Looking to purchase a new launch property? While there’s an undeniable appeal in purchasing such a property in Malaysia, you should still perform the necessary due diligence and understand the process from end to end. Surprises are no fun (and can be costly!), especially when it’s a high-involvement purchase like property. We’ll go through the steps in this article with you.
First, what is a new launch project? These are properties in which buyers purchase units directly from the property developer, often during the pre-launch or launch phases. This segment is also known as the primary market, where properties are sold for the first time by the developer, as opposed to being resold by previous owners, which occurs in the secondary market.
Transactions in the primary market are regulated by the Housing Development Act (HDA), which mandates a standardised Sale and Purchase Agreement (SPA) and defect liability period.
This refers to the period of time from the date purchasers receive delivery of vacant possession and keys to their property, during which the developer is responsible for fixing any defects.
Under the HDA, the defect liability period is 24 months and 36 months for individual and strata-titled properties respectively, starting from the date of the vacant possession.
During this period, purchasers should check their unit for damages, defects or faulty workmanship, and report these issues to the developer to get them repaired free of charge.
Reasons To Buy a Newly Launched Property
- Modern design and amenities: New launches often feature contemporary architecture, energy-efficient features, EV charging stations and sometimes, unique amenities such as rooftop pools, sky decks, and co-working spaces, among others.
- Lower cost of entry: Most developers offer rebates or attractive packages, and absorb certain costs such as legal, loan agreement, and stamp duty fees. Some would also include gifts, fitting and furnishing, zero down payment and a chance to win contest prizes.
- Potential for appreciation: As the surrounding area develops, the property’s value may increase over time. In addition to the discount enjoyed, purchasers could enjoy a healthy capital appreciation, sometimes even before the property is completed.
- Choices: With new properties, you enjoy more flexibility in choosing your preferred block, floor, and view.
- Spending less on refurbishment: Purchasers are likely to save on refurbishments or repairs as the properties are brand new.
1. First Up, Budget!
As you familiarise yourself with the primary property market, you should also determine your affordability level. The rule of thumb is that your monthly loan instalments should not exceed one-third of your household income.
Knowing your repayment capability will help you effectively shortlist properties in the right range. Then, you’d not waste time looking at properties that are out of your repayment capability or the loan amount that you qualify for. You can use PropertyGuru’s mortgage calculator to get an estimate.
2. Let the Search Begin
Once you know how much you can borrow, the next step is to search for the right property. You can refer to PropertyGuru’s new property launch page and use the filter to begin your shortlist based on the area you’re interested in, the stage of completion, and your budget range.
You can also download the property’s brochure for easy reference, and there’s also a mortgage calculator on the page to ease your search.
Here are key factors to consider when you’re at this stage:
- Location: Proximity to work, schools and amenities, to determine how much time you’d need to spend on the road daily.
- Developer: Research the developer’s track record to gauge whether they will be able to complete the project on time and with promised quality.
- Project details: Review the tenure, land title, density, parking lots, layout, facilities, sinking fund and maintenance fees, entrance/exit points, and surrounding infrastructure, such as upcoming MRT or LRT stations if you prefer to get around with public transport.
3. Showroom Visits
Upon shortlist, it’s time to visit the sales gallery! To maximise your visit to each showroom, here’s a plan:
- Make an appointment to ensure that the developer’s sales staff or their appointed real estate agency are present to bring you through the project properly.
- Review the brochures beforehand, and familiarise yourself with the surrounding area. Ask about upcoming projects in the vicinity that could affect the view or property’s value.
- Prepare a checklist of items that you must know, including property orientation, APDL, completion timeline, payment terms and milestones, facilities, unit layout customisation or finishes, number of units per floor, refuse area, potential noise pollution, and financing options, among others.
- Consider whether your preferred layout would fit your lifestyle needs for the mid to long run.
- Actively engage with the sales staff, and express your concerns.
- Take down important details, for easy comparison later. You might forget the details of each project, especially when you’re visiting several showrooms across weeks or months.
4. Upon Unit Confirmation
Now, once you’ve booked your desired unit, you need to pay the stipulated booking fee and check with the end financier on your loan eligibility. Once eligible, you need to make the requisite loan application.
Once the loan application is approved, you need to sign the sale and purchase agreement (SPA) and memorandum of transfer within a specified period. The developer often bears the legal fees, so remember to check with the developer on this.
When that’s done, you would need to settle the loan differential sum at the appropriate stage of Progressive Payment Schedule, while the balance of the progress payment will be settled by the end financier.
Other expenses would include disbursements and stamping fee on the SPA, stamp duty on transfer, legal fees for preparation of the loan and security documents and stamp duty on the charge document.
5. Secure Financing
While it’s a wonderful feeling to finally take the step to owning a property, it’s important to ask yourself this — can you afford the property for the long-term, and will the purchase put you (and your family) under great financial stress? Only you would have the answer to that important question.
As for the property’s monthly instalment, it would depend on these:
- Property purchase price
- Type of mortgage (Term, Flexi, Semi-Flexi)
- Tenure of the loan (typically 35 years or until 70 years old)
- Home loan interest rate
- Insurance (MRTA, MLTA, MRTT, MLTT)
Detailed information on the items above, including the process of applying for a home loan, can be found here.
Do note that different banks have different Debt Service Ratio (DSR) limits, so it is important to know yours to avoid a home loan rejection. DSR measures your ability to settle your debt obligations. It is one of the components of your risk profile, a key factor banks use to determine your borrowing power. Generally, your DSR should not exceed 70%.
You will also want to get your finances in order, such as your credit card repayments and other loan repayments, such as a car loan and study loan (PTPTN). If you’re unsure of how your financial health looks to financial institutions, you can check by getting your CCRIS report via the CCRIS online platform, CCRIS kiosks at Agensi Kaunseling dan Pengurusan Kredit (AKPK), and approved credit reporting agencies such as CTOS Data Systems Sdn. Bhd. (CTOS), Credit Bureau Malaysia Sdn. Bhd. (CBM), and Experian Information Services (Malaysia) Sdn. Bhd. (formerly known as RAM Credit Information Sdn. Bhd.).
Often, the developer’s panel of banks are present at the sales gallery. Check and compare interest rates and loan packages before choosing. You’ll need to provide the necessary documents such as a copy of your NRIC, salary slip, bank account and EPF statements, income tax (LHDN) receipt and property booking form. Remember, a strong credit score can significantly improve loan terms.
It will take the bank 1 to 2 working days to access your application and process your loan. If your loan is approved, you will receive a Letter of Offer. This document indicates your interest in purchasing the property and almost always includes a form of payment to lock it down. This could be 2% to 3% of your selected unit’s purchase price, depending on the package that the developer is offering.
Cost Checklist for Primary Market Homebuyers
| During the execution of the SPA | • Deposit / booking fees (Note: Collection of booking fees before signing of SPA is prohibited for property governed under the Housing Development (Control and Licensing) Act 1966) • Legal fees and disbursement for SPA • Legal fees and disbursement for loan agreement |
| Before completion of the SPA | • Stamp duty for MOT or Deed of Assignment • Mortgage insurance • Differential sum between the balance purchase price and the loan amount Note: Stamp duty exemption for 2024 — first-time homebuyers who purchase a home valued at RM500,000 and below can enjoy a full stamp duty exemption until the end of 2025 |
| Upon delivery of Vacant Possession | • Home insurance • Maintenance fee and sinking fund • Quit rent • Assessment tax • Indah Water • Renovation cost (optional) |
Summary of Purchase Steps for a New Launch Project
It’s certainly a lot to digest if you’re a first-time homebuyer. As new launch projects involve a waiting period between the purchase and completion of the property, we suggest staying in the loop of the project’s construction progress by communicating with the developer.
We’ve broken down the steps of purchasing a property in the primary market here:
- Check on loan eligibility and work out your budget.
- Search and shortlist preferred properties on PropertyGuru.
- Make an appointment to visit the sales gallery and view the show units.
- Take note of important details for each property.
- Compare the costs, pros and cons.
- Select your preferred property, block and unit type.
- Sign the sales form and pay a deposit/booking fee.
- Review the mortgage loans by the developer’s panel, and provide the necessary documents to the bank officer.
- Select preferred mortgage loan and sign the bank’s Letter of Offer once the loan application is approved.
- Appoint a lawyer to handle loan documents or use the developer’s appointed legal firms.
- Sign the SPA, legal documents, and loan agreement.
- Pay the balance deposit (10% minus the booking fee paid earlier), and other charges, such as legal fees on the SPA and stamp duty for Memorandum of Transfer (MoT).
- Pay progressive interest upon the completion of each stage, according to the schedule of payment of purchase price. You would only be required to pay full instalment once the bank has released the final disbursement.
- Now it’s wait time, until the developer issues the Vacant Possession.
- Upon receiving the keys, check your unit for defects and submit it to the developer for them to fix the defects.
- Move into your new home!
Buying a new launch project involves careful consideration, planning and informed decision-making. Conduct thorough research, trust your instincts, and don’t hesitate to seek professional advice when needed.
Happy property hunting and buying!
Need Help Buying a New Launch Property?
Choosing the right new launch project for you could seem daunting, especially when you have to navigate the myriad processes, regulations, and financing options involved.
But don’t worry—we’ve got you covered. Whether you’re a first-time homebuyer, an upgrader, or an investor, our Ultimate New Launches Guide has all the information you need to make an informed decision.
Discover comprehensive insights and expert advice tailored to help you find the perfect home. Start your journey today by exploring our curated guide!
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