Under Construction vs Completed Property: What Malaysian Buyers Miss

Buying under construction saves you money upfront, but you will not collect a single ringgit of rent for two to four years. Buying completed costs more today and carries no construction risk, but you can move in or rent out the day the ink dries on the sale and purchase agreement. Which choice suits you depends on your cash flow, risk tolerance, and time horizon.

This guide walks through every dimension that matters for Malaysian buyers in 2025 and 2026.

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What each option actually means

Under construction (primary market / new launch): You sign a Sale and Purchase Agreement (SPA) directly with the developer before or during construction. Payments are staggered in a legally defined progressive schedule, and you receive the keys only after the Certificate of Completion and Compliance (CCC) is issued, typically 36 to 48 months later.

Completed property (subsale / secondary market): You purchase a unit that already exists, usually from an individual owner. The transaction is governed by a standard property sale, with full payment due upon completion of the conveyancing process, typically 3 to 4 months after signing.

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Progressive payments: the real cost of building time

When you buy under construction, you do not pay the full loan amount on Day 1. Instead, your bank releases funds to the developer in stages as construction milestones are hit. Your monthly instalment grows each time a disbursement is made.

This is good for cash flow early on. It is expensive later, because you are paying loan interest (or profit rate for Islamic financing) on the progressive drawn-down amount while the unit sits unoccupied.

Typical progressive payment schedule (Housing Development Act 1966)

Construction milestone	Cumulative % of purchase price
Signing SPA	10% (down payment)
Piling / foundation complete	15%
Reinforced concrete framework	25%
Walls (brick / block)	35%
Roofing	45%
Internal plastering, electrical, plumbing	55%
Roads, drainage, carpark	65%
Certificate of Completion and Compliance (CCC)	100%

The schedule above applies to standard landed and strata residential projects regulated under the Housing Development (Control and Licensing) Act 1966. Commercial titles (SoHo, SOFO, serviced apartments) may use a different schedule, because they are not governed by the same Act, though a pending Real Property Development Bill is expected to extend protections to these buyers.

Progressive interest: During the construction period, most conventional loans charge you interest only on the portion disbursed. On an RM500,000 unit at 4.25% p.a., your interest-only payment when 35% has been disbursed works out to roughly RM620 per month. That amount rises to around RM1,770 per month when the full amount is drawn down at CCC. Budget for this escalation.

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The abandonment risk you cannot ignore

This is the single biggest asymmetric risk in under-construction buying. As of 30 September 2025, KPKT recorded 107 abandoned housing projects affecting 15,553 homebuyers and 29,587 units (source: New Straits Times, citing KPKT data, November 2025).

Three layers of protection exist, but none is absolute:

1. Housing Development Account (HDA): Developers must deposit all buyer progress payments into a dedicated, project-specific HDA. Funds are ring-fenced and can only be released to contractors who complete milestones. If a project is abandoned, the ministry freezes the HDA.

2. Developer blacklisting: From 2025, KPKT began blacklisting individual company directors, not just corporate shells. This closes the historical loophole where an errant developer dissolved one company and re-registered under a new name.

3. Build-Then-Sell (BTS) 10:90: Some developers now offer the BTS model. You pay 10% upfront and the remaining 90% only at CCC. This shifts virtually all construction risk to the developer. Ask specifically whether the project you are eyeing offers BTS before signing.

How to check: Use the KPKT eSemak portal to verify whether a developer holds a valid licence and the project has an active advertising and sales permit (AP). A missing AP is a hard stop.

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Instant rental: the completed property advantage

A subsale buyer can advertise a unit for rent the moment keys are collected. In Kuala Lumpur, gross rental yields for well-located condominiums averaged 4% to 6% in 2025, based on NAPIC transactional data. A RM500,000 unit earning RM2,200 per month generates a gross yield of 5.3%.

An under-construction buyer earns nothing during the construction period of, say, three years. At that same 5.3% yield, the opportunity cost is roughly RM79,200 in foregone gross rent over 36 months, before accounting for vacancy and maintenance.

Rental income also helps service your loan. Buyers who need rental cash flow to qualify for the next loan, or who want the property to be partially self-funding, almost always come out ahead with a completed unit.

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Price, stamp duty, and tax comparison

Item	Under construction	Completed (subsale)
Typical price premium vs market	Developer sets; sometimes 10-20% above subsale for location	Market-priced; reflects actual demand
Stamp duty on transfer	Based on SPA price (tiered: 1% on first RM100k, 2% on next RM400k, 3% above RM500k, 4% above RM1m for residential)	Same rates apply
RPGT if you sell within 5 years	Applies once you own and dispose	Applies; 0% after 5 years for Malaysian citizens (effective from 1 Jan 2022, per LHDN)
Loan interest during construction	Progressive, growing with each disbursement	Full instalment starts immediately
Defect Liability Period (DLP)	24 months from VP / CCC handover	None for subsale; negotiate in SPA if possible

RPGT note: Malaysian citizens pay 0% RPGT on disposal after the 5-year holding period (from 1 January 2022 per LHDN). Non-citizens retain a minimum 10% RPGT floor regardless of holding period. Check LHDN’s current RPGT rate table before planning any exit.

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EPF Account 2 withdrawal: both options qualify

Both under-construction and completed property purchases qualify for EPF (KWSP) Account 2 withdrawal to reduce your loan principal or fund the down payment. The withdrawal is limited to the price difference between your property and any existing EPF housing loan, so speak to your EPF branch to confirm your eligible amount before the SPA is signed. Rules are updated periodically; check kwsp.gov.my for the current policy.

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Side-by-side summary

Factor	Under construction	Completed (subsale)
Upfront cash needed	Lower (10% down, then progressive)	Higher (full down payment, immediate full disbursement)
Waiting time for occupancy	36 to 48 months typical	Can move in within 3 to 4 months
Rental income	Zero during construction	Immediate
Abandonment risk	Exists; HDA and blacklisting mitigate but do not eliminate	Zero; unit already exists
Price negotiation	Limited (developer sets price)	Possible; owner motivated to sell
Defect liability	24-month DLP under HDA	Sold as-is; inspect thoroughly before buying
Bumiputera discount	Applies on developer new launches (typically 7%)	Not applicable
RPGT exposure on early sale	Same rules once you own	Same rules

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Which buyer suits which option

Under construction makes sense if:

• You have 4 to 5 years before you need the unit (new family, investment horizon)
• You want the Bumiputera discount on a developer project
• The developer offers BTS 10:90 and a strong track record
• You are comfortable with progressive payment cash-flow management

Completed (subsale) makes sense if:

• You need to move in within the year
• You need rental income to service the loan
• You want to negotiate on price with a motivated seller
• You prefer zero construction risk

For further context, see our guides on how to buy a house in Malaysia and freehold vs leasehold property in Malaysia.

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Key takeaways

• Under-construction buyers pay progressively but wait 3 to 4 years for any return; model the full progressive interest cost before signing.
• As of September 2025, 107 projects remain abandoned in Malaysia. The HDA, KPKT blacklisting, and BTS 10:90 options reduce but do not eliminate the risk.
• Completed property allows immediate rental income; at a 5% gross yield, every 12 months of waiting costs you roughly 5% of the purchase price in opportunity rent.
• RPGT is zero for Malaysian citizens after 5 years (effective from 1 January 2022 per LHDN); non-citizens never fall below 10%.
• Always verify a developer’s HDA licence and project advertising permit via the KPKT eSemak portal before paying any booking fee.
• EPF Account 2 can be used for both purchase types; confirm your eligible withdrawal amount before signing the SPA.

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Frequently asked questions

Can I back out after signing the SPA for an under-construction property? Technically yes, but you will forfeit a portion of the purchase price as per the SPA termination clause, typically 10% of the purchase price. The developer may also claim further damages. Exit costs are high, so verify your financial commitment fully before signing.

What happens if my under-construction project is declared abandoned? KPKT freezes the developer’s HDA. Affected buyers are registered with the ministry. Some projects are revived through new developers brought in by KPKT; between December 2022 and September 2025, 26 abandoned projects were successfully revived. If revival fails, you may pursue a legal claim, but recovery is slow and uncertain. This is why the BTS 10:90 model matters.

Is there a price difference between new launch and subsale in the same area? Often yes. Developers price new launches at or above current subsale market value, sometimes 10% to 20% higher for prime locations. The difference is partly the Bumiputera discount, partly the freshness of the unit, and partly the developer margin. Check NAPIC’s property price data at napic.jpph.gov.my for the going subsale transaction prices in your target area before evaluating any new launch.

Does the 24-month Defect Liability Period cover everything? The DLP covers defects in workmanship and materials that fail to meet SPA specifications, and it runs from the Vacant Possession (VP) date. Wear and tear, fixtures chosen by you, and anything outside the SPA scope are excluded. Report defects in writing immediately, as the DLP clock is fixed regardless of how long it takes the developer to respond.

Can a non-citizen buy under-construction property in Malaysia? Yes, subject to the foreign ownership threshold set by each state government (minimum purchase price floors range from RM500,000 to RM2,000,000 depending on the state and property type). Foreigners also pay a higher RPGT floor of 10% and a revised stamp duty rate of 8% on residential property transfers effective January 2026. Confirm current state-level rules with a licensed property solicitor before committing.