Buying foreign property? Here’s what you need to know

Owning property overseas may seem like a smart way to diversify your property portfolio, but as with other forms of investment, there are risks involved when buying a foreign property.

Before you embark on your foreign property purchase, ensure that you understand your needs by asking yourself these questions:

  • Is this foreign property, an investment, a future retirement home, accommodation for children studying overseas, a holiday resort, etc.?
  • What do I want to get out of this property – passive rental income, profit gains from capital appreciation, better living standards, etc.?
  • What is the financial commitment I am prepared for and over what period of time? Can I afford it?

Understanding your needs will help you decide on the type of property and the location or country that you are interested to buy into. Your needs and situation are likely to be different from others.

Once you’ve decided to forge ahead to buy a foreign property and are exploring the various foreign property options, do not rely solely on the advice of foreign developers or marketing agents. Conduct your own research, verify the information presented, read the fine print, and assess the risks before making a decision.

D’Rapport Residences, Jalan Ampang

Some key factors that you should take note of are:

#1 Information about the property

For new property purchases, get information on the developer’s track record to see whether it can deliver the completed project by the stipulated timeline and with the promised quality.

For resale property purchases, ask about the condition of the property and neighbourhood where the property is located. You may also wish to ask about the background and history of the property and its owners to find out more details.

Consider a visit to the property to give yourself a feel of more local factors such as accessibility to public transportation, traffic conditions, and noise and air pollution.

#2 Costs and financing limits

Always check what the total financial commitment is. The initial down payment may appear low but progressive payments may add up to a heavy commitment.

You will also be exposed to foreign exchange rate risks. Your income, recurring costs, and overall financial commitment may be affected by foreign exchange rate movements.

#3 Claims of high and guaranteed returns

Where there are claims of high guaranteed yields, irresistible promotions, and excellent property attributes, you must exercise greater caution. It may be possible that such discounts and returns had already been factored into the price and costs that you have to pay.

Always ensure that promotions and discounts are indicated in the Sale & Purchase Agreement and check the fine print.

Ask for evidence to substantiate these claims, and check the time frame for which the yields are guaranteed.

#4 Rules and restrictions on foreign ownership

Find out if there are any restrictions on the types of properties, minimum price, or location of the property that foreigners can buy.

In some countries, you may need to obtain approval from the local or central Government before you can own the property.

Check if foreigners are liable to pay additional taxes. There may be taxes levied when buying a property and separate taxes when you want to sell the property. Similarly, there may be taxes for owner occupation or when the property is rented out.

#5 Location of the property

Do not rely on sketch maps that may make the property look closer to amenities than it really is.

Check with the land and planning authorities for the land use surrounding the property. Planning perimeters for development sites may change over time.

#6 Transaction-related services

Prior to signing any agreement or document, read and understand all the terms and conditions carefully. If the documents are written in a language in that you are not conversant in, ask for a translated copy.

Find out if there is any service support from the developer after the sale is completed, and be aware of dispute resolution mechanisms in case the transaction does not proceed smoothly.

If you have doubts on any matter, always obtain independent expert advice from the relevant professionals e.g. lawyers, valuers, or bankers.

Exercise due diligence and do not rush into buying any foreign property without carefully considering your needs and financial commitments.

This article is written by the Council for Estate Agencies. For more information, visit

The Council for Estate Agencies (CEA) is statutory board under the Ministry of National Development. CEA is empowered to administer the regulatory framework for the real estate agency industry and is committed to protecting the interests of consumers through targeted public education schemes.

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