The speaker discusses the updated policies surrounding Malaysia's "Second Home" visa program, addressing concerns and debunking potential misconceptions. The conversation touches upon climate differences, increased financial thresholds, residency requirements, business opportunities, and real estate market dynamics.
The Harvard Heat and Sunscreen Reminder
Today's topic is the Second Home program in Malaysia. But first, a quick note about the weather in Harvard: it's extremely hot, with temperatures reaching 35 degrees Celsius. High-temperature warnings are in effect. The speaker notes a difference in heat tolerance, possibly due to stronger ultraviolet (UV) rays. Therefore, everyone should use sunscreen, not just to prevent tanning, but to protect against harmful UV radiation.
New Second Home Policy: Key Concerns
Many bloggers are discussing the new Second Home policy in Malaysia. The speaker will address some key arguments and concerns regarding the new rules.
Forced Property Purchase and Lock-in Period
The new policy now requires applicants to purchase real estate. Properties purchased as part of the Second Home visa application are subject to a 10-year lock-in period. Selling the property within this timeframe results in the automatic cancellation of the Second Home visa. This restriction presents a significant obstacle for some applicants.
Mandatory Residency Requirement
Applicants must now reside in Malaysia for a minimum of 90 days per year, equivalent to three months. This requirement is intended to attract individuals who genuinely intend to live in Malaysia long-term. This is attractive to retirees or families intending to send their children to study in Malaysia, but may be a deterrent to others.
Increased Financial Threshold
The financial requirements have been increased. Compared to the previous Second Home program launched last year, the current entry threshold is approximately $350,000 higher. This includes a required deposit of $150,000 (roughly $700,000 RMB). Factoring in property purchase and living expenses, this puts a considerable financial strain on potential applicants. An annual budget of at least 200,000 RMB is estimated for family expenses and children's tuition.
Restriction on Company Ownership
Those applying under the silver or gold tiers of the Second Home program are no longer eligible to start companies in Malaysia. Previously, some applicants were able to offset costs by establishing businesses. Now, only "white gold group" members can start a company. Other applicants may need to pursue commercial certification to start a business.
Addressing Misconceptions and "Soap Bubbles"
Despite the concerns, the Malaysian government is targeting a specific demographic: middle-class individuals (specifically those from first and second-tier cities). The speaker now discusses a couple of potential "soap bubbles" (misconceptions).
"U-Turn" Potential in Policy
Some believe that the new government might relax the policy conditions, potentially lowering deposit or purchase thresholds. However, the speaker argues that historically, the trend has been towards increasing standards. The Second Home program has evolved since its inception in 1996. Since then the requirements have steadily increased, with no evidence of a "U-turn" occurring.
Real Estate as an Inflation Hedge
The idea that holding local real estate effectively combats inflation is also questioned. The speaker categorizes the Malaysian real estate market into three segments:
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Luxury properties for the global elite.
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City-level high-rise apartments mainly for foreigners
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Properties intended for the local population.
Areas popular with foreigners, like Mangalore, often have higher prices and less integration with local life. Furthermore, many properties are based on 99-year leases rather than freehold ownership. The Kuala Lumpur market is divided, with properties marketed specifically to foreigners and others marketed to locals. These markets don't significantly impact each other, as there is often a price gap that deters local people from buying properties primarily marketed to foreigners.
Factors to Consider When Choosing a Property in Kuala Lumpur
Several factors should be considered when selecting a property.
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Convenience: This includes proximity to shopping malls for leisure and accessibility to daily life.
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Transportation: Easy access to public transport, such as the subway, is crucial.
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Facilities and Management: The quality of amenities like swimming pools and gyms, plus the overall property management, are vital. Safety measures are also an important consideration.
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Property Rights: Freehold properties (permanent ownership) are preferable for long-term investment and inheritance.
Invisible Benefits of the Second Home Program
Aside from residency, the Second Home program has invisible benefits for Chinese people. The program requires opening a local bank account in Malaysia. This account allows for multi-currency transactions. This enables individuals to deposit funds in stronger currencies and potentially benefit from higher interest rates. It also can provide a legitimate way to transfer larger funds out of China beyond the usual $50,000 limit per person.
Opening bank accounts in other countries, such as Canada, is becoming more difficult. Canada requires the applicant to demonstrate their intent to immigrate or demonstrate a specific reason to open an account.
The speaker concludes by encouraging viewers to subscribe to the channel for more information on immigration to Canada and immigration stories from Malaysia, Singapore, and Europe.