The Malaysia My Second Home (MM2H) program, which has attracted many expatriates and retirees to Malaysia over the years, is facing potential challenges following the introduction of a new property purchase requirement. This development may lead to a significant decrease in the number of applicants, according to MM2H Consultants Association president Anthony Liew.
New Property Purchase Requirement
The Malaysian government recently mandated that MM2H applicants must purchase property in Malaysia. While this move is aimed at boosting the real estate sector, it has raised concerns among potential applicants and industry stakeholders.
Retirees’ Reluctance
Liew highlights that most MM2H applicants are retirees who might be hesitant to commit to buying property before experiencing life in Malaysia. “So far, based on reactions from our members, the number of applicants will decrease due to this new requirement,” Liew told Malay Mail.
Factors Influencing Applicants’ Decisions
Temporary Residency Before Commitment
Many retirees prefer to live in a country for a few years before making a long-term commitment, such as purchasing property. This trial period allows them to assess whether Malaysia suits their lifestyle and needs without the immediate financial commitment and potential long-term ties associated with property ownership.
Ambiguity in New Requirements
Another issue is the ambiguity surrounding the property purchase requirement, particularly regarding the ability to rent out purchased properties. Liew questions whether applicants, especially those under the gold and silver tiers, will be allowed to rent out their properties if they choose to live elsewhere. “Some may not be able to buy properties where they want to live so they buy elsewhere and rent a place where they want to live but will they be allowed to rent out the properties they bought?” he asked.
Changing Demographics of MM2H Applicants
The primary MM2H applicants currently come from China, followed by Taiwan, Hong Kong, Korea, and Singapore. While many Chinese applicants are financially capable of purchasing properties, they are often reluctant to do so before ensuring that Malaysia suits their lifestyle.
Before the pandemic, Malaysia also attracted numerous applicants from western countries, particularly the United Kingdom. However, the number of Western applicants has declined since 2020, and the new property purchase requirement may further discourage interest from this demographic. Many Western retirees are not accustomed to purchasing property in their home countries, let alone in a country where they plan to stay only temporarily.
Terminations and Transfers
Liew mentioned that some MM2H participants have terminated their status, often due to the completion of their children’s studies in Malaysia. Additionally, there has been a minor trend of MM2H participants relocating to Thailand.
New Licensing Requirements for MM2H Agents
The government has also introduced a new licensing requirement for MM2H consultants, necessitating a bank guarantee of RM200,000. This requirement poses a significant challenge for smaller firms, particularly those still recovering from the pandemic’s impact. “We currently have over 200 members but with this new licensing requirement, the smaller firms may not apply for the new licence as they are unable to accumulate sufficient funds especially after being hit by the pandemic,” Liew explained.
Future Prospects for MM2H Program
Despite these challenges, there is optimism for the future of the MM2H program. The lowering of age requirements could attract younger applicants who may bring their families to Malaysia, potentially boosting various economic sectors. Additionally, the removal of the offshore income requirement is seen as a positive change.
Liew noted that younger families coming to Malaysia for their children’s education could positively impact the local economy. “They may apply to come here for their children to study here and it is good that they have removed the offshore income requirement too,” he said.
Conclusion
The new property purchase requirement for the Malaysia My Second Home (MM2H) program is expected to impact the number of applicants significantly. While this move aims to stimulate the real estate market, it presents challenges for potential retirees and expatriates who prefer to test the waters before committing to property ownership. The additional licensing requirements for MM2H consultants also pose challenges for smaller firms. However, with strategic adjustments and targeted initiatives, the program still holds potential for contributing to Malaysia’s economic growth and attractiveness as a long-term destination.
