiputera quota units. These are reserved for Bumiputera purchasers and cannot be sold to foreigners.

Properties below state threshold. Any property priced below the state's minimum purchase price for foreigners, as listed in the table above.

Agricultural land. Most states prohibit or heavily restrict foreign ownership of agricultural land. Rubber estates, palm oil plantations, and farming land generally require special state-level approval that is rarely granted for individual foreign buyers.

Low and medium-cost housing. Properties classified as low-cost (rumah kos rendah) or medium-cost housing are restricted to Malaysian citizens. These are typically priced below RM300K and built under government affordable housing programs.

Properties in designated Malay reservation areas. Beyond individual lot restrictions, some entire neighborhoods or zones are gazetted as Malay reservation areas.

In practice, the available universe for foreign buyers is: strata-titled condominiums, serviced residences, and some landed properties (where permitted) above the state minimum price threshold, on non-restricted land, outside Bumiputera quota allocation.

State Consent — The Approval Process

Under Section 433B of the National Land Code, every foreign property purchase in Malaysia requires state authority approval. This is not a rubber stamp. The process involves submitting an application to the relevant state government, which evaluates the purchase against its foreign ownership policies.

How it works:

1. Buyer and seller sign the Sale and Purchase Agreement (SPA)
2. Buyer's lawyer submits application to the state authority (Pejabat Tanah / Land Office or State Executive Council)
3. State authority reviews and either approves, rejects, or requests conditions
4. If approved, transfer can proceed

Timeline: Varies significantly by state. KL and Selangor typically process within 1-3 months. Penang can take 3-4 months. Some East Malaysian states can take up to 6 months. The SPA usually allows 3+1 months for state consent — if approval takes longer, an extension is needed.

State consent fee: Typically 1-2% of the purchase price, varying by state. This is a separate cost on top of stamp duty and legal fees.

Rejection risk: Approvals are not guaranteed. States can reject applications, particularly if the property is in a sensitive area, below a soft internal threshold (some states have unpublished preferences above the gazetted minimum), or in an area where foreign ownership concentration is deemed too high.

Your lawyer should confirm the state consent requirements and typical approval timelines before you sign anything.

MM2H — Malaysia My Second Home

MM2H is a long-term social visit pass that gives holders residency-like privileges, including some advantages for property purchases.

What MM2H provides for property buyers:

• Ability to purchase properties in Malaysia (still subject to state minimum thresholds)
• Some banks offer higher loan-to-value ratios — up to 80% compared to the typical 60-70% for foreign buyers without MM2H
• Longer tenure options at some banks
• Multiple-entry visa validity for 5-10 years (renewable)

MM2H requirements (revised program, 2026):

The financial requirements are substantially higher than the pre-2021 program. The monthly offshore income threshold of USD 10,000 (~RM 47,000 / SGD 13,500) filters out casual applicants. The SEZ/SFZ tier offers a lower entry point for applicants willing to base themselves in Special Economic Zones or Special Financial Zones. MM2H is primarily relevant for high-net-worth individuals, retirees with substantial pension income, or entrepreneurs with overseas business income.

MM2H does not:

• Grant tax residency (you are still taxed as a non-resident unless you meet the 182-day physical presence test)
• Override state minimum price thresholds
• Guarantee loan approval or better rates — it improves your profile but banks still assess independently

For most foreign investors purchasing a single investment property, MM2H's cost and requirements may not justify the marginal financing advantage. It makes more sense if you plan to actually reside in Malaysia part-time.

The Purchase Process — Step by Step

The standard process for a foreigner buying property in Malaysia:

Step 1: Find the property. Identify a property above the state minimum threshold, not in a restricted category. Verify with a lawyer that the title is clean and the property is eligible for foreign purchase.

Step 2: Sign the SPA. Engage a Malaysian property lawyer. Sign the Sale and Purchase Agreement and pay the earnest deposit (typically 2-3% immediately, with the balance of 10% within 14-21 days). The SPA will include a clause making the purchase conditional on state consent approval.

Step 3: Apply for state consent. Your lawyer submits the application to the relevant state authority. Processing time: 1-6 months depending on state. During this period, arrange financing if needed.

Step 4: Obtain financing. Apply to Malaysian banks. Foreign buyers typically receive 60-70% loan-to-value. Some banks with MM2H holders can go up to 80%. Processing takes 2-4 weeks for a letter of offer.

Step 5: Pay stamp duty and complete transfer. Once state consent is granted, pay stamp duty (8% flat rate on residential property for foreign buyers), complete the Memorandum of Transfer, and register the property under your name at the Land Office.

Step 6: Take vacant possession. For sub-sale properties, this happens on completion. For new developments, upon handover from the developer.

Total timeline from SPA signing to completion: typically 3-6 months for sub-sale, longer for new developments under construction.

Financing for Foreign Buyers

Malaysian banks do lend to foreigners, but on tighter terms than residents receive.

Banks active with foreign buyers: HSBC Malaysia, UOB Malaysia, OCBC Malaysia, Maybank, CIMB. Banks with Singapore or Hong Kong parent operations tend to have smoother cross-border processes. Singaporean buyers can find the full cross-border walkthrough in our guide on buying Malaysian property from Singapore.

Islamic financing is available to non-Muslim foreign buyers at all major Islamic banks. The effective profit rate is often 0.2-0.4% lower than conventional mortgage rates — currently around 3.95-4.15% for Islamic vs 4.35-4.50% for conventional. On an RM1.5M property at 60% LTV, the monthly difference is RM100-200. Over 25 years, that adds up. We covered the mechanics in detail in our post on Islamic vs conventional property financing.

The lower LTV for foreigners means more cash upfront but lower monthly installments. An RM1M property at 60% LTV with a 4.0% Islamic profit rate over 30 years costs approximately RM2,864/month — compared to RM3,823/month for a resident at 90% LTV. Your monthly cashflow position can actually be better as a foreign buyer, but the tradeoff is RM400,000 tied up in the property instead of RM100,000.

Tax Implications — The Real Cost

This is where most foreign buyers underestimate the drag on returns.

Stamp duty: Foreign buyers pay a flat 8% stamp duty on the full residential property value under the foreign buyer surcharge, rather than the standard tiered rates (1%/2%/3%/4%) that Malaysian citizens pay. On an RM1.2M property, this means RM96,000 in MOT stamp duty compared to RM32,000 for a citizen — a significant upfront cost differential. See our detailed stamp duty calculator for exact figures.

Rental income tax: Flat 30% on net rental income (after allowable deductions) for non-residents. While non-residents can claim deductions for expenses like maintenance fees, assessment tax, quit rent, and fire insurance, the 30% flat rate (versus residents' progressive rates starting at 0%) remains a significant cost differential. If your unit rents at RM4,000/month with RM800/month in allowable deductions, you owe RM960/month in tax. Use our rental income tax calculator to model specific scenarios.

RPGT (Real Property Gains Tax): For non-citizens, RPGT is 30% on gains from disposal within the first 5 years, stepping down thereafter. This makes short-term flipping extremely expensive. For a full breakdown, see our RPGT calculator.

The 30% flat rental income tax on net rental income — even after allowable deductions — is the single biggest cashflow drag for foreign buyers. The high flat rate versus residents' progressive rates significantly reduces after-tax yield. Factor this into every projection.

For Singaporean buyers specifically, we have a detailed tax walkthrough in our Malaysia property tax guide for Singaporeans.

Can Foreigners Buy Commercial Property?

Yes — and with generally fewer restrictions. Commercial properties (shop lots, office units, retail spaces) in most states have lower or no minimum price thresholds for foreign buyers. State consent is still required, but approvals tend to be more straightforward.

Commercial property also offers a tax advantage: rental income from commercial properties can be structured through a Malaysian company (Sdn Bhd), which pays corporate tax at 17-24% rather than the 30% non-resident flat rate. Proper tax structuring through a local entity can meaningfully improve after-tax returns. Consult a Malaysian tax advisor before pursuing this route.

The tradeoff: commercial property typically requires larger capital outlay, has longer vacancy periods when untenanted, and is more sensitive to economic cycles than residential rental.

Worked Example — Foreign Buyer Cashflow

An Indonesian buyer purchasing an RM1.2M condo in KL, financed at 60% LTV with Islamic financing:

At 4.8% gross yield and 60% LTV, this property is cashflow-negative by RM652/month. To reach breakeven, the buyer would need either a rental yield above 6.0% or a lower purchase price. Foreign buyers need to clear a materially higher yield bar than residents — our analysis in gross yield vs net cashflow explains why.

Run the full numbers for your specific scenario using our cashflow calculator or Singapore buyer costs calculator before signing an SPA.

The Bottom Line for Foreign Buyers

Malaysia is one of the more accessible Southeast Asian markets for foreign property ownership — there is no outright ban, no leasehold-only restriction, and freehold title is available. But accessible does not mean simple.

The three things that catch foreign buyers off guard:

1. State minimum thresholds lock you into the mid-upper market where yields are typically lower
2. 30% flat rental income tax on net rental income (after allowable deductions) significantly reduces the net yield on properties that look profitable at the headline level
3. State consent delays of 1-6 months add uncertainty and carrying costs to every transaction

Foreign buyers who do well in Malaysia share a common approach: they model the full cost stack before purchase, target gross yields above 6.5% to absorb the tax drag, and treat the state consent process as a known timeline rather than an afterthought.

The buyers who struggle are the ones who saw a headline gross yield at a property fair and discovered the real numbers months later.

All figures in this post are based on publicly available information as of February 2026. State minimum price thresholds, stamp duty rates, and tax structures are subject to change. Consult a qualified Malaysian property lawyer and tax advisor before making any investment decision.

Sources & Further Reading

• National Land Code, Section 433B — state authority consent requirements for foreign buyers
• Economic Planning Unit (EPU) Guidelines — foreign investment committee guidelines
• State Minimum Price Thresholds — state-by-state minimum prices for foreigners
• NAPIC Property Market Report 2025 — Malaysian property market data and price indices