Buy to let in Malaysia: a checklist before you book a new launch

If you buy to let in Malaysia, the tax rules start working the day you sign: rental income from a property you let out without providing services is taxed under paragraph 4(d) of the Income Tax Act, and a sale within three years of buying attracts real property gains tax (RPGT) of 30%. A new launch adds one more variable: you are buying a unit that does not exist yet, to rent to tenants you have not met, in a market that will look different by handover.

That is why a buy-to-let purchase needs a different checklist from a home you will live in. The numbers that matter are the rent a tenant will really pay, the costs that come out of it, and how many similar units will be competing for the same tenants on the day you get the keys.

There are eight checks, in the order you would make them: location, unit type, furnishing, the numbers, supply at handover, management and tenancy agreements, tax, and a final checklist.

Quick answer: Before you book a new launch to rent out, check real rents for similar units nearby, work out net yield and the monthly gap after your loan instalment, count the units completing around the same time, and budget for furnishing, maintenance charges and tenancy stamp duty. Rental income is taxable, and RPGT on a sale falls from 30% in the first three years to 0% from the sixth year for citizens and permanent residents.

Work out the rental yield

Before you start: what buy to let in Malaysia involves

A buy-to-let purchase is a business decision made with personal money, so it helps to be clear about what you are signing up for. You will pay the booking fee, deposit and progressive payments like any other buyer, then carry the loan, maintenance charges and insurance yourself until a tenant moves in. After that, the rent has to cover those costs, and you declare it to LHDN every year.

Three things are worth knowing before you look at a single project. First, if this is your third home loan or more, Bank Negara Malaysia set a maximum loan-to-value ratio of 70% on the third house financing facility in its 3 Nov 2010 measures. That means a larger cash downpayment, so confirm the current limit with your bank. Second, the cost of borrowing moves with the Overnight Policy Rate, which BNM kept at 2.75% on 3 Sep 2026. Third, the rent you receive is added to your other income and taxed.

You will also want three professionals on call: your bank for loan approval, a lawyer for the sale and purchase agreement (SPA) and the tenancy agreement, and LHDN (or a tax agent) for rental income and RPGT.

1. Location and tenant demand

Start with the tenant, not the building. Every buy-to-let decision rests on one question: who will rent this unit, and what will they pay? A project near a university, a hospital, an industrial park or a rail station has an obvious tenant pool. A project in an area where most people already own their homes may not.

Look for evidence. Check the asking rents for completed buildings of a similar age and size within walking distance, and note how long units stay listed. A developer's "projected rental" is a sales figure.

Questions to answer before you book:

• Who are the likely tenants: students, young professionals, families, expatriates or factory staff?
• How do they get to work or class, and how long does it take at peak hour?
• What do completed buildings nearby rent for, furnished and unfurnished?
• Is the area's main employer or institution likely to still be there when your unit is handed over?

2. Unit type and size

The right layout for a rental is the one your tenants want, which is often not the one you would choose to live in. A one-bedroom or studio near a campus or business district suits single tenants. A three-bedroom suits families or room-by-room letting, if the building's house rules allow it.

Price per square foot matters more for an investor than for an owner-occupier, because rent does not rise in line with size. A larger unit costs more to buy, furnish and maintain. Compare layouts on what each one could rent for against what it costs, not on the total price alone.

Small details change tenant demand too: a dry kitchen with no ventilation, a bedroom without a window, or a car park bay that is not included. Ask for the floor plan and the car park allocation in writing before you pay the booking fee.

3. Furnishing and fit-out

A new launch is handed over bare or partly fitted, and in many areas a furnished unit lets faster than an empty one. That fit-out is cash you need at handover, on top of your downpayment, legal fees and the first months of loan instalments, before any rent arrives.

Plan the fit-out to suit the tenant you identified in step 1. Students and young professionals usually expect beds, a wardrobe, a fridge, a washing machine and air conditioning. Families may prefer to bring their own furniture. Keep every receipt: LHDN allows the cost of replacing furnishings such as furniture and air conditioners to be claimed against rental income when the letting is a non-business source.

Two cautions. The rule covers replacements, so ask a tax adviser how your first fit-out is treated. And keep finishes to what a tenant will pay more rent for.

4. Numbers: yield, cash flow and loan

This is where most buy-to-let plans succeed or fail. Work out three numbers: gross yield, net yield and monthly cash flow after the loan instalment. Use your own figures for rent and costs; the example only shows the method.

Gross yield is annual rent divided by the purchase price. Net yield takes off the costs of owning the unit and a realistic allowance for empty months.

Example: Say you buy a RM1,000,000 condo and expect to let it for RM3,500 a month. All figures here are assumptions. Gross annual rent: RM3,500 x 12 = RM42,000. Gross yield: RM42,000 / RM1,000,000 = 4.2%. Assumed yearly costs: maintenance charges and sinking fund RM6,000 (RM500 a month), assessment and quit rent RM1,500, fire insurance RM400, one empty month RM3,500. Total: RM11,400. Net annual income: RM42,000 - RM11,400 = RM30,600. Net yield: RM30,600 / RM1,000,000 = 3.06%.

Now add the loan. Cash flow is what is left after the instalment, and on a new launch it is often negative in the early years.

Example, continued: Add a 90% loan of RM900,000 over 35 years at an assumed 4.0% a year. The monthly instalment works out to about RM3,985. Monthly net income before the loan: RM30,600 / 12 = RM2,550. Monthly gap: RM2,550 - RM3,985 = about -RM1,435. If this were your third home loan and the bank lent 70% (RM700,000) on the same terms, the instalment would be about RM3,099, but you would need RM300,000 in cash for the downpayment.

With a negative monthly gap, what matters is knowing its size and being able to carry it, including through a vacancy or a rate rise. Run your own figures through the home loan calculator before you meet the bank.

5. Supply risk at handover

A new launch has a timing risk that a completed unit does not. Every buyer in your block who also plans to rent will be looking for a tenant in the same few months after vacant possession (VP), when you get the keys. If neighbouring projects complete at the same time, the competition is bigger still, and rents can be lower than anything you assumed at booking.

Check three things. How many units are in the project, and how many are already sold? When is handover due under the SPA, and has an extension been approved? What other projects nearby are due to complete in the same year? You can check a licensed project's details yourself on KPKT's public TEDUH portal.

On PropLaunch, the list of launches with units still available shows how many units are left in each project, which tells you how much stock the developer is still selling alongside you. Use it as a starting point, then confirm the details with the developer before you book.

Build the risk into your numbers: assume a longer first vacancy and a lower first rent than a completed building nearby achieves today.

6. Management and tenancy agreements

Two sets of rules govern a rented strata unit: the building's, and the tenancy agreement's. Strata buildings are managed under the Strata Management Act 2013. KPKT's strata management handbook explains that owners pay maintenance charges for the upkeep of common property, cleaning, security and insurance, and a sinking fund for capital works such as repainting and replacing fittings. Owners who do not pay can face blocked access cards and action at the Strata Management Tribunal, and those charges are yours as owner, whether or not the unit is let.

Read the house rules before you buy. Some buildings restrict short-term stays or room-by-room letting, and a rule like that can change your rental plan entirely.

The tenancy agreement is the other half. Have a lawyer prepare or review it, and make sure it covers the rent, deposits, the length of the term, who pays for repairs, and how either side can end it. It must also be stamped. Under item 49(a) of the Stamp Act 1949 First Schedule, as set out in LHDN's stamp duty guideline, duty is charged on every RM250 or part of the annual rent, at a rate that depends on the length of the tenancy.

Source: LHDN, guideline on stamp duty for instruments under the First Schedule of the Stamp Act 1949 (as of 30 Jun 2026)

These rates came in with the Finance Bill 2024, which also removed the old RM2,400 annual rent threshold, effective 1 Jan 2025. The same guideline says the tenant (lessee) pays duty on the main agreement and the landlord on the copy. For a tenancy shorter than a year, LHDN annualises the rent first, and since 1 Jan 2026 tenancy agreements are stamped under self-assessment through e-Duti Setem on MyTax.

Example: Say you sign a two-year tenancy at RM3,500 a month. Annual rent: RM42,000. Number of RM250 units: RM42,000 / RM250 = 168. Stamp duty at RM3 each: 168 x RM3 = RM504. On a one-year tenancy, it would be 168 x RM1 = RM168.

Stamp on time. Instruments must be stamped within 30 days of signing, and late stamping costs RM50 or 10% of the duty, whichever is higher, if paid within three months after the deadline, and more after that, under rules in force from 1 Jan 2025.

7. Tax on rental income and on the sale

Rental income is taxed every year, and how much you pay depends on what you can deduct. Under LHDN Public Ruling No. 12/2018, letting a property without providing comprehensive maintenance or support services is a non-business source, taxed under paragraph 4(d). Only direct expenses incurred wholly and exclusively to earn the rent can be deducted.

The ruling gives these examples of deductible expenses:

Source: LHDN Public Ruling No. 12/2018, Income from letting of real property (published 19 Dec 2018)

Timing matters too. The same ruling says expenses for a period when the property is not let are generally not allowed, unless the vacancy comes after it has been let and the unit is clearly ready to let again. For a new launch, that means costs between handover and your first tenant may not be deductible. Ask a tax adviser how this applies to you.

If you sell, RPGT applies to the gain. The rate depends on who you are and how long you held the property.

Source: LHDN, RPGT rates, Schedule 5 Parts I and III (as of 23 Jun 2026)

Individuals also get an exemption of RM10,000 or 10% of the chargeable gain, whichever is greater, on each disposal. The once-in-a-lifetime exemption for a private residence, on the same page, is for a home you live in, so ask LHDN whether it can apply to a rented unit.

Example: Say a citizen buys at RM1,000,000 and sells in the 4th year for RM1,150,000, ignoring costs for simplicity. Gain: RM150,000. Exemption: the greater of RM10,000 or 10% (RM15,000) = RM15,000. Chargeable gain: RM135,000. RPGT at 20%: RM27,000.

How the holding period is counted for a property bought under construction, and which costs can be added to the purchase price, are questions for LHDN or a tax agent before you decide when to sell.

8. The buy-to-let checklist

Use this list before you pay a booking fee. If you cannot answer a line with a fact, find the fact first.

Frequently asked questions

Is buy to let in Malaysia worth it for a new launch?

It depends on your numbers, not on the market in general. Work out net yield and the monthly gap after your loan instalment using real rents for similar completed units nearby, and decide whether you can carry that gap through a vacancy.

Do I pay tax on rental income in Malaysia?

Yes. Rental income from letting a property without comprehensive services is taxed under paragraph 4(d) of the Income Tax Act, after deducting allowable direct expenses such as loan interest, assessment, quit rent, fire insurance and ordinary repairs. Confirm your own position with LHDN or a tax agent.

Who pays stamp duty on a tenancy agreement, the landlord or the tenant?

LHDN's stamp duty guideline says the tenant pays duty on the main agreement and the landlord pays on the copy. In practice the tenancy agreement can say who bears the cost, so agree it in writing before signing.

How much is stamp duty on a two-year tenancy agreement?

For a term over one year and up to three years, duty is RM3 for every RM250 or part of the annual rent. At RM3,500 a month (RM42,000 a year), that is 168 x RM3 = RM504.

What is the RPGT rate if I sell a rental property after five years?

For Malaysian citizens and permanent residents, disposals from the sixth year onwards are taxed at 0% under LHDN's current RPGT rates. Non-citizens who are not permanent residents pay 10% from the sixth year.

Can I deduct furniture costs from rental income?

LHDN Public Ruling No. 12/2018 allows the cost of replacing furnishings, such as furniture and air conditioners, as a deduction when the letting is a non-business source. The treatment of your first fit-out is a separate question, so ask a tax adviser.

How much can I borrow for a third property?

BNM set a maximum loan-to-value ratio of 70% on the third house financing facility in Nov 2010. Your bank will confirm the limit and the amount it will lend based on your income and existing commitments.

Before you book

Before you pay a booking fee, write down the rent you expect, the costs that come out of it and the instalment you will carry, then check each number against a real source. Ask the developer for the floor plan, the handover date and the house rules, and ask a registered estate agency for viewings and price lists.

Work out the rental yield

This guide is general information, not financial, legal or tax advice. Rules and rates change; confirm the figures that apply to you with your bank, your lawyer or LHDN before you commit. PropLaunch is not a real estate agency.

Related guides

• Rental yield: what a good return looks like in Malaysia
• Home loans in Malaysia: rates, tenure and margin of finance
• The costs nobody mentions when you buy a new home