A-Z of Property-Related Terms

Condominiums, also commonly known as condos, have common areas such as walkways as well as recreational facilities such as a swimming pool, gym, clubhouse, CCTVs and so on. They are jointly owned by the unit owners. The owners and occupiers of condominiums are subject to the rules and regulations of the condominiums.

A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

The tenure of freehold land is for life. You own the land, the unit, the building and anything that is on the land. There is no time limit for the owner and the freehold land lies with the titleholder until the property is transferred to someone else.

Flippers purchase a property for a resale profit. These properties are usually the ones with the highest capital appreciation / gain in the shortest amount of time. The duration can range between a few months to a few short years.

Keepers usually hold on to properties for at least a year, often for many years, with the intention of profiting from renting the property out. These properties are usually the ones that fetch rental returns higher than 6% and are usually high-rise developments such as apartments and condominiums.

Land that is exclusively for Malays or Bumiputeras. It cannot be sold to other races including foreigners.

The amount of financing provided by a financial institution depends on the market value (for completed properties only) or purchase price of the house, whichever is lower. For example, if a property is priced at RM700,000 and the Margin of Financing is 90%, the amount that must be paid is RM70,000.

A term insurance which reduces over the tenure of the loan. This form of insurance is used to provide cover for the outstanding loan amount, in the event of the death or total permanent disability of the insured. The MRTA is normally calculated to meet the outstanding loan amount.

My First Home Scheme was announced in Budget 2011 by the government to assist young adults who have just joined the workforce in purchasing their first residential property. The scheme allows young adults to obtain up to 100% financing from financial institutions.

MM2H is a programme offered by the government which allows foreigners who fulfil certain criteria to stay in Malaysia for as long as possible on a multiple-entry social visit pass. The social visit pass is initially for a period of 10 years and is renewable.

Buyers purchase a property before it is completed after having only seen the plans.

A facility with a credit line granted based on a predetermined limit. There are no fixed monthly instalments as the interest is calculated based on the daily outstanding balance. This provides borrowers with the flexibility of repaying the loan anytime and the freedom to re-use the money. The interest charged is generally higher than the term loan.

Fees that are due to real estate agents for services rendered and to be agreed between the estate agent and the client. The fees due are a maximum fee of 3% for all sale and purchase of properties

Citizens and permanent residents must pay the RPGT if they sell their property within a five-year window starting from the date of purchase.

The process of paying off a portion or the entire amount of the existing loan with the intention of obtaining another loan from the same or another banking institution.

A standard tenancy agreement stipulates that the tenant is obliged to pay two months’ rental in advance as a security deposit, one month’s rental as advance rental and a refundable utility deposit that is normally fixed at one month’s rental (subject to both parties’ agreement). It is important to remember that the tenancy agreement is for the benefit of both parties concerned and should be irrefutable.

A facility with regular predetermined monthly instalments that do not change during the entire term of the loan. Each instalment payment consists of the loan amount plus the interest.

Terraced houses are all connected to each other in a row and usually have open spaces at the front and back. The corner lots are quite similar to semi-detached houses as one side will have more open space compared to the rest. Each row may consist of 10 to 12 units depending on the size of each house, as it must comply with the regulations of the Fire Services Department which state that each row shall not exceed 130 feet in length.

A check of the title records to ensure that the seller is the legal owner of the property and that there are no other claims or liens outstanding.

Generally, townhouses are not as popular as other types of houses in Malaysia. They are two properties built on the same piece of land with the lower unit usually occupying the ground and part of the first floor, while the top unit occupies the remainder of the first floor and the second floor. Most of the time, the owner of the lower unit is different from the owner of the top unit.

The interest earned by an investor on an investment, stated as a percentage of the amount invested. The rental yield that most investors would accept is a minimum of 6% for residential properties. The basic formula for calculating rental yield is: Annual rental income divided by property price.