KUALA LUMPUR – February 27, 2017: Foreigners are taking advantage of loopholes in Malaysia’s real-estate related laws to buy freehold properties priced at below the ceiling set by the government with relative ease.
Apparently, the only effort they need to make is to find Malaysians willing to act as proxies.
This, as an Austrian immigrant told The Mole, was how he managed to buy a two-storey terrace house in Bukit Jelutong costing RM835,000 two years ago.
After establishing a kawtim (mutual understanding) with his Malaysian partner, the Austrian who introduced himself as Matteo said the rest was as easy as ABC.
“After my friend bought the house with my money, I hired a lawyer to change the title. We made it in such a way that the house appeared as a gift from one friend to another.
“Because I did not buy the house technically I did not break any laws,” quipped Matteo.
He resorted to doing this simply because buying properties in Selangor were considered way too expensive in the past four years.
In 2014, the Selangor government increased the price cap for non-Malaysians from RM1 million to RM2 million.
“Not every foreigner who lives here is rich you know. It’s true that most of us are wealthy but we’re not millionaires,” he said.
Another foreigner from Germany disclosed other alternatives.
“Some of us buy the so-called guest-houses that are bought as freehold properties through joint-ventures between local and foreign companies,” he said.
He revealed how some private residential clubs were involved in selling properties to well-to-do but not millionaire foreigners.
“The price may be higher but it’s still below the price cap.
“Plus, we don’t have to pay in lump sum. Our monthly installments are billed as club membership,” he added.
Another lawyer, Aidil Khalid said such malpractices are mainly a result of lack of enforcement.
Commenting on Matteo’s case, Aidil reasoned that state agencies should have checked on the current value of a property before approving the gift-giving transaction.
“If at the time the gift is presented to the foreigner the value of the property is below the price cap, the authorities aren’t supposed to approve the transaction,” he told The Mole.
There were also instances where a proxy declared a price higher than the cap in a dummy sale and purchase agreement.
Aidil also cited the National Land Code to point out that it is highly unlikely a state agency would be able to repossess the sold/gifted property.
This is because a section of the law provides for the indefeasibility of a title once the name of the owner is registered.
The Mole attempts to get a clarification from the ministry of urban wellbeing, housing and local government were unsuccessful.