5 Hidden Costs of Owning a Home in Malaysia
Is adulthood beckoning you to spread your wings and fly out of the comfort of your parents’ nest? Or are you stepping into the next chapter following your holy matrimony and have decided to build a new home with your partner (and your future kids)?
Looking for a new long-term crash pad is undeniably exciting, but are you financially ready for such a big step? Here are some hidden costs that you should take note of when buying a house:
Upfront Charges
They say buying a house is a harder decision to make than choosing where to eat for lunch (We think they’re both equally puzzling!). But of course, buying a house isn’t an overnight decision – you have to first keep your bank account in check for miscellaneous fees.
Do you have enough money for various upfront charges? These fees include:
- Sales & Purchase Agreement (SPA): Legal fees, 10% deposit of property price, stamp duty
- Loan agreement: Legal fees, stamp duty, legal disbursement fees
- Memorandum of Transfer (MOT): Fees for transfer of ownership, stamp duty
- Bank processing fees for housing loan
- Property agent fees
Still a fish out of water on property lingo? Let’s start with basics; read more on SPA here.
Home Insurance
Having an insurance for your home is equally important as getting a health insurance to protect yourself against unforeseeable events.
Here are some common home insurance policies that you should know about:
| Insurance policy | What it covers |
|---|---|
| Basic fire insurance | Loss or damage of the building or its contents caused by fire, lightning, and explosion. |
| Houseowner insurance | Same as Basic Fire Policy, with extended coverage such as floods, burst pipes, natural disasters, and theft for residential properties i.e. private dwellings. |
| Householder insurance | Same as Houseowner Policy, with extended coverage on fatal injuries caused by the insured items. |
Utility Fees
If you haven’t saved some money for a rainy day, it may be best to revisit your finances because buying a house will cost a pretty penny – and we’re not just talking piggy banks here.
Prepare some buffer cash for electricity and water bills, sewerage, and internet for miscellaneous charges upon registering for a new account for these utility services which include installation and administrative charges.
Property Taxes
A man may be able to escape his ex-girlfriend, but he sure can’t escape taxes. When you own a property in Malaysia, there are a few government taxes you have to be mindful of:
- Quit Rent: This is essentially land tax, charged by the Land Office for any land you own where your house was constructed. Also known as cukai tanah.
- Parcel Tax: This is the apartment/condo version of land tax, charged by the Land Office for strata properties. Gated residences on stratified land are also charged with this. Also known as cukai petak.
- Assessment Tax: Charged by Majlis Perbandaran, this tax is used to maintain the infrastructures and services in your area, i.e. pedestrian sidewalks, cleaning public parks. Also known as cukai taksiran.
- Tax upon Purchase/Sale of Property: You are expected to pay stamp duty for important documents on your housing upon purchasing a house.
Maintenance Fees and Sinking Funds
Owning a strata property such as high-rise units where you share common public facilities like the swimming pool and the gym means you have to set aside some cash for monthly maintenance fees. These fees are used for the regular upkeep of the shared facilities and services, including security and garbage disposal.
You will also have to fork out money for sinking funds, otherwise known as emergency community funds. The fee is collected by your residential Joint Management Body (JMB) and will be used for adhoc expenses such as building repair works.
House shopping requires a lot of research – make sure you do your homework before settling on a property so you won’t have any regrets! Read up more about tips on buying a home and SPA signing for first time home owners.
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