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Sohaib Ikram
Sohaib Ikram serves as the Director of Emerhub in Malaysia.
Malaysia’s real estate market presents numerous opportunities for local and foreign investors. However, establishing and operating a real estate agency here is a highly regulated profession. There are strict licensing rules and operational standards in place, governed by several governing authorities. Therefore, understanding these requirements is crucial for building a compliant and successful agency.
This article walks you through the essentials of setting up a real estate agency in Malaysia from legal framework to step-by-step process.
Understanding Real Estate Agency Operations in Malaysia
A real estate agency in Malaysia mainly acts as an intermediary in property transactions, including sales, purchases, and leases. This involves providing advisory services, marketing properties, and negotiating deals on behalf of clients.
Due to the nature of these activities and the values involved, the sector is closely monitored.
Legal Framework for Real Estate Agencies
Several laws and bodies govern real estate agency practice in Malaysia:
- National Land Code and Valuers, Appraisers, Estate Agents and Property Managers Act 1981 (Act 242): This is the primary legislation. It dictates that only licensed Real Estate Agents (REAs) can legally advise on land purchases, ownership transfers, or sale negotiations. Unlicensed advisory work related to land transactions is considered illegal agency activity.
- BOVAEA (Board of Valuers, Appraisers, Estate Agents and Property Managers): This board, under the Ministry of Finance, is responsible for issuing REA licenses for individuals and firms, as well as Real Estate Negotiator (REN) tags. If an agency or its principal is not licensed by BOVAEA, it cannot legally operate as a real estate agency.
- Companies Commission of Malaysia (SSM): All businesses in Malaysia, including real estate agencies, must register with the SSM, typically as a Private Limited Company (Sdn. Bhd.). However, SSM registration alone does not authorize a company to perform regulated real estate agency activities without the necessary BOVAEA licenses.
- The Housing Development (Control and Licensing) Act 1966: If your agency plans to market new or off-plan housing projects, you must ensure the developer holds a valid Advertising Permit and Developer’s License (APDL). Marketing projects without this can lead to penalties.
Key Requirements to Operate a Real Estate Agency in Malaysia
To operate a legally recognized real estate agency in Malaysia, you’ll have to meet certain conditions:
- Licensed Leadership: The agency must be headed by or have a licensed Real Estate Agent (REA) holding the primary agency license.
- Approved Business Structure: Most real estate agencies set up a Sdn. Bhd. (Private Limited Company). The shareholding structure must comply with any applicable equity conditions, especially with foreign participation involved (more on this later).
- Compliant Business Premise: Licensed agencies must operate from a dedicated office that meets BOVAEA’s standards for signage, accessibility, and professional operations.
- Qualified Negotiators (RENs): A licensed REA can supervise up to 50 Real Estate Negotiators (RENs). However, each REN must have completed BOVAEA’s mandatory training and be formally registered with the Board to receive their official REN tag.
- Minimum Capital & Financial Standing: While the specific minimum paid-up capital for a locally-owned agency can be modest, companies with foreign shareholding generally need to declare a higher minimum paid-up capital (e.g., RM350,000 to RM500,000, depending on the structure and level of foreign equity) to demonstrate financial stability.
Can Foreigners Start a Real Estate Agency in Malaysia?
Direct foreign ownership and operation of a real estate agency in Malaysia are significantly restricted by licensing rules. The crucial REA license, issued by BOVAEA, is only available to Malaysian citizens and, in some specific cases, Permanent Residents (PRs).
However, these restrictions do not completely bar foreign participation in Malaysia’s real estate sector. In practice, foreign investors often engage in the market through:
- Joint Ventures (JVs) with Licensed Malaysian REAs: Forming a Sdn. Bhd. where a licensed Malaysian REA holds the necessary controlling interest and the agency license.
- Franchise Models: Partnering with a local license holder to operate under an established brand.
- Operating Real Estate-Related Businesses (Non-Agency): Establishing businesses that support the real estate sector but do not perform licensed “estate agency work” themselves. Examples include:
- Property marketing firms.
- Buyer advisory services (focusing on due diligence or market insights, not deal negotiation).
- PropTech platforms (e.g., listing sites, CRM systems).
- Real estate investment consultancies (focusing on feasibility studies or data).
Foreigners can fully own these non-agency businesses, but they must structure them carefully to avoid crossing into regulated agency work, especially when it comes to negotiating deals or earning commissions from transactions.
Emerhub’s local experts can help define your service scope and register your company appropriately.
How to Start Your Real Estate Agency in Malaysia
The setup process will vary depending on whether you are forming a licensed agency (typically through a JV or franchise with a Malaysian REA) or a non-agency real estate-related business. For structures involving foreign participation with a licensed Malaysian REA partner, the steps generally include:
1. Local Partner Selection and Due Diligence
Before you draft any agreements, it’s crucial to vet your Malaysian REA partner thoroughly. Emerhub conducts thorough due diligence– verifying licenses, financial health, and track record, so you can avoid compliance issues and build a sustainable venture.
2. Drafting Your JV or Franchise Agreement
Once you’ve verified your partner, it’s crucial to put your agreement into writing. Emerhub can draft a clear joint venture agreement or franchise agreement that clearly defines revenue sharing, licensing obligations, and exit plans, ensuring your interests are protected and the setup stays compliant.
3. Company Registration with the SSM
Your real estate business must be registered with the SSM as a Sdn. Bhd. Emerhub manages the process end-to-end: reserving your agency name, drafting a compliant constitution, and registering your Malaysian REA partner as a key shareholder.
If you’re setting up a non-agency real estate business, such as marketing or advisory services, we’ll ensure your MSIC codes clearly exclude agency activities to avoid regulatory issues.
4. Register Your Real Estate Agency with BOVAEA
With your SSM registration in place, the next step is to register your agency with the BOVAEA. This involves submitting necessary documentation, including proof of the REA’s license, company registration details, and information about the business premises.
Additionally, any Real Estate Negotiators (RENs) employed must also attend a two-day Negotiator Certification Course and be registered with BOVAEA to obtain their REN tags.
5. Secure Agency and Sector-Specific Licenses
Your Malaysian REA partner must apply to activate or transfer their REA license under the new entity. If your services include project marketing, property management, or land sales, Emeerhub can also help you secure all related licenses such as:
- APDL (Advertising Permit and Developer’s License)– required for marketing off-plan residential properties.
- Property Management License– needed if managing strata properties on behalf of owners.
- Valuation or Land Broker Permits– if advising on land transactions, valuations, or cross-border acquisitions.
6. Fulfill Tax and Reporting Requirements
Before your agency can begin operations, you’ll need to set up your tax and payroll systems. These are foundational steps that make your business eligible to hire staff, invoice clients, and operate legally in Malaysia. Emerhub helps you:
- Corporate income tax file registration with LHDN (tax authority)
- SST enrollment (if revenue exceeds RM500,000 annually)
- EPF, SOCSO, and EIS contributions for local hires
- Bank account opening and invoicing
Maintain Ongoing Compliance for Your Real Estate Agency
Whether you’re exploring a joint venture, launching a franchise, or building a non-agency real estate brand, the right company setup protects your investment and positions you for long-term success in a heavily regulated industry. Emerhub helps you:
- Register your business and secure all necessary licenses
- Operate within your approved business scope
- Renew licenses and certifications before expiry
- Report changes in equity, directorship, or operations to BOVAEA
Emerhub provides ongoing support to help you navigate these requirements, protecting your investment and positioning you for long-term success.
Ready to explore your real estate business options in Malaysia? Fill out the form below to connect with our local experts!
Frequently Asked Questions About Starting a Real Estate Agency in Malaysia
Since foreigners (without PR) cannot directly obtain an REA license to own an agency, involvement typically occurs through:
Running a non-agency real estate business (like marketing, advisory, or PropTech) that doesn’t require an REA license. Applying for PR status to eventually pursue REA licensing is an option, but it’s rare and has stringent criteria.
Forming a joint venture (Sdn. Bhd.) with a licensed Malaysian REA partner.
Operating a real estate franchise through a local Malaysian REA license holder.
Yes, provided you’re not acting as an agent or directly brokering property transactions. Foreigners can fully own and operate real estate-related businesses that fall outside the legal definition of agency activity, for example:
- Marketing firms that promote listings or generate leads
- Buyer advisory services that offer insights or due diligence (but don’t negotiate deals)
- PropTech platforms like listing sites, CRM systems, or virtual marketplaces
- Investment consultancies that focus on feasibility studies or market data
These don’t require an REA license, but your company structure must be clearly positioned to avoid regulatory overstep, especially when it comes to negotiating deals or earning commissions. Emerhub helps you define your exact service scope, and conduct the entire company registration on your behalf.
You must be a Malaysian citizen or PR to apply for the REA license. Foreigners without PR are not eligible. However, the REN tag is open to anyone working under a licensed REA, provided they complete the BOVAEA-approved course and registration process.
If you are partnering with a Malaysian who already holds an REA license, setting up the joint venture or franchise business (Sdn. Bhd.) typically takes 4 to 8 weeks. This depends on company registration, aligning the REA license with the new firm, and office setup.
For an individual to become a licensed REA themselves (if eligible as a citizen/PR), the process is much longer, usually 2 to 3 years, involving coursework, exams, and practical training.
Yes. Licensed real estate agencies in Malaysia are required by BOVAEA to operate from a physical office that complies with their standards. This includes appropriate location, visible signage, and basic office infrastructure. The office must also be inspected and approved before a firm is granted its license.
For non-agency entities, a physical office is generally not mandatory. However, you must still have a registered business address for SSM registration, tax setup, and banking purposes. In these cases, Emerhub can set up virtual or shared office addresses in compliance with these requirements.
A licensed real estate agency in Malaysia can register up to 50 RENs per licensed REA. Each REN must attend a certified training course and be officially registered with BOVAEA under the agency.
