51 Essential Property Jargon To Know For Buying A House In Malaysia
Don’t worry though, we’re here to help. Get to grips with key terms through the simple A-Z glossary guide to house buying terms you need to know (arranged alphabetically).
1) Accessory Parcel
An accessory parcel is any area of property that is solely owned by one individual as per the deeds (which is a written legal document regarding the ownership of property), but is not directly adjacent to the main parcel of property. For example, a dedicated parking area owned by a single flat in a high-rise development.
2) Affordable Housing
Affordable housing is an overarching term for properties which are priced for sale at a price widely seen as affordable for people on average incomes in Malaysia.
As of 2020, Bank Negara Malaysia defined the maximum affordable house price as RM282,000 based on median national income that year.
3) Affordable Housing Market
This refers to the affordability of the market as a whole, and how it relates to average income across the country.
Khazanah Research Institute and Bank Negara Malaysia define an affordable housing market as one where the median price for the housing market is three times the gross annual household income.
B40 refers to the income group of citizens whose earnings are in the bottom 40% (B40) of all earners in Malaysia. This measure is based on the median monthly income per household. B40 groups can access some targeted housing schemes and initiatives to support purchasing a home.
5) Bank Valuation
A Bank Valuation is a property valuation carried about by banks to determine the value of property. This valuation is an important consideration in home loan offers from banks.
6) Base Lending Rate (BLR)
The Base Lending Rate (BLR) is a reference lending rate set by Bank Negara Malaysia, based on the cost to lend money between financial institutions. Up until 2015 it was used as the reference guide for lending rates, impacting loan products such as house loans.
7) Base Rate
The Base Rate (BR) is an interest rate banks refer to in order to inform rates for products such as house loans. It replaced BLR as the standard reference rate in 2015. It takes into account the cost of lending money for banks, and the minimum interest rate set by Bank Negara Malaysia.
8) Bumi Lot
A Bumi lot is one of the four main types of land for sale in Malaysia. Houses built in these areas may be sold or leased only to ‘bumiputera’ citizens. An application can be made to the relevant authorities to release a property from these restrictions, although it is challenging to succeed.
9) CCRIS Report
A Central Credit Reference Information System (CCRIS) report is a credit report created by Bank Negara Malaysia’s Credit Bureau to provide a review of credit of a potential borrower. It is an important measure used to determine home loan application approval.
10) Certificate of Completion and Compliance (CCC)
The Certificate of Completion and Compliance (CCC) is a document that forms an important part of the property transfer process when buying a house.
A CCC is issued when a newly built property is signed off as complete and fit for habitation, as assessed and submitted by a professional known as a Principal Submitting Person.
11) Common Property
Common property is a shared area of property or facilities found in a stratified property such as a condo development. It does not belong to any single specific owner, and instead covers shared property elements such as lifts, parks, gyms, gardens etc.
Conveyancing is the term used to refer to the end-to-end legal process of transferring ownership of a property from one owner to another. In simple terms, it describes the process of a current property owner selling their property and transferring ownership to the buyer.
A covenant is a condition or agreement recorded in a property deed such as a SPA, which commits the owner to certain conditions. This could include elements such as a restriction on how and when you can sell the property.
14) CTOS Score
A CTOS score is a credit rating undertaken by the CTOS credit rating agency, and is often used by financial institutions to check the credit worthiness of a lender such as an individual applying for a home loan.
15) Debt Service Ratio (DSR)
A Debt Service Ratio (DSR) is a method used by banks to assess your ability to make payments on a debt. It combines an assessment of your monthly net income against total fixed debts you pay to understand your financial circumstances. It is used by banks to determine the amount of home loan which you might have the financial ability to repay.
16) Deed of Assignment (DOA)
The Deed of Assignment (DOA) is a document used to transfer ownership of property between parties. It confirms that the assignor (who currently owns the property) is transferring ownership to the assignee (who is acquiring the property).
This legal document of transfer is used in cases where a Memorandum of Transfer (MOT) cannot be used, due to the current status of the property title.
17) Defect Liability Period
The Defect Liability Period is a defined period after a buyer acquires a newly developed and qualifying property which essentially acts as a warranty for repairs.
During this period, the developer is liable for repairing any defects which are identified as being due to poor construction or fall short of promised standards. The Defect Liability Period lasts 24 months for Individual Title properties, and 36 months for Strata Title properties.
18) Down Payment
A down payment is a lump sum payment made upfront to a seller during the purchase of a property. The minimum payment is 10% of the total purchase price, although purchasers can pay more than that figure, if agreed.
The first part of this may be paid as a 3% earnest deposit (see below!), which contributes to the mandatory 10% minimum downpayment.
19) Earnest Deposit
An earnest deposit is a sort of downpayment made on the purchase of a property to demonstrate your intention to purchase a house, usually a refundable payment of typically 3% of the total purchase price.
It’s designed to show you are sincere about a property purchase, and paid in conjunction with submission of a Letter of Offer. Where possible this should be paid to a trusted third-party to hold the funds in anticipation of the house purchase.
20) First-time Buyer
A first-time buyer is an individual purchasing a house who has not previously owned all or part of a property. First-time buyers are often eligible for financial support schemes or initiatives to enable them to purchase their first property.
21) Fixtures and Fittings
Fixtures and fittings are the movable objects often defined under a Sale and Purchase Agreement, that may or may not be removed/included at the time of a property sale. They include elements such as fridge, freezer, light fixtures, curtains, etc.
Freehold is one of the four main types of land in Malaysia. Freehold is a type of land whose ownership has no end date, and belongs to the owner in perpetuity. Freehold land can be subject to forced acquisition by the government, but this is rare.
A guarantor is a named party on a loan agreement, who acts as a guarantee of payment if the primary party fails to meet their financial obligations. They agree to be responsible for meeting the payment terms in the event of a default by the primary party.
24) House Loan
A house loan or home loan is a loan taken from a bank or financial institution to assist you in purchase of a property. It is subject to a variety of credit checks and assessments to ensure your ability to pay.
The total amount you can borrow is capped at 90% of the bank assessed property valuation for your first home, although this is reduced for subsequent home purchases.
25) Individual Title
An Individual Title is a title deed document issued for property with a single owner of a whole piece of land, with no shared ownership responsibilities. This typically covers landed properties such as semi-detached houses, terraced houses, and bungalows.
26) Joint Ownership
Joint ownership is where two or more individuals are named as co-owners on the title of a property. It is often accompanied by a joint home loan application.
27) Land Title
A Land Title is a legal document which defines ownership of a particular parcel or area of land. It is an overarching term which covers Individual Title, Strata Title etc. A copy of all land titles are kept by the Land Office of the relevant state authority.
28) Landed Property
Landed property refers to property types in Malaysia which are owned through an individual property title, such as bungalow, semi-detached, or terrace house.
It means that the ownership covers the individual property and land without any shared areas that would be reflected in a Strata Title.
Leasehold is one of the four main types of land for sale in Malaysia, and defines areas of land which are ‘leased’ from local authorities.
Properties sold under leasehold have a maximum lease period, typically 99 years, after which the ownership reverts to the State Government. A lease renewal can be pursued to extend this leasing period.
30) Lease Renewal
Lease renewal is the process of extending the ownership of leasehold property once the term on the leasehold expires. When the lease expires the ownership of the land returns to the State Government, and an application to extend personal ownership must be made at the Land Office.
31) Legal Fees
Legal fees in the property market is a term which refers to all mandatory payments to legal professionals for legal assistance in the purchase or sale of property. These are legislated by law, and are clearly defined costs as dictated by the Solicitor’s Remuneration Order.
32) Letter of Offer/Intent to Purchase
A Letter of Offer is a written commitment by a prospective buyer to an owner or developer of a property, stating an intention to purchase that property. It is usually accompanied with a 3% earnest deposit. It can sometimes be called a Letter of Intent to Purchase.
33) Loan Agreement
The Loan Agreement is the official document between a bank or financial institution (lender) and the home buyer (lendee) defining the terms and conditions of a loan.
It will include elements such as total loan amount, term of loan, repayment conditions, and named individuals responsible for making payment.
34) Loan Disbursement
Loan disbursement is a term used to refer to the approval and handing out of loans in the property market. The loan disbursement rate of banks is often assessed to understand how accessible home loans are at any given time.
35) Loan Tenure
Loan tenure defines the term over which a loan is agreed. Essentially it defines the total number of years you have to repay the loan under the loan agreement.
M40 refers to the income group of citizens whose earnings are in the middle 40% (M40) of all earners in Malaysia. This measure is based on the median monthly income per household. M40 groups can access some targeted housing schemes and initiatives to support purchasing a home.
37) Malay Reserved Land
Malay Reserved Land is one of the four main types of land for sale in Malaysia. This type of land may only be sold or rented to Malay Muslims.
38) Margin of Finance
The Margin of Finance, sometimes called the Loan-to-Value (LTV) ratio is an assessment of lending risk undertaken by financial institutions prior to a loan offer. It will define the total amount offered in your home loan, up to a maximum 90% of the property valuation.
39) Master Title
The Master Title is a property title issued during the construction and development phase of a property development.
Issued after a developer has been granted permission to develop land, and covers ownership of the entire parcel of land under development. It also grants the right to sell off individual parcels of this land under a Strata or Individual Title.
40) Memorandum of Transfer (MOT)
The Memorandum of Transfer is a legal document which defines the transfer of ownership of a property. The signing of the MOT is the legal confirmation of transfer of ownership and generally forms the final step of the transfer process.
41) Mortgage Level Term Assurance (MLTA)
Mortgage Level Term Assurance (MLTA) is a type of life insurance often used to cover the value of a home loan, covering death or permanent disability. The MLTA is a level value of cover, with the total amount insured remaining the same throughout the course of the plan.
At point of claim it is paid to the bank which holds the home loan, with any excess cover paid directly to a beneficiary. A takaful version of this cover is available in the form of a Mortgage Level Term Takaful (MLTT).
42) Mortgage Loan
A mortgage loan is another term used to describe a home loan. It refers to the loan taken out under a loan agreement to pay for purchase of a property.
43) Mortgage Reducing Term Assurance (MRTA)
Mortgage Reducing Term Assurance (MRTA) is a type of life insurance often used to cover the value of a home loan, covering death or permanent disability.
The MRTA will pay out a decreasing amount of cover over time, with the total value of payment at any given point designed to align with the total value outstanding on a home loan.
It is paid out to the bank which holds the home loan, with no additional amount paid out. A takaful version of this cover is available in the form of a Mortgage Reducing Term Takaful (MRTT).
44) Sale and Purchase Agreement (SPA)
The Sale and Purchase Agreement (SPA) is an extremely important document which defines the terms of a house sale.
A legally binding contract between buyer and seller which confirms mutually agreed conditions such as method of payment, defect liability period, conditions of property, fixtures and fittings and other relevant clauses.
45) Solicitor’s Remuneration Order
Solicitor’s Remuneration Order is a legal term used to describe a law which governs legal fees chargeable for legal services undertaken for purchase or sale of property. It dictates the maximum fees, minimum fees, and chargeable rates for these legal services.
46) Stamp Duty
Stamp duty refers to a fee paid for the ‘stamping’ of legal documents to prove their legitimacy. It’s a mandatory requirement on instruments of transfer in property sales and loan agreements. Stamps are issued by the Inland Revenue Board of Malaysia (LHDN).
47) Strata Property
A strata property refers to an individual property with a Strata Title that forms part of a larger development with shared areas of land. This includes properties such as mixed-use retail/residential developments, condo developments, apartment complexes etc…
48) Strata Title
A Strata Title is a title deed document issued for a single property parcel with individual ownership as part of a larger development that includes areas of shared ownership. This typically covers strata properties such as apartments and condos in developments with shared ownership areas.
49) Subsale Property
Subsale property (also known as the secondary market) refers to the sector where a buyer is purchasing a property from a current owner who is reselling the property.
Essentially, it’s an official way of saying buying a ‘second-hand’ house from someone who already owns it, rather than a new build property from a developer.
T20 refers to the income group of citizens whose earnings are in the top 20% (T20) of all earners in Malaysia. This measure is based on the median monthly income per household.
51) Vacant Possession
A Notice of Vacant Possession is a document issued to confirm ownership has been passed to the purchaser of a property from a developer. It will follow the Certificate of Completion and Compliance confirming the property is fit for habitation.
The Notice of Vacant Possession essentially states that the house is complete and ready for you. This notice also triggers the start of the defect liability period.