The Different Types of Property Titles in Malaysia

We all dream of owning our perfect home, but what do you need to know about buying property in Malaysia? When purchasing a property, you’ll often hear terms like different types of “titles.” But what exactly is a property title?

Property titles are a vital component of your Sales and Purchase Agreement (SPA), as each type of title grants different rights and entitlements. To help Malaysians navigate their path to homeownership, we’ve compiled a comprehensive list of the various property titles available in the country. Understanding these titles will better prepare you for the complexities of property ownership.

1. Master title

A Developer Title or Master Title is a single ownership document (Hakmilik) typically held by the developer, related company, or landowner before the land is subdivided into separate lots. In some cases, the developer partners with the landowner, such as Kuala Lumpur City Hall (DBKL) teaming up with a builder. Before subdivision, the developer or landowner controls all transactions related to the land, requiring approval for sales or refinancing.

Once a unit is sold and keys are handed over, the developer must transfer ownership to the buyer. The unit then receives an individual or strata title, invalidating the master title. The developer no longer has rights over the property, and buyers no longer need developer approval for transactions.

If the property was purchased with a loan, a lien on the title exists until the debt is fully repaid. Failure to repay the loan can lead to foreclosure by the lender.

Summary

The Master Title records the ownership of the current owner or developer, including their rights over the land or property.
It grants the owner or developer the right to sell or transact the land/property.
All properties and units are managed under the Master Title until they are subdivided into individual or strata titles. Common areas still under development, such as playgrounds and swimming pools, remain managed under the Master Title.

Note!

In short, the Master Title is a crucial ownership document in the property development process, covering the management and transaction rights of the entire development project.

2.Individual Title

This document represents the deed of ownership for each land plot divided from the master title and includes an ownership (Hakmilik) number. It confirms ownership of both the land and any property built on it. This applies to landed properties like bungalows, terrace homes, shophouses, and semi-detached residences. Note that some landed properties might have strata titles, which will be discussed later.

Summary

Ownership: Confirms ownership of both the land and the property itself.
Typically Applies To: Landed properties such as terraced houses, bungalows, and semi-detached homes.
Maintenance Responsibility: Falls on the individual owner.
Issuance Time: Generally quicker.

Note!

Whether it’s a strata title or an individual title, neither significantly impacts property value. The main difference lies in the usage and fees associated with common facilities.

3. Strata Title

A strata title is similar to an individual title but with a key difference. With an individual title, you fully own both the land and the property. With a strata title, you own a unit within a larger development and share ownership of the land and common facilities with other unit owners.

Examples include condominiums, apartments, gated terrace homes, and retail lots in malls. Strata-titled properties have a Joint Management Body (JMB) to handle maintenance and fee collection, regulated by JMB Malaysia.

Summary

Ownership: Owners hold the title for their individual unit and share ownership of common property within the building with other owners.
Typically Applies To: Condominiums, office buildings, and some specific landed properties.
Management Responsibility: All owners collectively manage, maintain, and upkeep the building.
Cost Sharing: Owners pay management and maintenance fees based on their unit share.

Note!

New government regulations require developers of newly built condominiums to complete the strata title process before handing over the property, which can delay the issuance of this title.

4. Bumiputera Reserve (BR) or Bumiputera Lots

Bumiputra (Bumi) properties are land parcels or units that can only be sold or rented to Malaysians who meet specific criteria:

Peninsular Malaysia: A Bumiputera is someone with a Muslim Malay or Orang Asli parent.
Sabah: A Bumiputera is someone with at least one indigenous parent and born in Sabah, or whose father lived in Sabah at the time of birth.
Sarawak: A Bumiputera has both parents as indigenous natives of the state.

New developments often include a Bumi quota, with a percentage of properties reserved for Bumiputeras. Resale homes with Bumi quotas can only be transferred to Bumiputeras unless state approval is obtained to release them to the open market.

Summary

Ownership: Land reserved exclusively for Malays.
Usage: Only Malays are allowed to operate businesses and reside on this land.
Exclusivity: Not open to non-Malays, including in Sabah and Sarawak.
Regulation: Governed by the National Land Code (NLC).

Note!

Opportunities to transfer these properties to non-Malays are limited. Non-Malays may face difficulties obtaining government approval for purchasing Bumi lots. Ensure government approval is secured before paying any deposit.