Pre-Acquisition And Post Acquisition Cost

The most common question in the mind of a property purchaser is the cost that came with purchasing a property apart from the purchase price of the property and monthly instalments to be paid to the respective financier.

In order to answer this question, it will be easier to differentiate and separate the cost into two parts. The first is the Pre-Acquisition Cost and the second is the Post Acquisition Cost. The Pre-Acquisition cost shall comprise of several payments; for example, deposit payment, valuation fees, insurance cost and legal fees. However please bear in mind, the example provided below may vary based on each individual case. In most sub-sale cases (purchase of a second-hand property), the buyer is required to prepare an initial deposit payment of the property. Normally the deposit amount of a property is ten percent (10%) from the property sale price. This practice norm derives from the fact that usually an individual bank loan approval rate is 90% of the purchase price.

Another example of Pre-Acquisition Costs is valuation fees. These valuation fees are fees owed to be paid by the purchaser toward the property valuer appointed by their financier. Valuation Fees is service fees paid in order for the bank to obtain the actual property value. This is very much important as it will determine the marketability of the property. The bank being the financier of the property need to always have their position and interest covered at all time.

To add to that, another cost that can be included in the Pre-Acquisition Costs is the Lawyer’s legal fees for their services. The lawyer’s legal fees can be further divided into two, which are the Sale and Purchase Agreement Preparation and the Loan Agreement Preparation fees. Each of the legal fees shall consist of stamp duty and disbursement charges.  Contrary to popular belief, these legal fees are all subjected to the Solicitor Remuneration Order. The lawyers may not simply charge for their services, there are guidelines and limitations to each charge. Therefore, to obtain a trusted and the best legal fee quotation please do not hesitate to contact us Messrs Misyail Othman & Co (pardon the free ads).

Most purchasers tend to overlook the second part of this article which is Post Acquisition Cost. Upon completion of the sub-sale case, there are still several payments that need to be prepared by the purchasers. One of the payment is the payment of essential utilities of the property. Utilities here include the electricity, water and sewerage service supply for such property. In this regard, the purchaser needs to register her or his name for the service and usually these services require for deposits to be paid beforehand as surety. This deposit shall vary from the type of services selected and provided to each property. Depending on the type of the property, an apartment for example, may even require a monthly payment to be made to its management bodies for services and facilities provided and shared at the housing area.

In addition to the utility’s payment above, the purchaser needs to remember that upon a successful transfer of name onto their now newly obtained property, they are obliged under the law to make yearly tax payments to respective authorities. These tax payments are allotted into two which are Quit Rent and Assessment Receipt. A Quit Rent is a tax payment towards the state land office and it is classified as the land rental payment, in which is governed by Section 5 and 95 of the National Land Code 1965. There are several implications in the event of failure to make such payments and among others the authority may seize over the property from the respective owner. An Assessment Receipt on the other hand is a tax payment toward the local municipal authorities. This tax payment is sanctioned under Section 127 of the Local Government Act 1976. An Assessment Receipt can be paid twice a year as the tax is apportioned into two taxable period yearly, January to June and July to December being the latter.  Alike to Quit Rent, failure to make Assessment Receipt payment may also authorize the Local Authority to seize the property from the registered owner.

To conclude there are much more thoughts that are needed to be put into prior purchasing and after purchasing a property. However, these costs shall not deter anybody to purchase any property as there are various packages provided by the various financiers or financial institutions so to attract potential borrowers to commit and obtain loans with them. Some may even offer to cover all or parts of the Pre-Acquisition Cost. It is our right as the borrower to pick and choose the right and most suitable offer to assist us in obtaining our desired property.  Therefore, do plan properly for your purchase of new property!

Prepared by,
Azza Aiisar
Messrs Misyail Othman & Co.



More Posts

DATIN SERI ROSMAH BT MANSOR V PUBLIC PROSECUTER [2021] MLJU 2394 COURT OF APPEAL (PUTRAJAYA) Stay Proceedings in Criminal Cases Facts of the case 1.   


  NBR LWN MAIS [2018] SLRHU 7 Mahkamah Tinggi Syariah, Shah Alam Pengisytiharan Keluar Agama Islam Fakta kes 1.    Plaintif iaitu NBR telah dilahirkan pada

Send Us A Message