As you take your first steps toward homeownership, it’s essential to be prepared for the journey ahead.
While you’ve probably heard about the 10% down payment, there’s actually a whole lot more to consider.
Let’s discover some fees you may not have thought about when buying a home!
| 7 hidden costs when buying your first home |
1. Stamp duty fees
You can never run away from stamp duty fees.
This is the tax placed on your property documents during the sale or transfer of the property which must be stamped within 30 days from the date of transaction.
What are some examples?
- Stamp duty on the Sale and Purchase Agreements (SPA) of your property
- Stamp duty on Deed of Assignment (DOA) / Memorandum of Transfer (MOT) paid by new property owner
- Stamp duty on your loan agreement (0.5% of the total loan)
Latest stamp duty fees on the MOT or DOA
| Price Tier | Stamp Duty Malaysia (% of property price) |
| First RM100,000 | 1% |
| RM101,000 – RM500,000 | 2% |
| RM500,001 – RM 1 million | 3% |
| > RM 1 million | 4% |
Payment of stamp duty can be now done online on the LHDN official website through the Stamp Assessment And Payment System or STAMPS.
But good news…
First-homebuyers who purchase residential properties worth between RM500,001 to RM1 million will enjoy a 75% stamp duty exemption up to 31 December 2023.
For the transfer of property between family, stamp duty on the instruments of transfer of property will be fully exempted for the first RM1 million of the property’s value.
2. Home insurance
Most banks will require buyers to purchase insurance on their homes as part of the housing loan package to protect the value of the property.
The common options include:
Mortgage Reducing Term Assurance (MRTA)
- Most popular and economical option
Mortgage Level Term Assurance (MLTA)
- Sum assured remains constant or level throughout the policy period
Term Life insurance
- Oldest and most common life insurance
3. Legal fees
If you’re unfamiliar with the proceedings of creating a Sales and Purchase Agreement, you might have to appoint a lawyer to help you with it.
They will prepare all the necessary documents and contracts to facilitate the transfer of the property.
The fees are then calculated as a percentage of the purchase price.
How are legal fees calculated in Malaysia?
The legal fee rates in Malaysia are as below:
| PRICE TIER | LEGAL FEE (% of property price) |
| First RM500,000 | 1% |
| RM500,001 – RM 1 million | 0.8% |
| RM1,000,001 – RM 3 million | 0.7% |
| RM3,000,001 – RM 5 million | 0.6% |
| > RM 5 million | 0.5% |
Note that some developers may absorb the legal fees but you will always need to pay the stamp duty yourself as a buyer.
4. Malaysian property tax
As a homeowner, you are legally required to pay tax on your property every year.
Here are some of the types of tax to take note of:
Quit rent (cukai tanah)
- Collected by the state government’s Land Office or Pejabat Tanah Dan Galian (PTG).
- For highrises in some states, quit rent is charged to the Joint Management Body (JMB) and they include it as part of your maintenance charges.
Parcel tax (cukai petak)
- A relatively new tax introduced in Penang and Kuala Lumpur so far.
- It is also collected by the state government’s Land Office or Pejabat Tanah Dan Galian (PTG).
- Parcel tax is equivalent to quit rent for property divided into parcels such as apartments.
Property assessment rates (cukai pintu)
- Property assessment rates are collected by local councils to be used in developing and maintaining local area infrastructure and services such as public parks and garbage collection services.
5. Utility fees
Without a doubt, you’ll need basic utilities for your new home – which come at a cost as well.
You’ll need to prepare some allocations for:
- Electricity from Tenaga Nasional Berhad (TNB)
- Water supply
- Sewerage services provided by Indah Water
- Internet or broadband connection
To sign up for these services, you’ll fill out forms, pay a deposit, and cover fees for installation and paperwork.
6. Monthly maintenance & sinking fund
When you purchase a property in a strata/gated community, you become a part of a private community that’s managed by a Joint Management Body (JMB).
You’ll typically be making regular contributions to cover these familiar expenses:
- Maintenance fees: Fees to keep common facilities, like elevators, swimming pools, and gyms, in good working condition, plus other common services such as cleaning and security.
- Sinking fund: A larger sum of money set aside for unexpected, significant community expenses such as an elevator break down.
It’s a good idea to talk to your JMB to find out how much you’re expected to contribute.
7. Furnishings and maintenance
One more thing to take into account is of course, the furnishings and the overall look of your home – including its maintenance.
It can be an additional cost to keep your home looking timeless, especially the things you don’t normally see such as the lawn, the decorations for your balcony, etc.
If your home comes with furniture, remember that there will be an additional penny to pay to take away your unwanted items.
With thoughtful financial planning and a bit of savvy, you’ll be well on your way to making that dream of owning your own space a reality.
If you need advice to purchase your first home, our team of real estate professionals are ready to help! Drop your details below and our team will assist you.
[hubspot type=form portal=5699703 id=85ebae59-f425-419b-a59d-3531ad1df948]
