Since we signed the letter of offer from the bank, there were numerous delays in the further processing of our purchase… most likely being held up at the lawyer’s office.
Within two weeks from signing the letter of offer, the legal clerk made an appointment with us to send the Sales and Purchase (SPA) agreement and the Deed of Mutual Covenant (DMC). The SPA includes the standardised terms and conditions, part of the legislation of the state, in addition to the details and floor plan of the property we bought.
The DMC is a contract between owner and developer binding you to certain behaviours and protocol to be observed as part of the community. Clauses include things like paying monthly maintenance fees, restrictions on renovation, noise level, and other less civil behaviour. According to the lawyer, this contract is the only thing that binds your neighbours from being future pain in the asses and the same rules apply to you as well.
At the point of signing the SPA, the developer would require payment of outstanding downpayment which is 10% of the property price in our case (we took 80% loan plus 10% rebate from developer).
It was another excruciating 1 month wait before we heard news from the lawyer again. We were still pending the signing of the loan documentation binding our liability to the bank who offered to loan us the money.
There was a delay as the developer decided to effect the transfer of the title to us now instead of upon completion of the project which was the original arrangement in view that we were foreigners. Their rationale being that as the Malaysian government is considering the increase in minimum property price for foreign ownership from RM500K to RM1 million, they wanted to effect the transfer of title now to allay future complications.
This was all and good for us I suppose since now we own the land whether it gets developed or not? To effect the transfer from the Master title, we had to pay the stamp duties upfront which is thankfully absorbed by the developer. The stamp duties is a tiered percentage based on the purchase price.
First RM100,000 – 1%
Next RM400,000 – 2%
Next RM 1.5 million – 3%
Thereafter – 4%
For our purchase of RM545,800, our duties totaled to RM10,300 thereabouts with an additional RM2,000 for legal and administrative charges. You can refer to this website for the table of applicable fees.
Once all the paperwork was ready, we went down to the lawyer’s office to sign the loan documentation, title transfer form and state consent application together with further payment of RM11,000 for the levy charges plus administrative fees. There are rumours too that state consent levy might increase from the current RM10,000 to RM30,000.
At this point in time, let me explain that there are three sets of legal fees payable –
1. On the Sales and Purchase Agreement which is usually borne by developer
2. On the Loan Agreement which can be tagged to your total loan balance
3. On the Memorandum of Transfer (MOT) which is to effect transfer of title. Check if developer absorbs this cost.
After meeting with the lawyer in person finally, we were also able to clarify a few of our doubts. I was glad that our lawyer is a Christian and speaks good English.
We found out that with the ownership transfer, we are now liable for a few other taxes which we were previously unsure about.
First there is the Quit Rent also known cukai tanah as which you pay to the state government for simply owning a piece of land. According to lawyer, this is a paltry sum of about RM50 per year.
Then there is the Assessment Rate also known as cukai pintu which is paid to the local municipal (for me is MPJBT) depending on where the property resides on. The current rate is 0.14% of the property valuation which works out to be about RM800 per year for me. This tax is paid to the council for the upkeep of infrastructure such as roads, street lamps and clearing of rubbish. This is when I found out that the monthly maintenance paid on G&G properties is only for the security guards… You can read up more about Malaysia property taxes on this site.
All that remains now for us is to await the developer to stamp on all our documents, upon which they will be submitted to the Johor state for consent which would probably take a couple of months for approval. So we’d probably have to wait till September even before we can be sure about our ownership.
So to recap the total upfront costs to be considered –
1. Booking Fee
3. Legal Fee on Loan Documentation (sometimes developer or banks may absorb this cost)
4. Mortgage Reducing Term Assurance (MRTA)
5. SPA Legal Fee but usually borne by developer
6. Stamp Duties
7. Legal Fee on Stamp Duties/MOT
8. State Consent Levy
9. Administrative Fee on State Consent Application
Meanwhile we visited Sierra Perdana two weeks ago and am happy to see the progress of our development. Some new houses from earlier phases had just CFOed and many of the happy owners were there to scout the property. The shophouses are coming up quite fast as well and I can already picture what a lovely estate this will be when ready.