Introduction to ‘bumiputra property’

Posted on 19 December 2011 – 05:30pm

Khairul Anuar

Property lawyer and author Khairul Anuar

This article will form a part of my second book and is my attempt to work out the differences of meaning when it comes to Malay reserved property and bumiputra property or units as they are better known as in housing developments. Let us look at these differences according to Malaysian land law.

Malay reserved land
Malay reserved property, a policy leftover from the time when land administration was in the hands of the British, is always marked with the words “Malay Reserved” on the individual title. Some call such individual titles Red Grants or Geran Merah due to the red ink used.

According to the Malaysian Federal Constitution, a Malay is defined in Article 160(2) as fulfilling two criteria. The first is that he or she professes to be a Muslim, habitually speaks the Malay language, and adheres to Malay customs. Secondly, the person must have been either domiciled in the Federation or Singapore on Merdeka Day, or born in the Federation or Singapore before Merdeka Day, or born before Merdeka Day to one or both parents born in the Federation or Singapore (collectively, the “Merdeka Day population”) or is a descendent of a member of the Merdeka Day population. These are used to define the word ‘Malay Reserved’ on any individual title.

Here is the general rule on the transaction of Malay reserved property. It can only be transacted between Malays. An owner of a Malay reserved property cannot sell it to a person who is not Malay or a foreigner.

The signature on the Sale and Purchase Agreement can be witnessed by a lawyer but any document which is used at the land office for any transaction, such as Form 14A of the National Land Code which is used to transfer the property from one party to another, must be witnessed by a Registrar of and Mines or the District Officer or Assistant District Officer of any land office. The National Land Code empowers these officers to check whether the person transacting in the property is a Malay or not.

Bumiputra lots or units
Property known as bumiputra units or bumiputra lots meanwhile rarely have such labels on their titles. In most cases, the Sale and Purchase Agreement will determine whether the property is a bumiputra unit or not. In certain states, the label ‘Bumiputra lot’ can be found as a restriction-in-interest on the individual title of the property and in much rarer cases, you may find the label ‘Bumiputra lot’ like it is with Malay reserved property, on top of the individual title.

There is no specific clause defining the word ‘bumiputra’ in the Malaysian Federal Constitution unlike the word ‘Malay’. Article 153 of the Federal Constitution however mentions that there is a quota for Malays and natives of any states of Sabah and Sarawak. This has been used to define “bumiputra” when it comes to bumiputra lots in a housing development.

The term ‘bumiputra lot’ relates to the bumiputra quota imposed by the authority on the housing developer on each housing development. In some cases, the quota is set for the whole development and requires bumiputra ownership to be of a certain percentage at any one time without any mention of it at all on the Sale and Purchase Agreement.

That is why the control for any transaction of bumiputra lots is in the hands of the housing developer who makes sure the quota imposed is met. This is true especially if the sale is done before individual titles are issued, like with strata property, and involves the housing developer.

In most cases, 30% of all houses to be developed is set to be sold to bumiputra buyers. A special price, usually set at 7% discount, is given to bumiputra buyers. When you buy a bumiputra unit from a housing developer, and get a bumiputra discount, your property is restricted from being sold to non-bumiputra.

There are exceptions. In the case where the property is not labeled as a bumiputra unit on any of its documents, either on the Sale and Purchase Agreement or on the individual title itself, a bumiputra owner can apply using a consent to transfer to transfer the property to a non-bumiputra buyer.

If you bought a property without an individual title where you must acquire consent from the housing developer of the property to re-sell, the housing developer may have to consider whether at that particular time, the quota of bumiputra units is at the percentage imposed by the authority. There are cases where the housing developer is willing to remove the bumiputra restriction if the bumiputra buyer pays back the discount which was given in the first place.

As for any property which has a title, if a plausible excuse is given to the land office handling the transfer of a property owned by a bumiputra to a non-bumiputra, the transaction can sometimes be allowed. Among the best successful reasons given is that the seller has tried to sell to bumiputra buyers but has failed. If at first the application to transfer fails, appeals can be made.

In conclusion, it can be said that a Malay reserved land is a subset of bumiputra unit but not vice versa and a Malay reserved property is more restrictive than a bumiputra property.

Property lawyer Khairul Anuar wrote last year’s book 40 Questions You Should Ask Your Lawyer before Buying a Residential Property in Malaysia. He is now working on the sequel can be found on Twitter as ‘@kruel74’