Bumi lot, Bumi quota, Malay reserve land

 

Bumi lot, Bumi quota, Malay reserve land

 

In Malaysia property market, we have property that labeled as Bumi lot, bumi quota or Malay reserve land. This is to protect and giving privilege to the Bumiputera in Malaysia. It has been a norm in Malaysia property market.

 

  1. What is the different between bumi lot or bumi quota?

 

Bumi quota is imposed by the authority to the developer in the Development Order and in line with the noble requirement in the NEP which is intended to balance the economic disparities involving the bumiputras and non-bumiputras.

It’s an allocation by the government policy to the developer, imposing that the developer has to allocate around 10-40% of the development units to be sold to bumiputera only. Hence, developer are required to sell certain no units to bumiputera.

However, if given that the whole development units has been taken up except bumi quota units, developer could apply consent with government to decrease the quota to sell the outstanding bumiputera units to Non-Bumi. Non-Bumi can purchase bumi quota unit later on as subsales.

Ensuring portion of units benefit by bumiputera. Moreover, Bumi quota property unit won’t state in the title document as “only transferable to bumi buyer only”.

 
However,
 
Bumi Lot is unit that will state in the title document with ” Transferable to Bumi only”. Hence this units has restriction.

Example..

Developer ABC launch a project.

Consist of lot 1,2,3,4,5,6,7,8,9. And they reserved 6,7,8,9 as bumi reserve lot.

Bumi lot would usually give 7% to the bumiputera buyer, which certainly selling lower than 1,2,3,4,5.

Let’s say, lot 1-5 rm100,000. While 6-9 rm100,000 – 7% bumi = rm93,000.

– if a non bumi would like to buy the property, he/she can only buy lot 1-5.

– if a bumi would like to buy, he/she can choose from lot 1-9. But, if he/she choose lot 1-5, he/she wil pay rm100,000. If he/she choose lot 6-9, she pay rm93,000. And for lot 6-9, a special bumi stamped will be seen on the title once obtained.

– however, due to Malaysia law, there is some developer applied bumi quota instead of a fixed bumi reserved lot. Bumi quota of 10% we assumed.

Let’s say developer have total 9 units, so is 0.9 after 10% bumi quota applied. We round it up to 1. So, by the end of the day, it is compulsory that 1 unit must be owned by bumiputera. Assumed he/she is the last bumi vendor, and if unfortunately that the bumi vendor wanted to sell his/her lot even there is no special stamped or indication of bumi reserved, he/she couldn’t sell to non bumi.

– Freehold or leasehold doesn’t affect status of bumi lot/ bumi quota or malay reserved land

 

  1. What is malay reserve land?

Malay reserve land is a land that government has imposed only Malay can owned the land as per constructed buildings on it too. It is stated in the title as “REZAB MELAYU” (Refer to our title explanation). Developer who took this land and developed can actually ask for consent to transfer it to non bumi status to be sold to the mass market. It really depends on the consent.

 

  1. Is it possible for non bumi to purchase bumi lot or malay reserve land units?

The answer is no, it’s impossible to transfer bumi lot or malay reserve land to non bumi. However, there have been few cases where it has been successfully transferred. Conveying lawyer kept submitting consent form land office in order to request permission for the land to be transfer, with lots of trial and rejection. It’s not recommended as it is costly and time consuming.

 

  1. Does bumi or malay reserved land units affect the pricing?

Yes it does, even as bumi buyer are reluctant to purchase the unit as investment, because less demand. Simple economic sense, buyer notice it is bumi lot and would be difficult or closed to impossible to sell to non-bumi, hence it has removed a portion of the property buyer in the market, hence less demand. With less demand, the price wouldn’t surge much.

However, the reserved serve a purpose for bumiputera to own specific land.

 

  1. I have seen non bumi purchased malay reserve land !

Well, this has been seen and done before, however in different scenario. Example, the land itself is malay reserve land. The company that owns this land is Chinese company and selling the land to all Malaysian, however it is with the government consent allowing transfer to be done for non bumi. Consent is very important for land to be transferred in between bumi and non bumi for restrictive units and land.

 

Conclusion

Do consult with lawyer and banker in order to conform that the unit with restrictive line in the title, whether it’s transferrable before opting to purchase the units or lands, then get a letter of confirmation from the company or land office. Be prudent and smart

 
Drop any inquiries down below 🙂
Cheers

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