Set up a Company for Real Estate Activities in Malaysia

Updated on Monday 05th August 2019

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Malaysia can be a great business destinations for those who want to open a business developing real estate activities as this country is one of the friendliest jurisdictions in its region for foreigners who want to purchase properties here. The price for a real estate property in Malaysia declined starting with 2013, and in 2017, the average price of a property increased only by 5%, this being the lowest value since 2013. 
 
Those who want to open a company in Malaysia as a real estate business must know that they have to comply with a set of legal requirements. For example, the real estate agency must hire specialists trained in this field. In this case, it is necessary to hire real estate agents, who are trained professionals recognized by the authorities supervising this industry; our team of consultants in company formation in Malaysia can provide more details on other requirements available for this type of business. 
 

Does Malaysia provide a real estate license? 
 

Yes, the real estate activities carried out in Malaysia are recognized under a real estate license. It is legally required to be the owner of a real estate agency in order to carry out commercial operations in this sector. The holder of the license is the real estate agent, who is a professional that has completed studies in this industry and who passed a specific exam. 
 
Furthermore, the real estate agent must be registered with the Board of Valuers, Appraisers, Estate Agents and Property Managers Malaysia. According to the legislation in Malaysia, a real estate agency can be set up only by persons who are trained in this sector and who have the quality of registered real estate agents. The following apply as well: 
 
  • the real estate agent has the right of representing both the vendor and the buyer of a real estate property;
  • a real estate agent who has obtained his or her license may start a business in this sector;
  • the owner of the license can recruit up to 30 real estate specialists (real estate negotiators) who will engage in property transactions on behalf of the license owner;
  • persons who want to be hired in the real estate market and who do not own a real estate license can only operate as real estate negotiators, employed by a real estate agency;
  • in this case, a part of the fee for each property transaction of a real estate negotiator will be withheld by the real estate agency
     

What types of companies are available for Malaysian real estate agencies? 
 

Businessmen who want to start the procedure of company formation in Malaysia for a real estate agency have several options in this sense. However, it is necessary to be licensed by the above mentioned institution. For instance, a real estate agent can set up a sole trader, provided that he/she wants to start a business in his or her own name. 
 
Other available options for a real estate agency are the partnership or the limited liability company. In the case of a partnership, which is founded by at least two partners, both founders must have a real estate license. In the case of a limited liability company, the persons who have the quality of company’s directors are the ones who must be the bearers of the license. 
 

What are the fees of a real estate agency in Malaysia? 
 

The real estate agencies in Malaysia are regulated under several legal acts. For example, the real estate agent profession falls under the regulation of the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 and the Valuers, Appraisers and Estate Agents Rules 1986. Real estate agencies are regulated under the Malaysian Estate Agency Standards; the basic provisions of these acts can be presented by our team of specialists in company registration in Malaysia.
 
According to the provisions of these acts, a real estate agency in Malaysia can charge a 3% fee on the value of property (land and buildings); this is applicable for the sale of the respective property. However, for the sale of a plant or machinery, the fee increases up to 10%, but it is necessary to know that the fee charged by a real estate agent can’t be lower than RM 1,000. The real estate market in Malaysia is characterized by the following: 
 
  • in 2018, Malaysia registered a total of 313,710 property transactions;
  • the value of the real estate transactions developed here was of RM 140.33 billion;
  • these values accounted for an increase of 0.3% in value and 0.6% in volume compared to 2017;
  • the value of the residential units was of RM 19.86 billion in 2018;
  • this represented an increase of 27% compared to the situation of the previous year.  
 
Businessmen are invited to contact our team of specialists in company formation in Malaysia for further information on other requirements imposed to real estate businesses. Our consultants can provide step-to-step assistance on the registration procedures and may also offer tax consultancy or advice on any other corporate matter.