Should You Be Buying a Subsale House or a New Property?

Accessibility & amenities

Mature neighbourhoods have a wide range of amenities, such as schools, hospitals, shopping malls, sports centres, and public transport for a comfortable and convenient lifestyle.

However, traffic congestion can be an issue for densely populated neighbourhoods.

You’ll have more location choices, from established to emerging or new neighbourhoods. This gives you flexibility to find a place near your office, children’s school, parents’ home, or other lifestyle factors important to you.

However, there may be fewer amenities in newer locations.

Investment potential

Buying a subsale house in an established neighbourhood can yield higher returns in rent due to the amenities, access to public transportation, and other conveniences of a mature neighbourhood.

However, you may not experience much property appreciation unless you invest in significant renovations.

New properties are often located in developing townships. As the area matures and attracts new residents and businesses, property values in the area are likely to increase.

However, if you’re buying a new home in an established neighbourhood, you may not experience as much property appreciation.

Quality of construction & condition

There is less risk with a subsale house because you can inspect the quality and condition immediately.

You can only benchmark the quality based on the showroom or the developer’s reputation, such as past projects and the experience of other homeowners who have purchased from the developer.

Defects and furnishing

With subsale houses, you may have to fork out money to fix any defects and invest in your furniture or fixtures.

Developers tend to provide a defect liability period (DLP) that usually ranges from 24-36 months. Any defects reported during this time will be fixed by the developer at no cost to you.

Some developers may even offer furniture and fixtures as part of packages.

Move-in date

Often, buying a subsale house means you can move in earlier, unlike waiting for a new project to finish construction. If any renovations are needed, it usually takes less time than a new house to complete construction.

You could wait up to five years for a new project to finish construction. There is also the added risk of developers abandoning the project.

Renovations

Can significantly add to the costs if major or structural renovations are needed. May require an additional renovation loan. 

Any renovation is usually only for stylistic or lifestyle choices. Some projects may offer cash-back for renovations.

Defects

Buyer will have to pay to fix any defects.

Many developers offer a defect warranty period.

Valuation

Buyer usually needs to pay for valuation fees to make sure the offer price fits the market value.

No valuation required if the property is purchased during the construction period.

Down payment

Down payment is typically 10% of the purchase price, which you can pay with funds from EPF Account 2  if you wish.

Down payment is typically 10% of the purchase price, which you can pay with funds from EPF Account 2 if you wish.

Sales and Purchase Agreement (SPA)

Legal fees for the SPA are paid by the buyer as an additional cost on top of the purchase price. Fees are tiered starting from 1% of the first RM500,000.

Legal fees for the SPA are also applicable for new properties. However, some developers tend to cover this cost as a promotion for new developments.

Memorandum of Transfer (MoT)

Stamp duty on the MOT is paid by the buyer. The amount is based on a percentage of the property value, starting from 1% for the first RM100,000 and up to 4% for properties valued over RM1 million.

Stamp duty on the MOT is based on a percentage of the property value, starting from 1% for the first RM100,000 and up to 4% for properties valued over RM1 million.