As an opposition leader previously, Dr Mahathir Mohamad has long accused the Forest City housing project in Johor of being a gateway for foreigners to settle on Malaysian soil.
Now that Mahathir is prime minister, he caused a stir last week by claiming that foreigners can no longer buy properties there.
"One thing is certain, units in that city that are going to be built cannot be sold to foreigners. We are not going to give visas for people to come and live here," he said.
This led to confusion because Malaysia's laws allow for foreigners to purchase property. Further statements from Housing and Local Government Minister Zuraida Kamaruddin and later the Prime Minister's Office's didn't provide much clarity.
Does the prime minister's announcement have any legal basis? What are the criterion for foreign ownership of Malaysian property? Who are the regulators? Is there a relationship between property ownership and the Malaysia My Second Home (MM2H) programme?
To answer these questions, Malaysiakini consulted three experts - Ipoh Timur MP Wong Kah Woh, who has 13 years of legal experience in handling property cases in Perak, Hatta & Associates property head Safwan Ahmad and an experienced Johor-based lawyer who wished to be known only as “A”.
Their answers are compiled below for brevity.
Does the PM have the power to bar foreigners from buying property?
No, according to all three experts. Such powers belong to the state government which can decide on the minimum price and type of property accessible to foreign buyers.
Wong said state governments have a duty to protect their citizens from foreign speculators, who can snap up cheap property and put it out of the reach of locals.
"The state will set a limit for purchases by foreigners to protect the rights of Malaysians. This is to prevent foreign 'hot money' from pushing up the price of local property. Each state sets a different floor price for foreigners," said Wong.
What are the relevant policies for each state?
Each state government sets a floor price for properties that can be purchased by foreigners and MM2H visa holders. For most states, the floor price is RM1 million, although there are variations by region.
There can also be other stipulations. According to A, foreigners and MM2H visa holders cannot purchase two-storey commercial buildings and agricultural land in Johor.
What is MM2H?
In 2002, Putrajaya introduced the MM2H scheme to allow foreigners who fulfill certain criteria to stay in Malaysia for as long as possible on a special multiple-entry social visit pass.
This visa lasts for 10 years and is renewable.
According to the MM2H website, 35,821 such visas were issued between 2002 and August last year. Topping the list of these visa holders are the Chinese (9,902) followed by the Japanese (4,372) and Bangladeshis (3,746).
Applicants must prove that they have liquid assets equivalent to at least RM500,000 and are receiving income from a foreign source amounting to at least RM10,000 per month.
For those aged 50 and above, they are required to prove that they have at least RM350,000 in liquid assets and an income from a foreign source of at least RM10,000.
Are MM2H visa holders compelled to buy property in Malaysia?
No. According to Safwan, just like any other foreigner, MM2H visa holders must obtain permission from the state government to purchase property. However, having an MM2H visa does get them priority.
Conversely, a foreigner who succeeds in purchasing a property will not be considered for an MM2H application.
"MM2H regulations are quite strict. One of my clients could not bring his mother-in-law and he decided not buy a property," said Safwan.
Wong said property ownership has no bearing on permanent residency or citizenship applications.
"Even they reside in a house for five to ten years, it doesn't mean the Home Ministry will grant them permanent residency or citizenship.
"It is solely the prerogative of the ministry," he said.
News from - MalaysiaKini