21 Must-Knows For Singaporeans Before Investing Property In Johor Bahru (JB)

Last updated 31 Mar 2024SGMYTAXI

With the strengthening of the Singapore currency and rise of inflation, many might be interested in looking at ways to maximise their finances.

Johor Bahru, one of the developed city of state of Johor, Malaysia, is located just opposite Singapore.

This developing city holds the anchor as the financial centre and logistics hub for Southern Malaysia.

They are targeted for further development and potential growth.

With that, are you eager to find out some of the basics before considering to take on this investment move?

Now, let’s read on to find out how it can help in your investing planning!

1. What’s Your Reason To Invest Property In Johor Bahru? (Reflection Question)

First of all, it is important to do a self-reflection on your reason for planning an investment in Johor Bahru.

Every individual has their own financial judgement, perception and planning towards investment planning and achieving their financial security or freedom.

Pondering questions for your food of thought, e.g. Is this for short-term or long-term purposes? Does it benefit me in the long run? What is my ultimate motive/gain for this investment?

Is my financial status able to sustain my investment move for the long run?

 

2. What Are The Factors To Consider Before Investing In A Property?

Some of the various contributing factors to aid in your thought process:

• Sourcing for a suitable location that meets your financial needs
• Commitment Level
• Cost/Financial Obligations/Risks
• Knowing your eligibility/rights to purchase as a foreigner
• Type/Choice of property available, e.g., Apartment/Condo/Landed/Semi-D/Bungalow
• Understanding the minimum purchase price & minimum occupation period (MOP)
• Which loan (SG or MY) is viable?
• Avenues to source for the property
• Research on the developer/mortgage advisor/agent

 

3. What Are Some Benefits To Investing Property In JB?

Considering some of the pull factors below:

• Stronger purchasing power (get your favourite foods, groceries, essential & non-essential items at a cheaper prices)
• Higher investment returns due to developments, with the on-going MRT project between KL and SG
• Living in a potential less stressful place (slower pace, relaxed environment, awesome foods)
•  Easy access to the property market and gain full ownership of the freehold asset
• Close proximity to your loved ones living in Singapore (just a bridge away)

 

4. Can I Invest A Property Without Meeting My Minimum Occupation Period (MOP)?

Without meeting your Minimum Occupation Period, you are unable to invest in a property. Basically, MOP refers to the period needed to occupy the flat physically before it can be sold.

In short, the owner is required to live in the flat for at least 5 years before being able to invest in an overseas property.

If you are living in the flat after the overseas property purchase, you will need HDB’s approval (T&Cs applied).

Find out the eligibility of getting the private property here.

 

5. What Are The Standard Ground Rules Singaporeans Should Know Before Investing A JB Property?

• Fulfilling the minimum occupation period (MOP) of 5 years
• Total Debt Servicing Ratio (TDSR) – borrow from local banks or engage financial institutions. Rule of thumb is TDSR should not exceed 60% of your income.

 

6. Can Singaporeans Use Malaysia House Loan To Invest?

Singaporeans can get house loans from Malaysia banks such as CIMB, Maybank, UOB, HSBC, OCBC, etc to invest but note there is a cap on the loan percentage for non-locals.

For MM2H holders, the loan percentage is higher.

However, to apply for a loan as a non-local can be a challenge as they are looking at the citizenship status of the borrower whether they are foreigner with PR/working there, etc.

Therefore, the application system can take some time to take effect.

Banks could be looking for factors such as the borrower’s savings, overall income, job stability. so it can be difficult when getting a Malaysia loan.

Better to head down to the bank personally to understand better and find out the documentations and eligibility.

 

7. How To Start Finding A Property?

There are various ways to buy property in Malaysia such as online websites like Property Guru Malaysia or even walk in to show-rooms to enquire.

In shopping centres such as City Square, KSL City mall, they have booths set up on new and ready-to-stay housings.

But as a first-time property buyer, it is recommended to source through a housing agent.

To avoid scam trap, you can find the agent who is registered with the Malaysia Institute of Estate Agents. They are more reliable and trustworthy due to the holding of the membership.

 

8. Why Should I Connect To A Reputable Developer?

It is crucial to connect to a reliable developer especially when you are a beginner and dealing with financial matters, therefore, be more cautious to find a trusted developer.

 

9. Should I Take A loan In Singapore Or Malaysia?

Singaporeans can choose to apply for loans either in Singapore or Malaysia. Singapore bank allows financing for properties in Malaysia. Major banks in Singapore offer mortgage loans to help finance their investment.

Due to currency fluctuations and the hassle of opening and maintaining another country’s bank account, choose the local currency that works best to your advantage.

 

10. Should I Source For A Reliable Property Developer?

The reliability and reputation of the developer really matters when it comes to finding the right property.

Do a thorough research and survey on the list of developers with proper track records on their achievements, projects, results, testimonials.

Search for any complaints/feedbacks received and issues surfaced (extent on the issue severity).

You can check here to find out if the property developer has been blacklisted or received negative bad records.

 

11. What Are The Property Tax Rates In Malaysia?

In Malaysia, there are 5 types of property taxes consists of Stamp Duty, Goods and Services Tax (GST), Property Tax Assessment, Quit Rent and Real Property Gain Tax (RPGT)

The Stamp Duty is the cost incurred related to the transfer of the property. This is usually incurred during the sale of the property.

Usually, it is about 0.5% the total loan amount. The component includes sales and agreement of the property, memorandum of transfer, and the loan agreement.

The Goods and Services Tax is charged at 6% for commercial property with the criteria that the owner owns more than 2 commercial properties: land larger than 1 acre.

Not only that, they earn more than MYR RM 500,000 from the commercial properties; owning property cost more than MYR RM 2,000,000.

Next, the Property Assessment Tax (Cukai Taksiran/Cukai Pintu) is basically maintenance tax which includes costs that supplement and finance the infrastructure of the owned property.

The assessment tax rate for apartments is at 7%, landed property is at 4% of the annual rental value. The rental value is determined by the government based on the annual rental value of the property.

Quit Rent is an annual tax payable to the government applicable to all owners be it they own freehold or leasehold property.

Lastly, Real Property Gain Tax (RPGT) is the tax profit made from selling a property. You can find out how to compute your RPGT by using the calculator.

 

12. What Is The Minimum Purchase Price To Invest In A Property?

Singaporeans who wish to invest in a property in Johor Bahru, the value of the property should cost at least MYR RM1 million.

For those on MM2H programme, the value of the property is lower as they allow foreigners to purchase the property at a much lower price.

It is required to have at least MYR RM 500,000 in the savings accounts to get the properties.

 

13. Is Investing Property In JB Safe?

In general, investing property in Johor Bahru is safe provided the developer/company you are planning to invest in has substantial credentials in the market.

This can refer to the developers having a strong firm standing reputation and stability.

It is important to do proper research on the credibility and backgrounds of the developers. You might not want to pay a hefty price but turn out to be disastrous.

 

14. What Type Of Properties Can Singaporeans Invest In?

Depending on the financial status and preferences, Singaporeans can look into apartment, townhouses, commercial, condominium or landed residential housing and even land.

As long as requirements defined by the government authorities are fulfilled.

Any type of property is allowed except for:

•  Properties on Malay Reserve Land (MRL)
• Low and medium cost residential units
• Properties valued less than MYR RM1 million
• Properties allocated to Bumiputera group in any property development project

If you are looking for spacious houses, landed could be top consideration.

What’s more, the benefits that come with landed is more attractive than an apartment/condominium, though the price to purchase is higher.

 

15. Can Singaporeans Purchase Malaysian Property At A Cheaper Price?

The minimum value of the property should be valued at least at MYR RM1 million for purchase for non-locals with strata title & landed properties within non-international zones, except for Medin

For landed property (different international zones), it should be valued at MYR RM2 million.

However, non-locals can consider to look into buy property in JB though the Malaysia My 2nd Home (MM2H) programme,

This allows foreigners to stay in the country for a longer duration with a 10-year renewable visa plan.

 

16. Can I Invest In A Property If I Own A HDB Flat In Singapore?

Yes, definitely, you can still invest in Johor Bahru property if you own a HDB flat in Singapore with the conditions that the Minimum Occupation Period (MOP) is met.

 

17. Can I Stay Long Term In JB If I Were To Have A Property?

In a nutshell, Singaporeans can only stay in Malaysia for up to 30 days, not longer than that. It cannot be extended under any situations.

If the need to stay longer, you need to apply for a visa with the Immigration Department of Malaysia. However, documentations should be complete for faster application processing time.

 

18. What Are Some Of The JB Areas You Can Consider Investing?

Johor Bahru has many opportunities for development and growth. The strategic location just across Singapore has been the target for many Singapore investors.

Areas such as Iskandar Puteri (Nusajaya) Medini, Johor Jaya, Taman Molek, R&F Princess Cove, Eco World found to be hot areas attractive to investors due to its strategic location.

Not only it is near Singapore, it is also accessible with eateries, shopping and recreational activities.

As long as there’s foods, there will be Singaporeans, right? Because Singaporeans simply love to eat delicious foods!

To find out more on the property value, you may search in iProperty Website.

 

19. What Are The Basic Financial Requirements To Own A Property?

Singaporeans need to show proof of liquid assets worth a minimum of MYR RM500,000 in their account if they are less than 50 years old.

Not only that, a fixed deposit amount of MYR RM300,000 has to be deposited in the Malaysia bank account.

If they are more than 50 years old, they need to show proof of liquid assets worth a minimum of MYR RM350,000 in their account.

 

20. What Should I Be Aware Of When Investing In A Property?

• Property Taxes
• Down payment, stamp duty fees, entry costs and any other hidden costs
• Minimum property prices required
• Submission of medical report from registered hospital or clinic in Malaysia
• Valid Malaysia medical insurance

 

21. How Much Does Stamp Duty Cost?

For a property value of MYR RM800,000, for the first MYR RM100,000, the stamp duty percentage is 1%. For the next MYR RM 100,001 to MYR RM 500,000, the stamp duty percentage is 2%. The excess amount is 3%.

In total, the total stamp duty is the cost that adds up the individual amount.

 

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Disclaimer: The above post does not constitute to any final decision on your investment plans. It is purely with the intention of supplementing information to help your investing planning process. Nevertheless, it is still advisable to seek consultations and advice from the professionals.