Is it best to rent or buy property in Malaysia today? The decision between renting a property or buying is often one of finances. But even for people lucky enough to have a choice, what are the pros and cons of buying a property or renting in today’s market?
We’re lucky to be joined by leading Malaysian property expert, Founder and Managing Director of law firm Chur Associates, Chris Tan. In his own words, here are some key points to consider when looking at renting or buying property.
Renting is not a dirty word
In Malaysia, we are a nation that works on home ownership. So that means we encourage people to own a home rather than renting a home.
Renting is not a bad thing, depending on what you do. With today’s mobility, you might be working in KL today, but next year you’re in Dubai, and the year after in Hong Kong.
Mobility is higher in today’s context. The fact is we tend to be more fluid in where we want to settle down. Therefore, renting is captivating in the sense – why do you need to be tied to
Buying isn’t just about price.
Buying is not about price alone. You have to look at it in a very wholesome approach. What about terms of payment, term of occupation? Things like that are also important.
For example, you might not have your 10% deposit, so you may want to negotiate if you can pay your deposit in a few crunches. Or you might not be able to get the bank loan in the normal margin of financing at 90%. You can only get 60%, so you have to think about how to pay off the balance of the 40%?
Consider a flexible solution
When I look at the buyer market today, everyone is desperate to sell. What if they say they won’t come down with price, but you still like the property? How about asking to rent it for a year before buying at the desired price?
You can also ask for part of the rent to be taken as part payment of the purchase price. So it’s important to know how to negotiate. As long as you know what you want, you can get an even better deal than just price alone.
First time buyers need to account for all the costs
The biggest issue for first time buyers is number one – the cash flow. A lot of people say they have 10% deposit, and have a loan for 90% value, so they can buy a house.
A lot of time first time buyers are very excited and focus on other costs. But there are a lot of issues in a house. For example, you buy a condominium, you’ll have maintenance, service charges, sinking fund.
These payments are a commitment until you sell the property. So on top of the installment, you also need to pay all these things. That’s as well as the maintenance on your own unit. So work out the other cost implications, and then consider a purchase.
Get ready to negotiate
At the end of the day every development is different. You might not get a price drop in a mature area because of demand, but other areas you can negotiate.
Go do some research on a project that has just been delivered by a developer. Look at how the developer is selling at that time [in the past]. When a developer sells you should know that the developer was selling at a specific price. So if you know the original price, and the current price, that’s where you can find a reduction. There might also be a rebate or discount happening, that also represents a space for you to negotiate.
If you’re looking to rent you can negotiate too
There’s always scope for negotiation, in any market. If you are a tenant, you have many choices. If you’re a landlord, be aware of your competition.
So be smart. For example, a lot of people will hold out for their desirable renter. But renting property is a cash flow game. It’s not about asking for the best price. The one month you don’t rent will harm you. So a tenant has a lot of choices, and a landlord has a lot of competition.
The law protects tenants
If you ask me if a tenant is well protected in Malaysia? The answer is yes. As long as a tenant pays their rent, they have every right. So whether you’re influenced between buying and renting, different circumstances should be considered. But as it is right now, the protection is currently in favour of the tenant, not the landlord.
The market is good for buyers, and for renters
The current market conditions are good for a buyer, and good for a tenant. It depends on what your usage is.
If you can afford to buy, then buy. Because long term you achieve some return. But if you cherish flexibility, where you can end your commitment very fast, then rent.
Make an informed choice with Mudah
With more than 250,000 listed properties for sale and rent today, and over 4,000 fresh properties added daily, Mudah is on track to become Malaysia’s leading property platform. As part of that journey, we’re committed to helping support informed decisions for our audience.
“As Malaysia’s leading integrated one-stop resource for homebuyers, sellers and renters, Mudah Property is uniquely positioned to offer Malaysians insights that will help them decide where to live and where to invest when it comes to property,” said Mr. Gaurav Bhasin, CEO of Mudah.my Sdn. Bhd.