16 April 2013

Why do I need your consent to sell my property?

In a sale and purchase transaction of property in Malaysia, one may hear the agent or the solicitors advising parties in a transaction that “consent” is required from the relevant authorities before the transaction can be completed.

Some parties, particularly, first time purchasers of a property, would probably find this bewildering; why one needs to obtain permission (consent) before buying property.

There are a few types of “consent” that needs to be emphasized here. These consents are governed in the relevant sections in the National Land Code (Act 56 of 1965) and the gazettes by the Government in relation to purchase of property by a foreigner.

“Consent” from the relevant state authority is to be applied due to the ‘restriction in interest’ stated on the title. These ‘restriction in interest’ will vary in each title that holds the property but the main purpose of the statement is to get the seller of the property to apply for the “consent” of the relevant state authority to sell the property.

An example of a ‘restriction in interest’ that appears in a title for a property is “Tanah ini boleh dipindahmilik, dipajak atau digadai setelah mendapat kebenaran Pihak Berkuasa Negeri.”. What this statement simply means is that the current owner of the title to the property will only be able to transfer the title to anyone else, charge or mortgage AFTER the State Authority consent is obtained.

In relation to the foreigner’s purchase of property in Malaysia, Section 433 (B) of the National Land Code (Act 56, 1965) is particularly applicable. It is clearly stated that in the section, any foreigner that is within the interpretation of the act, will have to obtain the consent of the State Authority prior to acquiring or purchasing properties in Malaysia.

In furtherance to a foreigner’s acquisition or purchaser of property in Malaysia, the Government had set up a department called the ‘Economic Planning Unit’ or the EPU (formerly known as ‘Foreign Investment Committee’ or FIC) for any foreign body (individual or company) to apply for consent before purchasing a property in Malaysia which is of value below RM500,000.00. This was in a gazette of Circular 3/2011 which had taken effect from 1st April 2011.

This application of consent to the EPU is an additional application for properties purchased by foreigner that falls below value of RM500,000.00. In the event that the property that a foreigner is intending to purchase is higher than RM500,000.00, application of consent to the EPU is not applicable BUT the foreigner would still need to apply for the consent from State Authority.

The purpose of having these consent procedures is for the relevant land authority to maintain control over ownership of property in Malaysia.

As you can see from the above examples, some consent relates to “leasehold” property, where in the “leasehold” property the land is leased for certain amount of years, which therefore mean the land belongs to the Government; hence the need for consent application.

Also in the examples above, foreign investors would require consent before buying property. This procedure acts as a safeguard to ensure that Malaysians’ property does not fall into foreign hands, freely.

The procedure to obtain “consent” can be cumbersome and procedural. Every process may take anything from one month to one year to complete the same.

Nevertheless, your appointed solicitors would be able to assist you in this procedure to apply and obtain the “consent”.

By Sarah Kambali 

09 April 2013


RWY wish to congratulate our Richard Wee, who was recently elected by the 36 members of the Bar Council, as the Secretary of the Malaysian Bar for the term of 2013/2014.