BUYING a property in Malaysia is a marathon of paperwork.
By the time you have signed the Sale and Purchase Agreement, secured the loan, paid the stamp duty and collected the keys, the last thing on your mind is more forms.
Which is probably why so many Malaysians skip what could turn out to be a rather important and potentially expensive if missed step.
Can you really be fined RM2,000 and jailed for not updating your property ownership with the local council?
Verdict:
TRUE
Under the Local Government Act 1976, which is administered by the Housing and Local Government Ministry, property owners in Peninsular Malaysia are required to notify their local council when ownership of a property changes hands.
Section 160 of the Act requires the new owner to inform the council within the stipulated period after the ownership transfer has been completed at the land office.
The Kangar Municipal Council, for example, states on its official website that property owners must notify the council within three months of the transfer being finalised.
Failure to do so can result in a fine of up to RM2,000, imprisonment of up to six months, or both, under Section 160(6) of the Act.
That is not a typo. Six months in prison. For not filling in a form at the council office.
The requirement applies to every local council and city hall operating under the Act, from Kuala Lumpur City Hall and the Petaling Jaya City Council to municipal and district councils across the peninsula.
Sabah and Sarawak operate under separate ordinances, but have their own equivalent provisions.
The Ministry operates the PBTPay portal as a centralised online payment system for assessment tax across councils nationwide, underscoring how central this obligation is to the local government framework.
The reason behind the requirement is straightforward.
Local councils bill assessment tax, known as cukai taksiran or cukai pintu, directly to the registered owner of a property.
If you buy a property but do not update the ownership records with the council, the bills continue going to the previous owner's name and address.
The council has no way of knowing the property has changed hands, and you have no way of receiving the bills you are legally obligated to pay.
This is where the BUT comes in, because the fine itself is not actually the biggest risk.
The real danger is everything that happens quietly in the background while the ownership records sit unchanged.
Assessment tax is billed twice a year, typically in January and July.
If the previous owner stops paying, which they have every reason to do since they no longer own the property, the arrears begin to accumulate against the property itself.
Most councils apply a surcharge on overdue amounts, typically around 10% after the due date.
Over several years of inattention, a modest annual assessment of a few hundred ringgit can snowball into thousands in unpaid tax and penalties.
None of this announces itself.
If the council is still sending bills to the old owner's address, and the old owner is throwing them in the bin, you may have no idea the debt is growing until you try to sell, refinance or transfer the property.
At that point, all outstanding arrears must be cleared before any transaction can complete, and the bill that lands on the table tends to come as a very unpleasant surprise.
In the most extreme cases, councils have the power to go much further than a fine.
Under Section 148 of the Local Government Act 1976, a council can issue a warrant to seize movable property found on the premises to recover unpaid assessment tax.
Under Section 151, the council can detain and sell the property itself.
This is not theoretical. In November 2024, Kuala Lumpur City Hall sealed 27 premises in the Bandar Tun Razak constituency alone after their owners defaulted on assessment fees totalling more than RM600,000.
"After numerous reminders and warnings given to the owners, an operation has been carried out to ensure persistent assessment fee defaulters are held accountable," DBKL said in a statement reported by The Star in November 2024.
The scale of the problem across Malaysia is significant.
An academic study on property tax performance across Malaysia's local authorities found that the average collection rate for assessment tax arrears across the country's 12 city councils was just 34.52%, a figure the researchers rated as "unsatisfactory." For municipal councils, the average was only slightly better at 47.15%.
These arrears are not all caused by owners failing to update their records, but unregistered ownership changes are a well-known contributing factor.
When bills go to the wrong person at the wrong address, they tend not to get paid.
The process of updating ownership with the council is not complicated.
Most councils require the stamped Memorandum of Transfer, a copy of the Sale and Purchase Agreement and identification documents. Some councils now accept applications online.
The fee is typically modest, and the process can often be completed in a single visit.
The irony is that the consequences of not doing it are so much more expensive and time-consuming than doing it would have been.
A 20-minute trip to the council office costs you an afternoon. Not making that trip can cost you years of accumulated arrears, a RM2,000 fine, and in the worst case, your property.
Sources:
2. https://pbtpay.kpkt.gov.my/
3. https://www.mpkangar.gov.my/
4. https://www.mbjb.gov.my/en/
6. https://www.davidpublisher.
