Home Guidance BLT: A One Stop Solution For Homebuyers And Investors

BLT: A One Stop Solution For Homebuyers And Investors


The concept of the BLT is to provide an investor with a three-dimensional approach-banking, law and taxation to arrive at a suitable solution to their individual situation, as each investor will have his own unique set of circumstances and aims to give buyers a one-stop solution when it comes to purchasing property. Each expert will cover the following areas:

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iProperty.com editor Roshan Kaur Sandhu asked some expert advice from Chris Tan, Miichael Yeoh and Richard Oon on legal, banking and tax issues and each answered according to their own expertise.

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What is the most important step must a buyer take before purchasing a property?

Due diligence on the subject property in terms of ownership (or anything affecting the ownership) as well as any restrictions/ conditions in transaction, background of the seller (or developer) as well as understanding the financing of the purchase (own fund or bank that consider one’s credit worthiness and also the possible margin of financing based on the type of property).

How difficult is the process of purchasing a property in Malaysia?

It is complicated with many parties involved but a doable process nonetheless with the lawyers playing the key role going in between to connect the dots and filling up the gaps. As land is predominantly a state matter under our Federal Constitution, the process, norm and practice might vary a little from state to state. For a start, Sabah and Sarawak have a different regime compared to the Peninsular.

What legal issues must one consider before and after buying a property?

Before: Knowing exactly what you are buying is important. Are you buying it on an “as is where is” or are you expecting some improvements to be done before you take delivery? Are you buying with furniture and fittings? Always communicate your expectations and intentions with your lawyer as there are never two transactions that is exactly the same.

After: Ensure the proper change of ownership into the name of the purchaser. Including the changing name for the quit rent, assessment, utilities as well as with the property management.

How does a buyer protect himself before purchasing a property?

Always invest in a good lawyer who understands your unique circumstances. Understand the entire process beforehand would be helpful too.

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There are so many financing options available for a consumer and an investor in Malaysia. Which one should one pick? What are the things to look out for? Please elaborate from a consumer’s point as well as an investor.

There are more than 10 financing packages for you to choose from when you walk into a bank today. You are spoilt for choice. To me, which packages suits the borrower will depend a lot on his goals for financing. Let’s say the borrower were to flip the property in 2 years. Do you choose the package with lock years and penalty or the package where both are waived? No doubt the latter interest rate is higher but it suits its purpose. Which package will depend on the borrower’s needs and wants? The package with the lowest interest rate may not necessary be the best one. To all borrowers out there, you are encouraged to read the offer letter before you sign it. There are clauses specific to you only. The fine prints are there for a reason.

What are the common mistakes that buyers make when applying for a bank loan?

Buyers commonly make the following mistakes:

a) Did not do their own credit check before loan application

b) Have too many bad debts. Credit cards and personal loans top the list

c) Submit too many or too few documents for approval

d) Applying through inexperience bankers

e) They are in the positive list in Credit Tip Of System (CTOS)

What are the important steps to take to ensure that the loan is approved?

There are 3 things that you need to do when you apply a loan with the bank. You cannot miss out the following step. It will assist you to take charge of your loan.

1. Check your CTOS. You can check online now.

2. Check your Central Credit Reference Information Systems (CTOS).You can check with the central bank, Bank Negara Malaysia.

3. Check where you are standing now using Debt Service Ratio (DSR). You must learn how to calculate your DSR. Remember, you must get to know yourself and the banks well enough to get your loan approved. Nowadays we need to take charge in what we do. We cannot leave it to chance. With mortgage planning, we must take charge of our own approvals. Whether you are a first time home buyer or an investor, it will be good to start mortgage planning. It can take very fast or it will take some time but it will make sure that your loan is approved.

What are the latest insights on the banks?

Pls refer to www.miichaelyeoh.com/2015/08/baserate-explained.

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What are the key things to remember when we are declaring property tax?

To begin with; make sure you remember to declare the rental income from your property investments! In this self-assessment regime, being the subject of a tax audit is inevitable. Bear in mind that tax evaders can face up to three years jail-time or RM20,000 fine or both, if found guilty for the various offences under the Income Tax Act 1967. Secondly, make sure you claim all the expenses you can legitimately claim as a landlord, against the rental income from your property investments. Some of such expenses include but not limited to, the following:

• Advertising for tenants;

• Assessment;

• Insurance;

• Interest on loan(s) to finance the purchase of the rental property;

• Legal expenses (renewal of tenancy agreement, recovery of rental arrears);

• Maintenance/service charges;

• Property agent fees/commission;

• Quit rent;

• Repairs and maintenance;

• Replacement of rental assets. Having understood the concept of tax-deductible expenses, it is vital to appreciate the need for proper records and documentation. When it comes to a tax audit, the Inland Revenue Board’s basis of allowing you a claimed deduction is based wholly on the availability of EVIDENCE. So do make sure that you keep your bills and receipts somewhere safe!

What are the ways to minimize property tax?

Practically all tax-mitigating strategies involve structuring a transaction to obtain the lowest exposure to tax, by using one or more of the following overlapping strategies, which I like to call the Four Ds: DUCK, DEDUCT, DEFER and DIVIDE. They are explained in greater detail below:


‘Duck’, in this context, refers to avoiding unnecessary penalties by understanding your responsibilities as a tax payer under the self-assessment system (SAS). For example, filing your tax returns incorrectly, or making your tax payments late, will result in penalties. Ducking penalties will therefore save you a lot of hard-earned money.


It’s important to maximise claims for the tax deductions and reliefs which you are entitled to. Many people are unaware of what expenses they can legally use to reduce their taxable income. The examples of the expenses that a landlord can claim have already been explained above.


Firstly, using the financial concept of the ‘time value of money’, it is better to pay a ringgit of tax tomorrow, than it is to pay it today. This is because the money saved on taxes can be invested and earn interest (or more income). At the same time, inflation will reduce the value of the payment in real terms. Secondly, with the implementation of the Goods and Services Tax (GST), and in order to remain competitive with other nations in the region, it’s expected that the income tax rates in Malaysia will reduce gradually over coming years. This means paying less tax in future years, on the same amount of income.


This strategy involves ‘income-splitting’, in other words, where the situation permits, dividing income among several parties in order to reduce the overall tax charge.

If you are familiar with the income tax rates in Malaysia, you will see that the tax rates at lower bands of chargeable income are lower, and progressively increase as the bands of chargeable income increase. I’ll give you an example of how this ‘divide’ strategy works. For the year of assessment 2015, a person who is paying tax on a net rental income of RM70,000 is subject to a rate of 16%. However, if there are two people (e.g. a husband and wife) each paying tax on RM35,000, they would both be subject to a rate of only 5%! Naturally, anyone would prefer the second scenario.

Chris Tan

How has the GST affected the property market so far since its implementation?

Not much given that it is a buyer’s market now with developers getting competitive with their offerings. The GST cost has been mostly absorbed with the current market conditions. The main concern of the property buyers is that GST is part of the price and this very portion cannot be funded by any bank loan, cash flow and bigger sum up front.

Do Malaysians generally understand how GST works when it comes to purchasing property or do they need more education and awareness?

There are still a lot of confusion in the market as the Customs Department is slowly addressing the issue as it arises. Any serious property investor must make it a point to understand GST as it has certainly contributed to the costs and affected the property investment model that we were familiar with before 1st April 2015. There is now an additional dimension in GST for the property investor to consider.

How will the BLT work and benefit the consumer and investor?

The BLT is to address real concerns in the market as property investment has become sophisticated with risks involved. It is less speculative now as property investment has slowly matured. Investors need to have a balanced model in screening property investment conscious of their unique risk profile. Just like BLT in a sandwich, it aims to elevate property investment to another level.

Richard Oon

How has the GST affected the property market so far since its implementation?

REHDA previously reported that home prices will increase by 2.6% when GST comes into play, Personally, I feel that the GST has not affected the prices of properties which have already been launched by the developers prior to 1st April 2015. Having said that, with the implementation of the GST, the developer will now have to consider GST in its cost-structure when determining the pricing of its future housing projects, as the GST-element of the development costs, by virtue of the GST mechanism, cannot be claimed by the developer and will inherently be passed on to the house buyer. The primary commercial property market may be even worse off now with the GST being in place, as the commercial property buyer will have an additional 6% GST – on top of the property price – to reckon with. If GST is a factor that a property investor need to consider in its investment-making process, do bear in mind that the GST rate (based on a global trend) will generally tend to increase over the years. Notwithstanding the supply and demand factor of the property market, GST will have a greater impact in future years than it has now.

Do Malaysians generally understand how GST works when it comes to purchasing property or do they need more education and awareness?

Malaysians generally are still quite ignorant about how GST will impact property prices. Listening or getting advice from the ‘coffee-shop experts’ or friends just adds on to the confusion and misconceptions about GST. My advice is to obtain information and clarification from the right channels, i.e. from the authorities itself (Royal Malaysian Customs) or GST experts.

How will the BLT work and benefit the consumer and investor?

The concept of the BLT is to provide the investor with a three-dimensional approach (ie. from the perspective of banking (B), law (L) and taxation (T)) to arrive at a suitable solution to their individual situation, as each investor will have his own unique set of circumstances.