Conveyancing and Real Estate

New rules for property buyers

PETALING JAYA: Property buyers will no longer have the option to take loans for longer than 35 years. Anyone taking a personal loan can now only do so for a period of up to 10 years.

These are new rules set by Bank Negara with the aim of helping to reduce household debt in the country.

Before the new caps, property buyers could take loans for up to 45 years, while personal loans could be paid back over a period of up to 25 years.

Bank Negara is acting because Malaysia’s household-debt-to-Gross Domestic Product (GDP) ratio is a high 83%. It is the highest in emerging Asia.

The stricter lending guidelines also saw the central bank prohibiting the offering of pre-approved personal financing products.

These new measures to tackle household debt will also be extended to all financial institutions and credit cooperatives regulated by Bank Negara, the Malaysia Co-operative Societies Commission, Malaysia Building Society Bhd, and Aeon Credit Service (M) Bhd.

All these institutions will also need to follow responsible lending limits. New borrowers, especially those with lower incomes, can only take on debt amounting to 60% of their monthly take home pay.

The new limits will not affect loan applications made before yesterday.

Bank Negara governor Tan Sri Zeti Akhtar Aziz, in a briefing yesterday, said the household debt was not yet at an alarming level, but based on present trends it would eventually be so.

Extremely long property loan periods “encourage excessive debt accumulation by households and increases the vulnerability of this (the household) sector,” she said.

Industry players said the measures would have a limited impact on the property market because the older generation of Malaysians had already bought into the property cycle.

They said the latest caps would mainly affect the younger generation.

“They are the ones who will need loans with the extra tenure, not the older generation who are mainly able to afford (higher monthly repayments),” said IOI Properties’ director Teh Chin Guan.

“In the short term, the level of affordability for the younger generation will be lower at today’s prices,” he added.

Elvin Fernandez, managing director at property consultant Khong & Jaafar, said these moves by the central bank should be applauded because property loans with a tenure of more than 40 years was not advisable.

Real Estate and Housing Developers’ Association of Malaysia president Datuk Seri Michael K.C. Yam believed the measures were a “good pre-emptive move because Malaysians are not very disciplined when it comes to these matters”.

“In other countries the maximum tenure is usually 25 years or until the person reaches the retirement age of 55,” he added.

Federation of Malaysian Consumers Associations president Datuk Marimuthu Nadason also supported the new measures.

“But I urge Bank Negara to work with civil societies like us on financial literacy education, which Malaysians sorely lack,” he said, pointing out that 51 people were declared bankrupt daily in the country.

Korisatan Karu­ppiah, Penang Consumers Protection Asso­ciation president, said borrowers should be allowed to repay their loans ahead of schedule, without penalty.

“The lenders argue that they have already made plans with your money over the tenure you agreed with, and that paying back the sum early affects their plans,” he said.

He said the penalty was a fine, of between RM10,000 and RM35,000, depending on the size of the loan.



Nod for MPPP to take legal action against landowner

GEORGE TOWN: THE Penang Island Municipal Council (MPPP) has received the green light from the deputy public prosecutor’s office to take legal action against the landowner of the illegally cleared land in Bukit Relau here.

MPPP president Datuk Patahiyah Ismail said that the court has, however, yet to give them a date for the hearing.
“We have got the go ahead to take legal action. This is concerning the earthworks plan that was not submitted,” she told reporters after a council meeting at Komtar here yesterday.
It was earlier reported that the landowner had been told to speed up its mitigation works and overcome any pollution issue at the site.
It was also reported that earthworks at the site had stopped, with only mitigation works going on.
The land, which was cleared earlier this year without council permit, was rezoned last year to allow for low-density housing development.
Located over 76m above sea level, the land was being cleared to make way for a high-end project, which included bungalows.
Meanwhile in an immediate response, environmental interest group Citizen Awareness Chant Group’s (Chant) steering committee member Peter Wong welcomed the move.
“This is a matter of public interest as illegal works without proper approval, haphazard construction without consultants’ advice may cause landslides, which may lead to the loss of lives.
“Also, the illegal works was an act which was blatant and a total disregard of authority and the law,” Wong said in a statement.
Wong further stated that in the interest of the public, the prosecution should seek a deterrent sentence to prevent future abuse of the process and the offender to merely pay a fine.
The illegal hill clearing, which had gone on since April, was brought up to the media early last month by Seri Delima assemblyman R.S.N. Rayer.

Read more: Nod for MPPP to take legal action against landowner – Central – New Straits Times

Conveyancing and Real Estate


Our lawyers’ exposure to this area is extensive. We attend to all forms of property transactions having represented international and Malaysian vendors as well as purchasers of residential and commercial buildings and for land conveyances. The firm also handles leases and tenancies and attends to loan and other documentation relating thereto.


Our conveyancing practice area extends to:-

  • Sale and Purchase Agreements – Housing Projects for Developer and/ or property subsale for individuals and companies
  • Bank loan and security documentation
  • Deed of Mutual Covenants
  • Power of Attorney
  • Deed of Assignment / Reassignment
  • Probate and Administration of estates
  • Wills
  • Trust Deeds
  • Applications for copyright, trademark and patent registration
  • Drafting, vetting and commenting on IT contracts and IP Agreements
  • Sale and Purchase of Shares Agreements
  • Sale and Purchase of Goods Agreements
  • Telecommunications Agreements
  • Service and maintenance Agreements
  • Settlement Agreements
  • Tenancy Agreements
  • Leasing Agreements
  • Hire-Purchase Agreements
  • Drafting, preparing and vetting various types of legal documents, contracts and agreements
  • Commenting and rendering legal opinions on various legal documents and issues