Key Considerations when Purchasing Land

Requirements and considerations when purchasing land for our retirement.

Before we started, there were a few key considerations when purchasing land for our retirement. We gathered the list from our search, by talking to other landowners, and real estate agents. We had no prior experience with land purchase, so we started from zero knowledge. It would have been easier if we had a guide as to what to look out for and key considerations when purchasing a land. I hope you will find this article helpful if you are looking to buy a land.

We wanted to buy land with my hubby’s siblings and in-laws. We created a list of considerations to meet everyone’s requirements and ensure that everyone is on the same page. Check out the locations we considered prior to settling for The Valley Karak.

Factors to consider when purchasing a land

Distance from the city

That is the first criteria to think about as you can immediately start mapping out the locations. We decided that it should not be anywhere above 1.5 hours’ drive so that if we need to come back to KL, we can do so easily. But it depends on your choice; if the distance is not an issue for you, then you have a bigger pool of choices to consider.

Land size

How big is enough? It really depends on what you have in mind.

Our plan was to build a 1,000 sq ft house, have a 1,500 sq ft vegetable garden, and the remaining land be filled with fruit trees. So in total, I thought 5,000 sq ft was enough. I was realistic, as I had a strict budget to follow.

What did we finally decide on? 47,916 sq ft! Nine and a half times more than we initially planned.

Have a rough idea of what you want to do, and then work out a rough land sizing that would fit your requirements. Stay flexible though because you never know what can change. An ideal plot of land may not fit your initial size plan, but it may fit your overall retirement vision.

Land Type

I have always known that there are many land categories in Malaysia. For starters, there are residential, commercial, industrial, and agricultural. These are self-explanatory, and you need to adhere to the specific use that it was designated for.

Some are freehold and some are leasehold. Non-Muslim individuals are not allowed to purchase Bumi Lot or Malay Reserved land. Usually, the land listings and real estate agents would be very clear about the land classification.

Always check if there are special conditions that come with the land. We have come across a land that has a condition that you need to plant paddy. Or that the land cannot be sold to non-family members. Once you are keen on the land, head to the land office for a detailed land search. Having a good real estate agent to assist you is key to all these questions and more.

We decided that we would only want land with freehold status. We are open to both residential and agricultural land options. The only difference between the two is the building size, and some additional taxes to pay. For agricultural land, we can build one dwelling not exceeding 20% of the total land size. For residential, you can use the entire land for the same purpose, while adhering to all the local building laws. We were not building a mansion, so we are okay with either as long as other criteria are met. Residential land is subject to cukai tanah (quit rent) and cukai pintu (assessment) while agricultural land is only subject to cukai tanah.

Land Tier

You will hear this terminology used by most real estate agents – Tier 1, Tier 2, Tier 3. In simple terms, Tier 1 implies that it has direct access through a proper tar road. Tier 2 means that the land needs to go through Tier 1 land through a designated right-of-access road. Tier 3 means that it will be going through Tier 1 and Tier 2’s right-of-access roads.

Right-of-access is clearly outlined in each land, so there is no land without access. The landowner cannot prevent you from using the designated right-of-access roads, even if they are located on their property. However, as it is ‘no man’s land’, it also means that it is up to all landowners to maintain the road. Most of the time, these roads are gravel or muddy roads that may require a 4-wheel drive to access. So bear that in mind when you start the search. The cost of maintaining roads is not a small sum.

We wanted land that is easy to access with our small car, so we prefer Tier 1 areas or land with good road access. Land in this category is also pricier.

Flat land or with slopes/hill

Flat land is generally easier to manage – to build anything, to plan your plantation, roads, etc. A hilly or sloping land is harder to build, and you’ll need terraces to make the land usable. However, you will likely get a nice view due to the elevation and structure of the land.

After much consideration, we selected a land with a slope as we wanted to build our home on a higher elevation. We need to manage slopes and build retaining walls, monitor water flow, construct drainage, create terraces, and build internal roads. The cost of building on sloping land is higher, but the view and elevation is worth it. It can however depend on individual taste and needs.

Utilities

If you have a vision of going off-grid in totality, then maybe you won’t need this. I’m talking about electricity, pipe water, and phone/internet connection. If you need all these, then make sure you check whether there is an existing connection or that you can potentially get all these. Make sure to also consider the cost of bringing electricity poles from the main lines to your land, as it can be surprisingly expensive.

If you are happy to go off-grid, you can choose solar systems for all your electricity needs. Be ready to put aside RM15K for a starter solar system, and that excludes regular maintenance, etc. Speak to a reputable solar system provider that can provide you with support, maintenance, and spare parts. For water, you can do rain harvesting or rely on spring water (some land has natural spring water or what we call “air mata air” – as in water from the ground). If you are using this for drinking, make sure that the water is from the source itself. This means the water from the ground has to originate from your land.

We chose a land with water and electricity from TNB, which meets our criteria as we didn’t want to go off-grid. We needed a special device to amplify the mobile signal and internet connection because our chosen land is deep in the jungle. It is workable for us, as we don’t expect a fiber internet connection. Recently, we also found out that we could use Starlink for a stable internet connection. We would also dig a well (potentially) as we have an underground water source on our land.

Investment

Have a rough idea of what you would like to put aside for this. Be realistic. You can get loan financing for land but make sure that you are able to pay off the mortgage before you retire! We learned that land financing is more expensive than home loans and the financing amount is lower. So make sure you have saved enough to pay the initial down payment.

Our dream land… finally!

As we had a list to cross-check with, it was easy for us to streamline our choices. After a lot of contemplation, we made our choice, and here’s a map of where it is. It is in the middle of the jungle, so there is no way I could pinpoint it to precision. It is a guarded area, so you can’t actually walk in without registering or having an owner’s pass.

Summary of the land:

• Distance: 1.5 hours drive away (approx 80 km from KL)
• Location: Karak in Pahang
• Land Size: 1.1 acres (47,916 sq ft)
• Land Type: Agricultural Land, Individual Title, Freehold
• Access: Tar road access accessible via normal car
• Flat/Slope: Gentle terrain, elevation 170 m at the highest point
• Utilities: TNB, piped water, underground water source available (if you want to dig a well), need a special device to amplify mobile/internet signal (not fantastic internet connectivity via any providers but with Starlink, there is now hope for us living in rural countryside!)
• Security: Guarded 24 hours (with that it also comes with a monthly maintenance fee of RM200 per acre per month)

Hope all the above tips help you in selecting your choice of land for your retirement dream. I will be sharing our progress from time to time, but we will be going slow from hereon. We envision this entire project to be completed in 10 to 15 years, just in time when we are ready to retire.