What Foreigners Cannot Buy in Malaysia — Four Federal Bans, Plus What Each State Adds
Four categories are barred to foreigners nationwide: property below RM1 million per unit, low and medium-low cost residential units as determined by the State Authority, property on Malay Reserve Land, and units allocated to Bumiputera interests in a development. All four sit in the Ministry of Economy's federal guideline.
The important part: the last three are category bans, not price bans. You cannot buy a low-cost unit by offering RM3 million for it, and no amount of money moves Malay Reserve Land. Many buyers treat "I can afford it" as a passport — against these three, budget does nothing at all.
Then each state adds its own layer, and some of those bite harder than the federal ones: Selangor bars landed property on individual titles, Perak bars freehold entirely, Melaka caps you at two homes, and most states bar auction properties to foreigners outright.
Layer one: the four categories barred nationwide
The source is the Ministry of Economy's Garis Panduan Perolehan Hartanah, Section VI "SEKATAN", paragraph 10, in force 13 July 2022. It states that foreign interests are NOT ALLOWED to acquire:
- Real estate valued below RM1,000,000 per unit. That is the price floor; the state-by-state variations are covered in the minimum price guide.
- Residential units in the low and medium-low cost categories as determined by the State Authority. Note the test: it is the housing category the project was approved under, not the current asking price.
- Property on Malay Reserve Land (Tanah Rizab Melayu). This is the hardest line in Malaysian property law, grounded in each state's Malay Reservations Enactment. No exceptions, no waivers, no structures.
- Units allocated to Bumiputera interests in a development (Bumi lots). The only state we found that expressly contemplates release is Johor — subject to exemption from the State Secretary's office, Housing Department. Whether other states do the same, we could not source, and we are not going to guess for you.
🔴 Two things are NOT on the federal list although many articles say they are: agricultural land and auction properties. Those are state-level restrictions — most states do bar them, but the authority sits with the state, not the federation. The distinction matters the moment you are asking about an exception or a special arrangement.
Layer two: the state restrictions, which stop more deals than the federal ones
None of the below is federal law. These are state rules, and they defeat more transactions than the RM1 million floor does — mostly because buyers do not know the clauses exist.
Excluded by title type
- Selangor: strata and landed-strata titles only. Landed property on an individual title — bungalow, semi-D, terrace — is off-limits. This is the single most budget-relevant rule in the country, because it closes Selangor's entire landed market to foreigners.
- Perak: no freehold at all. Since September 2023 non-citizens and foreign companies cannot acquire, own, hold or inherit freehold property in Perak. Residential subsale is barred in all three zones as well — new-build from a developer on a 60-year leasehold is the only route.
- Kuala Lumpur, Putrajaya, Labuan: a foreign individual may buy residential, but commercial, industrial and agricultural property is open only to foreign companies incorporated in Malaysia — not to a foreign individual in their own name. Sabah words its commercial and industrial categories the same way.
Excluded by house form
- Single-storey and 1½-storey terrace houses: expressly barred in Kedah, Johor and Melaka.
- Melaka additionally requires commercial property to be three storeys and above, and it cannot be bought storey by storey.
Excluded by quantity and holding period
- Melaka: two residential units maximum, three commercial. And residential and commercial property cannot be transferred or leased for five years from the date the Form 14A transfer is registered, with a 60-month registrar's caveat on the title.
- Penang: commercial and industrial property may only be sold three years after the date of the SPA.
Excluded by how you acquire it
- Auction properties: expressly barred in Kedah, Penang, Selangor, Negeri Sembilan and Melaka. Section 433B(4) of the National Land Code separately bars a non-citizen from bidding at a court-ordered sale of agricultural, building or industrial land without state consent.
- Agricultural land: not permitted in Selangor, Pahang, Terengganu, Sabah and Sarawak; allowed only under narrow exceptions in Kedah, Penang, Melaka, Negeri Sembilan and Johor, usually tied to a high-impact agriculture joint venture, a minimum acreage or a minimum value.
Special categories
- Melaka's Heritage Zone is off-limits; Malacca Customary Land (MCL) cannot be owned, though a 30-year lease is permitted.
- Johor: property gazetted under the Akta Warisan Kebangsaan 2005 is off-limits.
- Penang goes further than the federal rule: foreigners and permanent residents may not own low-cost, medium-low-cost or medium-cost housing, plus low-cost terrace houses, low-cost flats, Bumiputera-quota houses, low-cost shops, stalls and service workshops.
- "I'll set up a Malaysian company and buy through that." It does not work as a workaround. The federal guideline defines "foreign interest" to include a Malaysian-incorporated company in which non-citizens, permanent residents or foreign companies hold more than 50% of the voting rights. A foreign-controlled local company is still a foreign interest — the RM1 million floor, the four bans and State Authority consent all still apply. The company route has real uses (some states open commercial and industrial only to locally incorporated companies, and the RPGT ladder differs) but it is not a way around the restrictions.
- "I'll hold it in a Malaysian friend's name." This is not a grey area; it is a way to lose everything. The registered owner is the legal owner. And an instrument executed under a power of attorney by a non-citizen over alienated land is void and incapable of registration under section 433F — so you lose both the asset and the mechanism you were counting on to control it.
- "It's a cheap low-cost unit, I'll just pay more for it." Low and medium-low cost housing is a category ban, unrelated to what you pay. The test is the housing category the project was approved under, not today's market price.
Five checks before you sign anything
- Check the tenure on the titleFreehold or leasehold? In Perak that single question can end the transaction. At the same time, check whether it sits on Malay Reserve Land — the title will say so.
- Check whether it is an individual or a strata titleIn Selangor, landed property on an individual title is closed to foreigners. Do not go by what the house looks like; go by how the title was issued.
- Check the unit's housing categoryLow cost / medium-low cost / medium cost / open market — this is fixed when the project is approved. Ask the developer or your solicitor for the document; do not accept a verbal answer.
- Check whether it is a Bumiputera quota unitAsk the agent to show you the unit's quota status. Johor allows an exemption application; for other states we could find no published basis.
- Confirm it is not an auction propertyMost states bar auction property to foreigners entirely. When the price looks unusually good, ask where the property came from.
Frequently asked questions
Can a foreigner buy a house on Malay Reserve Land?
No, and there is no exception. It is one of the four categories expressly barred by paragraph 10.3 of the federal guideline, grounded in each state's Malay Reservations Enactment. Price, residency status and company structures change nothing. Johor makes the point explicitly: even transfers under the Distribution Act or a court order are not permitted for Malay Reserved Land.
Can I use a Malaysian company to get around the foreigner restrictions?
No. The federal guideline defines "foreign interest" to include a Malaysian-incorporated company in which non-citizens, permanent residents or foreign companies hold more than 50% of the voting rights. A foreign-controlled local company faces the same restrictions. Where the company route does matter is elsewhere: some states open commercial and industrial property only to locally incorporated companies, and a Malaysian-incorporated company gets the 30/20/15/10% RPGT ladder rather than the flat 30% that applies to a foreign individual for the first five years. It does not help with the thresholds or the bans.
Can foreigners buy auction properties in Malaysia?
In most states, no — Kedah, Penang, Selangor, Negeri Sembilan and Melaka bar them expressly. Section 433B(4) of the National Land Code separately provides that a non-citizen or foreign company may not bid at a court-ordered sale of land under the agriculture, building or industry category without State Authority approval. Buying cheap at auction is effectively closed to foreign buyers.
Can foreigners buy agricultural land in Malaysia?
Usually not. Selangor, Pahang, Terengganu, Sabah and Sarawak bar it outright. Kedah, Penang, Melaka, Negeri Sembilan and Johor have narrow exceptions with conditions attached: Johor requires RM1 million or more than 15 acres, whichever is higher; Negeri Sembilan permits it only through a high-impact agriculture joint venture that does not involve foreign property ownership; Penang requires a minimum of 5 acres, at least 30% Malaysian shareholding, and conversion out of agricultural use within two months of transfer approval or the approval lapses.
Why did a sales agent say foreigners can buy, and then the purchase failed?
Three common reasons. The unit was a Bumiputera quota unit, which excludes foreigners by category. The state restricts the title type — Selangor's bar on landed individual titles catches many buyers. Or the price did not clear that state's threshold, or it did but the valuation did not. "Foreigners can buy" usually describes the project as a whole, not the specific unit you picked. Ask for confirmation in writing at unit level.