The time has come to buy a home, and you’re all excited about it. What comes next is choosing between a sub-sale home and a brand new one. Once you’ve decided on that, you go on to wonder whether you should buy in the city, or the outskirts would be a better option.
To begin with, a sub-sale home is commonly known understood as purchase of fully completed property where you can buy what you see. Usually, such sub-sale is a purchase from an existing owner or maybe left over or remnant of unsold duly completed property from developer. You get to inspect the condition of the house.
Whereas a brand new property is a home that has not been owned or stayed-in by anyone before and usually purchased from a developer. At the time of purchase the construction could be just beginning and the only thing you get to see is only the nicely done furnished showhouse designed by interior designer. If the construction is completed or the units are left over of unsold units you may get the chance to inspect but such unsold units may be located unsuitably or sometimes with unfavorable “feng shui” like being located next to TNB substation, facing a junction, facing an oxidation pond or for those who are more superstitious unlucky house numbers.
As for the location, while many choose to buy within the city, there is also a recent increase in buyers purchasing properties in sub-urban areas, thanks to better amenities and accessibility within these places than in the past.
Here, we’ll help you weigh the pros and cons of brand new and sub-sale properties, and whether you should buy in the city or the outskirts.
Sub-Sale Property: Pros, Cons and Costs
Pros:
When buying a sub-sale property, you can view the physical house and get a feel of the property, its neighbourhood and the surrounding environment. It is easier to check on the types of amenities that are available nearby in well-established neighbourhoods compared to new developments. You can see the property as it is without having to visualise its features and dimensions. You will be able to inspect the property for any defects, especially if it’s been around for years. Plus, you can also get to know your neighbours before you purchase. If the location is fully matured with no more room for new developments, you can rest assured that there won’t be any new properties springing up that’ll affect your way of living.
You buy what you see. The transaction will be faster and less waiting time as you do not need to wait for the developer to complete the construction.
Cons:
Information about the property may be hard to obtain if the property is quite old, so you will need to enlist a really good agent to help you to do the research. The number of units, especially if you’re looking for a specific type such as intermediate or corner lot, will be very limited and restricted within certain locations only. Additionally, the property may look a bit run-down and require some renovation, which will add to your costs. There is no developer warranty, so if you end up with some issues that require heavy repairs after moving in, you have to bear the cost on your own.
Especially for old houses, there are usually issues with leaking pipes or faulty or worn off electrical wiring that could be a real hazard.
The repair may be costly and even require major renovation and repair costs.
Costs:
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Valuation Fees
Very rarely do house buyer conduct valuation of the house. You can make a comparison by just checking on our website for the price of similar houses in the same location. If you intend to get a loan the bank will surely appoint a valuer to carry out a valuation as that bank would want to ensure that the value of the property is within the market value. The estate agent will also be able to advise whether the price is reasonable.
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Property Agent’s Fees
Property agent’s fees are usually borne by the seller, unless you engage an agent specifically to find a house for you. The agent’s fee is usually 2-3% of the property price.
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Downpayment
This will amount to 10% of the property price, but keep in mind that you also may want to have a minimum of 20% cash in hand as most bank would only give out loan at 80% of the property price.
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Ad Valorem Stamp duty on Transfer
The stamp duty for transfer is based on the scale as provided under the Stamps Act 1949.
Property Price Percentage First RM100,000 1% From RM100,001 to RM500,000 2% From RM500,001 to RM1 million 3% Above RM1 million 4% -
Legal Fees
This includes costs of preparing and handling the SPA (Sale and Purchase Agreement) legal documentation and passing it to the appropriate authorities, stamp duty charges and lawyer’s fees. The amount is according to a value and property price of the property.
Professional Legal fees Percentage For The First RM500,000.00 1.0% For The Next RM500,000.00 0.8% For The Next RM2,000,000.00 0.7% For The Next RM2,000,000.00 0.6% For The Next RM2,500,000.00 0.5% -
Other Charges
Filing fee, registration fee, presentation fee, stamp fee, fee for searches and others may differ depending on the location of property, value of property. This may range from RM300 all the way to RM5000. Do consult your lawyers to find out more.
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Taking a Loan
If you are taking a loan there will also be legal fees and stamp duty.
The legal fee is based on the same scale as the SPA.
The loan duty is fixed at 0.5% of the loan amount.
Filing fee, registration fee, presentation fee, stamp fee, fee for searches and others may differ depending on the location of property, value of property. This may range from RM300 all the way to RM5000. Do consult your lawyers to find out more.
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Other cost
This includes Mortgage Reducing Term Assurance (MRTA) or Mortgage Level Term Assurance (MLTA), home loan instalment, interests, home or fire insurance, utility payments and renovation costs.
Brand New Property: Pros, Cons and Costs
Pros:
When you purchase a brand-new property, you will be able to obtain the information about the house from the developer. You can also view the features and dimensions of the property at a showhouse. Brand new homes usually may sometime come with special rebates, discounts and offers to entice buyers.
Such offers include legal fees borne by the developer, stamp duty exemption, minimal downpayment and others. The pricing of the property is also competitive compared to current market prices. Along with new facilities that are in good condition, you can also have the flexibility in choosing the unit type, direction in which the house is facing and floor plans. You can rest assured that new homes come with a 24-month defect liability period, where the developer must fix any defects.
5% of the purchase price you pay will be retained by a stakeholder lawyer, and if the developer refused or failed to rectify any defects you may demand that this sum retained be used to cover the cost for the repair work.
Cons:
The waiting time until the home is completed can be pretty long, in some situations up to 36 months so if you’re in a hurry to move in, then a brand new property may not be suitable. One of the biggest risks involved in purchasing brand new properties is the construction of the building delayed due to external/internal issues, or worse, the project being abandoned. Other than that, there is also the possibility of new or different projects being built in the vicinity that are not in the township’s planning.
Costs:
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Downpayment
The usual downpayment is 10% but in certain cases, the developer of the property development may have a special programme that requires less than the usual 10%, or nothing at all until the development is completed.
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The legal fee and cost involved is basically the same as if you buy a subsale property (please see above)
However, most developer do have homeowner scheme in which no legal fee is to be paid but you are still required to pay for the cost and disbursements incurred by the lawyers for filing fee, registration fee, presentation fee, stamp fee, fee for searches and others may differ depending on the location of property, value of property. This may range from RM300 all the way to RM5000. Do consult the lawyers to find out more.
Sometimes the scheme may also include the developer covering the legal fee for the loan too and for some property, there may be exemption or remittance (rebate) on stamp duty for the loan.
Buying In the City
When you purchase a home within the city, you will be exposed to plenty of external stressors such as pollution, excessive noise and lights and most commonly, busy traffic. Properties within the city tend to be smaller in size yet expensive, owing to the location, demand and convenience that are more readily available compared to a property within the outskirts.
One of the perks of buying a home in the city is easy accessibility to facilities such as public transports, healthcare, shopping, education and more.
Buying In the Outskirts
When you purchase a home in a sub-urban area, you will experience a quieter lifestyle, as opposed to the hustle and bustle of city life. Property buyers who purchase within the outskirts do so because it’s more affordable and bigger in size. For the price of a decent condominium in the city, you can get a double-storey landed property in the outskirts.
Perhaps accessibility to facilities may not be as good as within the city, but in recent years, sub-urban developments have also started merging-in a good amount of amenities within their vicinities.
Choosing The Right One
As everyone has their own needs and preferences, there’s no truly right or wrong type of home or location to choose.
Brand new properties offer interesting discounts and offers, while a sub-sale home offers a stable and mature location. As for investment purposes, new properties are appealing for their aesthetics, while sub-sale properties can be easily rented out as soon as you have ownership of them. So it’s completely up to you to pick the right one according to your own unique requirements!
Next step, click here to check out our property listings for your next right home!
The statement and information in the articles are the opinion of the writer and meant only as a guide. Any property purchase, rental or lease involve many legal issues and other complication depending on the individual facts and circumstances. Readers and Users are strongly advised to seek professional advise including from qualified and competent lawyers, bankers and/or real estate agent to verify the information and the statement before embarking on any purchase, rent or lease of any property. To the fullest extent permitted by law, we exclude and disclaim liability for any losses and damages of whatever nature and howsoever cause and arising including without limitation, any direct, indirect, general, special, punitive, incidental or consequential.
