16/12/2025

TUESDAY | DEC 16, 2025

3 Buying blind in Malaysia’s housing market

Empower buyers, disclose risks upfront: Fomca

PETALING JAYA: The government should consider introducing a law or formal guideline requiring sellers and agents to disclose material non-financial risks in subsale property transactions, says the Federation of Malaysian Consumers Associations (Fomca). Its CEO, Saravanan Thambirajah, said such risks include harassment, gang activity, violent incidents or other safety concerns that could influence a buyer’s decision. “At present, buyers are not specifically protected by any law requiring sellers or agents to disclose non-financial risks such as harassment, gang activity, intimidation, criminal use of the property or other safety related issues linked to the property or its surrounding environment. “Given that safety, security and peace of mind are material considerations for any homebuyer, there should be a requirement for mandatory disclosure of non-financial risks that could reasonably influence a buyer’s purchasing decision.” Saravanan said Fomca and the National Consumer Complaints Centre regularly receive complaints from buyers who discover safety or social issues only after completing a property purchase. “Consumers often approach us after learning that their property was previously linked to criminal activity, violent incidents or persistent neighbourhood disturbances after moving in. “While these cases involve criminal matters that fall under police jurisdiction, they highlight a recurring concern about the lack of upfront disclosure and the serious impact on consumers’ sense of safety and quality of life.” One of the biggest challenges for buyers, Saravanan added, is the absence of a formal mechanism to verify a property’s safety or social history before purchase. “There is no mandatory disclosure requirement, no publicly accessible database linking crime or safety incidents to specific properties and limited transparency at the neighbourhood level. Information involving intimidation, gang activity or harassment is typically within the domain of law enforcement and not easily accessible to the public,” he said, adding that social stigma and fear often prevent neighbours from sharing information. In the current regulatory environment, prospective buyers must rely on informal measures to protect themselves. Saravanan advised observing the property and surrounding area at different times, engaging with neighbours and conducting online searches for news reports related to the property or locality. He said buyers can also consult independent property professionals familiar with the area and even make enquiries with the police, though access to information may be limited due to privacy and investigative restrictions. “While these steps can help, they are not a substitute for proper disclosure requirements. Consumers should not be expected to uncover hidden risks on their own.”– By Harith Kamal

Ű BY HARITH KAMAL newsdesk@thesundaily.com

consequences. “Research shows that once such information becomes known, properties tend to face a longer time-on-market and downward pressure on prices. “When buyers are unaware at the point of transaction, properties may trade at normal market values, with the stigma only emerging during resale.” This reflects information asymmetry, reinforced by Malaysia’s contract law framework, he said. “Under the Contracts Act 1950, silence does not generally amount to misrepresentation,” he said, noting similar pricing effects linked to housing stigma are observed in countries such as the United States and Japan. On whether property agents should voluntarily disclose safety related or criminal histories, Najib said Malaysian law imposes no general duty. “Estate agents are regulated under the Valuers, Appraisers, Estate Agents and Property Managers Act 1981, which requires them to avoid misrepresentation and act in the public interest. “However, there is no explicit requirement to disclose stigma related issues.” Still, he said, academic literature on real estate ethics suggests withholding information that would materially affect a buyer’s decision raises fairness concerns. For buyers seeking to avoid high risk or so-called “black area” properties, Najib said legal due diligence alone is insufficient. “Formal searches under land law do not capture safety, social or reputational risks. Buyers need to conduct their own social due diligence. “This includes speaking to building management, residents’ associations and neighbours, observing the area at different times and asking agents or sellers directly about past incidents. “A seller’s or agent’s willingness to respond transparently is itself informative,” he said, adding that documenting such inquiries in writing is advisable. On whether Malaysia should introduce mandatory disclosure, Najib cautioned against a sweeping regime. “The most appropriate approach would be a targeted disclosure framework with safe-harbour protection,” he said, rather than a broad overhaul of contract or land law. He pointed to Japan’s system for psychologically impacted properties, which requires disclosure of specific, verifiable events within defined timeframes without permanently stigmatising properties. “For Malaysia, a limited model focusing on serious, clearly defined safety issues, time-bound disclosure and legal protection for good-faith disclosure would strike the right balance.”

o Nearly 80 % of homes sold have undisclosed pasts as no law requires sellers to reveal troubled property histories: Expert

PETALING JAYA: Nearly 80% of homes sold in Malaysia are second hand, yet no law requires sellers to disclose a property’s troubling past – from violent deaths and crime to harassment or safety hazards – leaving buyers to navigate a largely “buyer beware” market. According to the National Property Information Centre’s Property Market Report 2023 summary, only 21.5% of residential transactions involved new homes, meaning the vast majority occurred in the secondary market. Universiti Teknologi Malaysia property economics and finance expert Assoc Prof Dr Muhammad Najib Razali said even a small number of properties with troubling histories can attract widespread attention in such a large market. “There is no statutory or

dominant, they are sufficiently present to influence buyer behaviour, especially in high density urban areas.” Najib explained that Malaysia’s subsale market largely operates on an “as is where is” basis, reinforcing the principle of caveat emptor, or buyer beware. “That combination – a huge secondary market, a buyer-beware mindset and patchy public data on so-called ‘soft risks’ – is why stories about problems following a house travel so quickly.” From a market perspective, he said awareness of a property’s adverse non-financial history can have tangible economic

administrative system in Malaysia that records or discloses non financial histories of residential properties. “Neither the National Land Code 1965 nor related regulations require such matters to be registered in land titles or sale documentation.” As a result, Najib said the true prevalence of these properties cannot be empirically measured. “However, academic studies on Malaysian housing markets do identify the existence of ‘stigmatised properties’, particularly those associated with psychological stigma from violent deaths or serious crime. “While these properties are not

Najib said there is no statutory or administrative system in Malaysia that records or discloses non-financial histories of residential properties. – AI-GENERATED IMAGE BY AZURA ABAS.

Second-hand house purchasers must do their homework

Ű BY IKHWAN ZULKAFLEE newsdesk@thesundaily.com

past harassment by loan sharks rarely affect market value unless the property is in a high-crime ‘black area’. Homes in dangerous neighbourhoods however, do see a dip in price, as buyers weigh safety concerns for their families.” Erman stressed that while buyers should exercise due diligence, there is no legal requirement for sellers to disclose past non-financial issues such as gang harassment. “Ultimately, it is the buyer’s responsibility to assess a property’s condition, location and safety.”

financial issues. “Banks will only disburse funds to the agency for payment to the previous homeowner once it is verified that there are no caveats, outstanding utility bills or other restrictions on the property. This guarantees that the property can be sold without any legal obstacles.” He added that this contrasts with auctioned properties, where buyers often pay less but inherit all liabilities. “For auctioned homes, buyers inherit all debts. For subsale properties, minor disturbances or

conducted on an as-is basis, leaving prospective buyers to assess the property for themselves. “When a buyer views a property, they see it in its current state. If satisfied, they can proceed with the purchase. “Once the agreement is signed, the seller cannot remove doors, ceilings or other fixtures,” he told theSun . Erman also further explained that while banks ensure the property is free of financial encumbrances such as unpaid utility bills or caveats, there is no legal obligation to disclose non

PETALING JAYA: Buyers of second hand homes in Malaysia face a harsh reality – they must investigate potential risks themselves – including harassment by loan sharks or past links to gangs and drugs. This is because sellers are under no legal obligation to disclose such history. Erman Taib, chief operating officer of Quality Home Realty (M) Sdn Bhd, said subsale transactions are