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The 5 Hidden Costs of Owning a Home in Malaysia

FIRST-TIME BUYER

Written by Fazrina Izzma

Various hidden costs that come with homeownership. 

They say buying a house is a harder decision to make than choosing where to eat for lunch. It's not just about finding the perfect space to call your own, it's about understanding the financial responsibilities that come with homeownership. We do know that buying a property is an exciting venture and monumental step, but amidst the anticipation of becoming a homeowner, it's crucial to be prepared for the various hidden costs that come with homeownership. 

 

various hidden costs that come with homeownership. 

 

Other than the purchase price, there are several hidden expenses that can catch homeowner off guard. In this guide, PropertyGenie will help you to understand and budgeting for additional hidden expenses to ensure a smooth financial planning to buy a home in Malaysia.

 

5 Hidden Costs of Owning a Home in Malaysia

 

Upfront Fees and Charges

Upfront Fees and Charges

When purchasing a property, there are various upfront fees and charges that homeowner need to budget for. These include:

  • Sale & Purchase Agreement (SPA)
    • Legal fees
    • Stamp duty
    • Legal disbursement fees

(Exemption Stamp Duty for First Home Buyers)

  • Loan agreement
    • Legal fees
    • Stamp duty
    • Legal disbursement fees
  • Transfer of ownership aka memorandum of transfer (MOT)
    • Fee
    • Stamp duty
  • Tax on legal agreements
  • Bank administrative charges for your home loan
  • Property agent fees (if you made your purchase with the help of any)
  • Runner fees (if you used any)

 

How much exactly that is depends on the price of the property you have purchased and it's crucial to do research and consult with a legal advisor or a property agent to get a clear understanding of the upfront fees and the breakdown of these costs to plan your budget accordingly. 

You can also use our home loan calculator to not only estimate your expected monthly repayment, but also on both loan and SPA stamp duty fee, legal fee.

 

Utility Deposits and Charges

 

Utility Deposits and Charges

Another important consideration is setting aside funds for utility deposits and ongoing utility charges. When you move into your new home, it will come with its own set of expenses. Utility companies may require deposits for services such as:

 

  • Electricity (Tenaga Nasional Berhad - TNB)

Tariff A: Domestic Tariff  (Residential tariffs) - The minimum monthly charge is RM3.00

TARIFF CATEGORY UNIT CURRENT RATE 
For the first 200 kWh (1 - 200 kWh) per month sen/kWh 21.80
For the next 100 kWh (201 - 300 kWh) per month sen/kWh 33.40
For the next 300 kWh (301 - 600 kWh) per month sen/kWh 51.60
For the next 300 kWh (601 - 900 kWh) per month sen/kWh 54.60
For the next kWh (901 kWh onwards) per month sen/kWh 57.10
  • Water
    • The cost of water can vary based on your consumption.
    • The average monthly water bill for a household in Malaysia might be around RM20 to RM50.

 

  • Sewerage (Indah Water)
    • On average, the sewerage fee may be around 5% to 10% of your water bill.
    • Example: A monthly water bill of RM30, the sewerage fee might be approximately RM1.50 to RM3.

 

  • Internet/Broadband
    • On average, a basic broadband plan with speeds of 30 Mbps to 100 Mbps may cost around RM80 to RM150 per month.
    • High-speed fiber optic plans with speeds of 500 Mbps or more can cost RM150 to RM250 or higher per month.

 

These deposits are essential to initiate your utility connections. So, make sure to account for these expenses in your budget, and do not forget that ongoing utility charges must be factored into your monthly budget.

 

Malaysian Property Tax

Malaysian Property Tax

As a homeowner, you are legally required to pay tax on your property every year. The amount is determined based on the assessed value of your property. There are various taxes associated with owning a property, including:

 

  • Quit rent (Cukai Tanah)
    • Charged by the Land Office for any land you own where your house was constructed
    • On average, quit rent can range from as low as RM50 to RM200 annually for residential properties.

 

  • Real property gains tax (RPGT/LHDN)
    • Tax on the profit from the sale of a property.
    • The tax rate depends on the holding period and varies from 5% to 30%.
    • On average, if you've held the property for more than 5 years, the RPGT rate is typically around 5%.

 

  • Assessment tax (Cukai Pintu)
    • Charged by Majlis Perbandaran, this tax is used to maintain the infrastructures and services in your area.
    • The rate is typically 4% of the annual rental value of the property.
    • On average, assessment tax for a residential property valued at RM500,000 may be around RM800 per year.

 

  • Parcel Tax (Cukai Petak)
    • This is the apartment/condo version of land tax, charged by the Land Office for strata properties
    • On average, parcel tax for strata properties can range from RM100 to RM300 annually.

 

Understanding these taxes will help you estimate the overall financial commitment associated with homeownership.

 

Home Insurance

Home Insurance

Home insurance is a critical aspect of homeownership that should not be overlooked. These are 3 common home insurance policy options for protecting your property that you should know:

 

Insurance policy  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.

 

Do remember that your property is your biggest assets and you should provides protection and coverage for your property like these insurance policy as recovery protection against any disaster.

 

Maintenance Fees and Sinking Funds

Maintenance Fees and Sinking Funds

When buying a strata or gated community property, where you share common public facilities like the swimming pool and the gym, you are part of a larger private community managed by a strata title owners. 

Apart from mortgage payments, homeowners are often required to contribute to monthly maintenance fees and a sinking fund, for which you have to set aside some cash for the monthly maintenance fee and sinking fund.

The maintenance fees are generally used for the regular maintenance of common facilities. However, the sinking fund is a sudden expense or emergency fund that is used for sudden situations such as elevator breakdowns.

 

Final Thoughts

Buying a property is an exciting venture, but being financially prepared for the hidden costs is essential. At PropertyGenie, we believe in transparency and empowering our users with knowledge to make well-informed decisions. By carefully budgeting for upfront fees, utility charges, property tax, home insurance, and monthly maintenance costs, you'll be well-prepared for the financial responsibilities of homeownership. 

For more insightful tips and guidance on navigating the real estate landscape, explore PropertyGenie. We're here to be your trusted partner on your homeownership journey, ensuring you have the information you need to make the best choices for your future. Happy house hunting!

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Article Highlights

hidden costs of homeownership

upfront fees and charges

utility deposit and charges

legal fees

Malaysia property tax

home insurance

monthly maintenance and sinking fund

.

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