If you have followed closely to our blog post sharing, you would have gained knowledge on some of the most common property jargons that you should know before buying a property.
Now, in this instalment of the must-know property jargons in Malaysia, we will delve into the property jargons related to assurance policies, taxes and strata property management bodies.
Brush up your knowledge on Top Must-Know Property Jargons in Malaysia
Mortgage Level Term Assurance (MLTA)
MLTA is a type of home loan life insurance often used to cover the value of your home loan, covering death or total permanent disability. In the unfortunate death or permanent disablement situations, this type of insurance policy offers repayment of your outstanding home loan as well as guaranteed cash value back at the end of the scheme.
A ‘level term’ means that the MLTA’s sum assured remains constant throughout the policy’s tenure, in contrast to MRTA’s ‘reducing term’.
During a claim, the MLTA is paid to the bank for any outstanding home loan repayment, with any excess cover paid directly to the appointed beneficiary. The policy holder can nominate any family member as beneficiary to receive the pay-out, should something unforeseen happen to him or her.
Mortgage Reducing Term Assurance (MRTA)
The MRTA is another type of home loan life insurance that offers financial protection for property loan borrowers in the event of your death or total permanent disability.
The ‘reducing term’ element in MRTA simply means that your coverage will gradually reduce in line with your outstanding loan amount until the end of the tenure.
In the unfortunate event of the passing or permanent disablement of the borrower, the MRTA goes directly to the lending bank to settle outstanding loan amounts on the property. Unlike the MLTA, your family members will not receive any cash benefit, as the bank is the beneficiary of a MRTA policy.
Real Property Gains Tax (RPGT)
RPGT may sound like a mouthful of acronyms, but it is actually an easy concept to grasp. It is basically a form of capital gains tax that is on chargeable on the profit that you gained from the sale of your property.
Do note that you will only be charged RPGT when you make a profit from selling your property. The Malaysian government provides a tax relief when you don’t make a profit at all, that is when the selling price is equal to, or lower than, your original purchase price.
The RPGT rate varies according to the tenure of ownership that is calculated from the date of your SPA signature to the date of property sale.
Joint Management Body (JMB)
Okay, moving on from taxes and assurances…we delve into the management of your homes or development, specifically for strata-titled properties.
Firstly, the Joint Management Body (JMB) is a body that works with the developer to maintain the property before a proper handover can be executed.
The JMB is responsible for overseeing daily operations such as rubbish collection and cleanliness, maintaining the common properties, and ensuring the community’s general safety. The JMB will continue to perform its duties until it is dissolved, which is then succeeded by the JMC or MC.
Joint Management Corporation (JMC)
Sometimes, the Management Corporation (MC) is also referred to as the Joint Management Corporation (JMC). But.. JMB, JMC, MC – how are all these different, besides their names?
The issuance of strata title is what differentiates the JMB from the JMC; before the issuance of strata title, the JMB exists in power, while the JMC or MC comes into the picture once the strata title is issued.
Sub-Management Corporation (Sub-MC)
Um, so we just learnt about JMB, JMC/MC… Now what is this Sub-MC all about?
Simply put, a Sub-MC is required if the strata development is too large and difficult to be managed by a single committee. For example, a mixed integrated development that consists of both residential parcels and commercial units, in this case, an independent Sub-MC will be formed.
The catch is – residents can only form a Sub-MC if the main MC is already in existence. Although the Sub-MC runs independently from the MC, one member from the main MC needs to participate in the operations of the Sub-MC.
Essential Property Jargons you Must Know in Malaysia Before Buying A Home
Now that you have some understanding of the common must-know property jargons in Malaysia, your knowledge may help you out when you embark on your home-buying journey, or even in your property investment endeavour.
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This article is intended to convey general information only. It does not constitute advice for your specific needs. This article cannot disclose all of the risks and other factors necessary to evaluate a particular situation.
Any interested party should study each situation carefully. You should seek and obtain independent professional advice for your specific needs and situation.