Saturday, 29 September 2012

House / Apartment Purchase - Associated Costs

So, after a very long break in posting, largely brought about because of being busy getting ready to move out of rented accommodation (at last) and move into my permanent home, normal service will now be resumed!  Apologies to those followers for whom the content fizzled out for a few months and thanks to those that have stuck with it.  To those, and to new readers alike, I hope that previous and subsequent posts will continue to to provide useful information about Penang (and MM2H) and indeed give some insight into some of the highlights of Penang life.

To kick things off I thought it might be useful to provide a rough guide to the costs that are associated with house / apartment purchase (at today's rates) which will of course need to be factored in to your overall costs.  All prices are in RM:

       60  Land Searches (x2 @ RM 30 ea)
       30  CTOS Searches (x2 @ RM 15 ea)
       30  Bankruptcy Searches (x2 @ RM 15 ea)
       40  Stamp Duty (for Sales and Purchase Agreement)
       10  Adjudication
     150 Cheques (written by lawyer)
       50 Mileage 
  1,000 Registration Fee
10,000 State Consent Fee (up until recently this was RM 1,000 but rose at the same time as property purchase threshold limits changed for Penang Island).

12,370 Sub Total

The above costs cover the general admin fees due and will likely be the same for all purchases.   The Registration Fee is also subject to change.

On top of these costs you will have to add the cost of your lawyer fees which are likely to be around RM 6,000 and the Stamp Duty Fee for transfer of title (Strata).  At the time of writing this is worked out on the following basis:

1% on the first RM 100k of the property cost
2% on the next RM 400k
3% on the next RM 1.5m
4% thereafter

As can be seen, these costs can rack-up quickly.  So, for example, on a 750k property you'd pay RM 16,500 in Stamp Duty.  So, adding all of the above together:

12,370  Admin Costs
  6,000  Legal Costs (approx.)
16,500  Stamp Duty

34,870  Total

Finally, when you own a condo here, over the course of the year, in addition to regular utility bills, you will incur a number of other charges for:

Service / Maintenance
Sinking Fund
Fire Insurance
Quit Rent
Assessment
Water (sewerage services)

These charges will vary depending on the property and I may well cover these in due course with an updated article about the 'domestic' costs that people need to cater for.  I mention the charges here simply because at the time of completing on a purchase your lawyer will advise you of any additional sums that may be payable by you by way of 'apportionment', essentially paying back the vendor for any such charges they have paid in advance but calculated only from the date you become the owner of the property.  Many of these charges are collected only once or twice a year so you could find yourself having to reimburse 3-5 months depending on where your purchase date sits in the billing cycle and the cost could be anything between a few hundred to a few thousand RM.

The Sinking Fund and Maintenance charges also deserve a special mention.  Depending on how these are handled by the condo management, over time owners will generally build up a sum which is held in credit against your property.  This credit is passed on to the incoming owner and if not used, will also be passed on to any subsequent owner.  As such you may well also need to reimburse the vendor for any credit that may be held by the management in respect of your apartment.

Hopefully the above will provide a rough idea for people interested in what other costs they may need to take into account when buying a property.  I'd stress that the above is an indication of prices at today's rates and clearly you would need to check with your lawyer as to both THEIR precise rates and the whether or not any of the state fees have risen.

Finally, one thing worth bearing in mind is that if buying a new property from a developer they will often bear the cost of the admin and legal fees but you should also be aware that, as far as I know, stamp duty will become payable when you come to sell the property, at or before which time you will need to apply for strata title.

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