Frequently Asked Questions
There are many considerations about moving to another country. Leaving friends and relatives is not something everyone is willing to do but there are many reasons why relocating to Malaysia or buying a second home there makes sense. Below are many of the questions which are frequently asked. Please browse through, and if these Questions and Answers do not answer your specific query, then please do not hesitate to get in touch.
Q. What is the cost of living like in Malaysia?
A. Malaysia has an exceptionally low cost of living and a tax regime that is most welcoming to foreigners. Everyone has to be a tax resident somewhere and where better than a tax friendly country? In addition the weak Malaysian Ringgit against the world’s leading currencies means it is cheap to buy and live in Malaysia. Take, for example the cost of a Big Mac Combo (Big Mac, fries and Coke) this costs about USD2.50, or GBP1.30; a full meal at a hawker stall only costs USD1.60, or GBP0.69.
Q. Will I be able to live off my pension in Malaysia?
A. If you are on a pension from a developed country you will find that it offers a much better standard of living here than in your own country. Since remittances from abroad are not taxed it makes living in Malaysia even more attractive.
Q. To supplement my pension, I have a number of investments. When I transfer funds from my bank accounts to Malaysia, will I be taxed on this money?
A. You could be charged tax by the country from which you are transferring the funds, and so you should contact your local tax office for further information, and their answer could depend on your status. For example, once a retiree has been out of the UK for a prescribed period, then offshore investments become free of UK tax and are not taxed by the Malaysian tax authorities either. For many retirees this means that they are living in Malaysia virtually tax free. Put simply, for a foreigner no tax is charged on any income derived outside Malaysia. Interest on any number of fixed deposits of RM100,000 (£14,500) or less held in Malaysian registered banks is also tax free.
Q. Will I have to pay capital gains tax on assets?
A. There is no capital gains tax on assets.
Q. How much capital gains tax will I have to pay on property?
A. On the 1st of April 2007 the Malaysian Government abolished capital gains tax on property to encourage foreign investment. This sparked a property boom.
Q. Will my heirs be subject to inheritance tax?
A. There is no inheritance tax.
Q. If I decide to move to Malaysia will I have to pay import tax on the household goods I ship across?
A. Possessions imported for personal use when retiring to Malaysia are exempt from tax.
Q. What about if I want to bring my car?
A. People settling in Malaysia can bring in one car free of import duty, sales tax and excise duty or buy a new one tax free.
Q. Are there restrictions on the property I can buy in Malaysia?
A. Overseas buyers are eligible to purchase property at a cost of not less RM150,000 (about £22,000). There is no upper limit to the cost of properties that may be purchased by overseas investors in Malaysian property.
There are some restrictions which are unique to Sarawak, but foreigners are eligible to purchase strata title property, which includes the condominiums at Santubong Suites.
Q. Am I eligible to buy the freehold?
A. Overseas visitors are eligible to buy the freehold of properties that cost RM250,00 (£72,335) or over. It should be remembered, however, that the santubong suites is leasehold, although the lease is 900 years long.
Q. Can I become a Malaysian citizen?
A. Yes, but only if you relinquish your current nationality or dual nationality and associated passport(s). If you are buying your property as an investment and will only be visiting every now and again, then you can usually stay up to three months’ at a time without needing a visa (this can vary depending on the country of your origin). If you plan to live in Malaysia, and have brought property, then you will be issued with a resident’s permit which will be renewed annually. After 5 years of residency you can apply for a permanent residents permit.
Q. As I am not a Malaysian citizen and won’t become a resident until I purchase my property, can I apply for a bank loan to fund my purchase?
A. You are eligible to apply for a loan from a local bank for 60% of the purchase price, perhaps even more, although the exact amount lent will depend on your circumstances. Through the local branch of Maybank in Kuching we have been successful in arranging loans for purchasers of Santubong Suites Apartments. This has largely been down to the high calibre of the apartments and the good reputation of the developer, Rewi Bugo.
Q. Can I open a bank account in Malaysia?
A. Opening a bank account is Malaysia is relatively easy. Once you purchase a property you will find that a number of overseas and local banks will be happy to open their doors to you. I have accounts with both HSBC and Maybank in Kuching, and with internet banking you can access your account in English at all times anywhere in the world, to check balances, transfer funds, and even pay utilities bills – all done online over the Internet.
Buying a Santubong Suites Apartment
Q. Has the land been properly registered with the necessary authorities?
A. Yes, the land has been registered with the Kuching Land Registry Authority, and full details of the Vendor and Land Instrument number are set out in the Sales & Purchase Agreement (SPA).
Q. Is there an Architect’s Certificate covering the building work?
A. Yes, an Architect’s Certificate has been issued, together with a ‘Certificate of Fitness for Occupation’ for the units in Santubong Tower. The units in Sejinjang Tower are still under construction.
Q. Is there a Management Agreement setting out the Vendor’s obligations to me?
A. Yes, there is a Management Agreement (MA) setting out in detail the Vendor’s obligations to you as tenant, following your purchase.
Q. Will I be expected to put down a deposit?
A. Yes, a 5% deposit will be required upon signing the SPA.
Q. When will I be expected to come up with the balance?
A. The payment of the balance is based on a payment schedule in the SPA as prescribed by the Ministry of Housing. This prescribed agreement will only be legal for up to 12 months after issuance of the Occupation Permit. For the Santubong Tower, because the units are complete, the schedule will stipulate 5% upon signing of the SPA and the balance within 14 days, but realistically it can take up to 60 days for loan disbursement. However, the SPA affords lenience where finance is required provided the purchaser demonstrates reasonable steps are being taken to procure said finance.
Q. How much will my stamp, registration and legal fees be?
A. Nothing, the stamp, registration and legal fees arising from and in connection with the (SPA) and the subsequent transfer of the ownership of your apartment will be borne and paid for by the Vendor.
Q. Will I be expected to pay the cost of maintaining the infrastructure?
A. Yes, from the day you take vacant possession of your apartment, Service charges are levied at a rate of RM0.25 per square foot, which is minimal considering the size of the complex and the high standards with which it is maintained, not to mention the provision of 24 hour security.
Q. How frequently are these service charges levied?
A. Service charges are levied on a monthly basis, however, the Vendor offers a discount to those tenants who are wiling to pay these in advance.
Q. Are there any other charges I should be aware of?
A. Yes, from the day you take vacant possession of your apartment, you will be expected to pay a contribution to towards insuring the building, but this is included in the service charge. Contents insurance is at the owners’ own cost.
You will also be expected to pay a contribution towards the sinking fund equal to 1% of the purchase price which is payable as part of the final balance on your apartment. The collective sinking fund will not be touched until a Management Corporation/Corporate Body is formed, which will comprise the owners of the units or anyone appointed by them. Thereafter the MC will decide how to spend this money, for example, keep it for future maintenance, give every owner a Service Charge holiday etc.
The only other charge relates to Local Council Assessment rates (the equivalent of Council Tax in the UK) which is levied at RM900 (GBP 130) per annum for the standard units.
Utilities – water, electricity, telephone (if desired), satellite TV (if desired)are understandably at the owner’s own cost. Electricity costs are considerably lower than those of most developed countries, given Malaysia is an oil exporter. There are no central heating bills as the temperature rarely drops below 25 degrees celcius, and gas for cooking purposes in supplied in economical gas bottles. Being a rainforest water is in plentiful supply and therefore supply costs are cheap.