You will encounter a myriad of bewildering legal and technical terminologies on your journey to purchase a home in Malaysia. So to help you understand the ABCs of property buying, we have compiled more than 30 terms, phrases and jargons along with their industry meaning arranged in alphabetical order.
1. AUCTION
This is typically the sale of a property to the highest bidder. Another form is the Dutch auction, wherein the auctioneer starts with a high asking price and lowers it until there’s a taker. Properties sold via auction are often mortgagee sales, or the disposal of foreclosed properties by banks.
Read more: The Pros and Cons of Purchasing an Auction Property
2. AS IS
This phrase applies to resale properties or units being sold in the secondary market. This is a legal term which means that the property is being sold in its present condition. It is important to note that there is no warranty for hidden defects in such transactions.
3. BUILT-UP AREA
Basically, the total area of the property you’re buying.
4. BUMIPUTERA LOTS
Land or properties that can only be bought and owned by Bumiputera, or native Malaysians.
5. CERTIFICATE OF COMPLETION AND COMPLIANCE (CCC)
This document replaced the previous certificate of fitness. Essentially, this signifies that a building is safe and fit for human occupation.
6. DEFECTS LIABILITY PERIOD
This only applies to off-plan units or units sold in the primary market. This is the period wherein any flaws discovered by the buyer will be rectified by the property developer at no cost to the purchaser.
7. DEVELOPER
A company whose business is constructing properties, such as homes, and selling them. Another similar term is home builder.
8. EARNEST DEPOSIT
This is the amount you pay to a vendor to show that you are serious in purchasing a home. It’s basically a booking fee. The only difference is that an earnest deposit is used for resale properties, while booking fee is the term used for securing an off-plan unit from a developer. If the transaction proceeds, the earnest deposit or booking fee is used to partly cover the property’s purchase price.
9. FREEHOLD
This means you own the land on which your property is built on forever or in perpetuity. However, the government can still compulsorily acquire freehold land for public infrastructure projects, such as roads and railways.
10. FORECLOSURE
Foreclosure is the process wherein a bank sells off a property used as collateral by a borrower, who has failed to repay his housing loan or mortgage.
11. GROSS DEVELOPMENT VALUE (GDV)
This is the estimated overall price of a real estate project once the developer has completed taking into account all of the units, as opposed to the individual price of a property in a development.
12. HOUSE FLIPPING
A residential property is purchased, but is quickly re-sold for easy profit.
13. HOUSING DEVELOPMENT ACT (HDA) OF 1966
The chief law that provides legal protection to home buyers in Malaysia.
14. INDIVIDUAL/STRATA TITLE
This is the deed of ownership for units in a strata development.
15. LEASEHOLD
Opposite of freehold, you only own the land for a limited period. A typical time frame for leasehold land is 99 years. At the end of the tenure, the government has the right to take back the land and is not required to compensate the property owner. Nonetheless, the property owner may be allowed to extend the term by paying a premium.
Read more: Freehold vs Leasehold: The Millennial Dilemma
16. LIQUIDATED DAMAGES
This is the amount a home buyer will get from a home builder if the firm fails to give you the keys to the unit you’ve bought during the agreed date.
17. MAINTENANCE FEE
The monthly amount paid by those who own strata properties that is used for the upkeep and maintenance of the strata development’s common facilities.
18. MALAY RESERVE LAND
This is land that is exclusively intended for Bumiputera or Malays. Such properties cannot be leased or disposed to other racial groups such as overseas nationals.
19. MEMORANDUM OF TRANSFER (MOT)
The document that transfers ownership of a property from seller to buyer.
20. OFF-PLAN
A property is being sold even before it is completed.
21. OPTION TO PURCHASE
Option to purchase is a contract whereby the seller grants someone the exclusive right to buy a property within a limited period at an agreed price. This becomes effective once the would-be buyer pays an earnest deposit or booking fee.
22. PRIMARY MARKET
Similar to off-plan, this means you are buying a brand new home, or one that has not yet been constructed.
23. PROPERTY AGENT
A professional licensed agent by the Board of Valuers, Appraisers and Estate Agents (BOVAEA) who provides property services, like selling or renting homes. They typically work for a property agency.
24. PR1MA (1MALAYSIA PEOPLE’S HOUSING PROGRAMME)
PR1MA is one of the major kinds of affordable housing in Malaysia that is subsidised by the federal government and sold to qualified buyers at below-market price.
25. REAL PROPERTY GAINS TAX (RPGT)
This is a form of levy that property owners need to pay when they sell their property. The tax ranges from a minimum of 5 percent up to 30 percent, depending on how long the seller has held the property. Basically, the longer the length of ownership, the less RPGT you need to pay.
26. RIGHT OF FIRST REFUSAL
This is an agreement whereby the property owner gives someone the right to buy a property first. The vendor can only sell the property to another after the right holder has refused to buy it.
27. SALE AND PURCHASE AGREEMENT (SPA)
A document that contains all the agreed upon terms and conditions between a property buyer and seller (typically a developer). This document is legally binding and both parties can sue the other for breach of contract.
Read more: 7 Things to Check Before Signing Your SPA
28. STAMP DUTY
This is a tax imposed on different commercial and legal documents, such as the SPA and the contract for the housing loan obtained from a lender.
29. SECONDARY MARKET
Opposite of primary market. This means you’re buying a resale property.
30. SHOW UNIT/SALES GALLERY
A life-size model or replica of the homes being marketed by a real estate developer.
31. SINKING FUND
Unlike maintenance fee, which is used for everyday repairs and upkeep of a strata development, the sinking fund is used for large expenditures in the future, such as major repairs.
32. VACANT POSSESSION
Vacant possession means the property is completed and fit to be occupied by the buyer, or the keys can be turned over to the buyer who can readily occupy such premises.
33. VALUATION
An appraisal of the estimated market value of a property done by a third party professional firm or in-house department of a bank. Use for negotiating the price of a property, or for calculating how much a home buyer can loan from a financial institution.
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(Written by G. Zizan, 19th November 2019)
