Purchasing an auction /lelong property in Malaysia is quite similar to buying a property from the secondary/subsale market. In addition to the final bid price, there are other costs you’ll need to prepare for. These additional costs can vary depending on whether you’re paying in cash or taking out a loan for the purchase.
5/10% of the Reserve Price as Deposit
To be eligible for bidding, prospective bidders are required to submit 5/10% (depeding on the Proclamation of Sale) of the reserve price as auction deposit. This is fully refundable if you do not win in an auction.
Remaining Balance Between Reserve Price and Successful Bid Price
When you win an auction, and you are not the only bidder, your initial 10% deposit based on the reserve price will likely be less than the 10% required based on the final bid price. For example, if the auction property has a reserve price of RM900,000, your deposit would be RM90,000 (10% of the reserve price). However, if you win the auction with a bid of RM1,000,000, the 10% deposit will now be calculated on the final bid price, which would be RM100,000 (10% of RM1,000,000). In this case, you would need to pay an additional RM10,000 to make up the difference.
Sales and Purchase Legal Fees and Stamp Duty
Purchasing an auction property in Malaysia is largely similar to buying a property from the secondary market (subsales). Highly advisable to hire a lawyer to process the transfer of title to your name, for which legal fees will be chargeable for professional services rendered. Be aware that legal fees may come with additional costs such as disbursements, which you’ll need to prepare for. To enable the title to be transferred to your name, you should plan ahead for the legal and stamp duty fees associated with the purchase. For LACA auctions, please note that stamp duty may vary depending whether it is Direct Transfer or Double Transfer. Further details can be found at our ‘Hidden Costs of Auction’ page.
Loan Legal Fees & Stamp Duty
If you intend to finance your purchase with a loan, you will incur additional legal fees and stamp duty charges related to the loan agreement. Unless you intend to finance the purchase in cash, taking a loan in what most buyers will do. The legal fees for the solicitors handling the loan financing are imposed on a scale rate pursuant to the Solicitors Remuneration Order, which are based on the value of the loan financing amount.
Outstanding Property Charges
When buying a auction / lelong property in Malaysia, you may be responsible for additional costs related to any outstanding charges on the property. This is as the defaulter / previous owner may not have made up to date payments for these items. These charges could include:
- Quit Rent
- Assessment
- Maintenance Fees
- Sinking Fund
- Electricity Bill
- Water Bill
- Indah Water
For LACA cases (Bank Auctions), most of these charges (up to 6 years before the auction date) will typically be covered, except for utilities bills. However, you’ll need to prepare extra funds upfront to pay off the outstanding charges, as you’ll have to settle them first before claiming reimbursement from the bank once the title has been successfully transferred to your name.
For non-LACA cases (High Court Auctions), only the quit rent and assessment charges will be covered. The buyer will be responsible for covering the remaining charges, including maintenance fees, sinking fund and utilities . It’s important to be aware of these potential costs to avoid surprises and ensure you’re financially prepared.
These are just generalizations. It is important that the conditions in the Proclamation of Sale are studied carefully, as the banks may not pay any of these costs and every case is different. For more information on LACA and non-LACA cases, please click here.
Additional Costs
The above costs cover the majority of cases. In lelongs / auctions, the property is sold on an as-is-where-is basis and without vacant possession. Some extra ‘hidden’ costs may also be applicable to ensure title transferred to your name and you are able to take vacant possession. Visit our ‘Hidden Costs of Auction’ page for more details.
