If you wish to buy a house or any property with a price exceeding your own savings, you may apply for a financing facility to purchase the property from any financial institution.

 

A loan/facility letter of offer will be issued in the event you fulfill the requirements for such financing including your ability for the monthly repayment.  Further to that, you are then required to enter into a loan/facility agreement with that financial institution.

 

As a matter of practice, this agreement is referred to as a “loan agreement” for conventional financing.  Meanwhile, in Islamic financing the agreement is referred as “facility agreement.”

 

Once you receive your letter of offer from the respective financial institution, it is advisable to appoint a solicitor to handle the adjudication of the offer letter and following that to prepare the loan or facility agreement as well as other related documentation.

 

The stamp duty for the loan agreement or facility agreement is on ad valorem basis in which the stamp duty calculation is 0.5% of the loan/financing amount.  However, there is an exemption on stamp duty for loan agreements or facility agreements for the purchase of the first residential property, aimed at alleviating the burden on Malaysians in their effort to own the first home.

 

Nevertheless, this exemption is conditional and subject to the value of the financing, the date of the sale and purchase agreement, and the type of residential property.  The exemption is not applicable to those who inherited or purchased other residential property before that agreement.

 

For instance, as per the Stamp Duty (Exemption) Order (No. 2) 2021 P.U.(A)54 that took effect  from 1 January 2021, exemption from stamp duty is applicable for any loan agreement or facility agreement valued at not more than RM500,000.00 for the purchase of first residential property.  Nonetheless, among the conditions to be met are that the sale and purchase agreement for the residential property must be dated between 1 January 2021 and  31 December 2025, and the type of residential property purchased must be a house, a condominium unit, an apartment, or flat.

 

As a matter of fact, the stamp duty exemption order will be updated from time to time, with the varying exemption criteria depending on the order issued by the Government. Therefore, to ensure that you are qualified for any stamp duty exemption  it is advisable for you to seek proper legal advice.

 

Prepared by,

Anis Syahidah Binti Ariffin

TETUAN MISYAIL OTHMAN & CO.