Glossary of House-Building Terms

Acre, point, hectare

Units of land area on Malaysian titles. 1 acre = 43,560 square feet. 1 point = 435.6 square feet, one hundredth of an acre. 1 hectare = 107,639 square feet, roughly 2.47 acres. More: Land check

AKPK

The Credit Counselling and Debt Management Agency. Its kiosks let you check your own CCRIS report free. If you are on AKPK's Debt Management Programme (DMP), that status is visible in CCRIS to every bank that checks, and each bank makes its own decision. More: Bank loan

All Risks insurance (CAR)

Contractor's all-risks cover for the works during construction. CIDB's 2022 form requires the contractor to take it out before work starts, for at least the contract sum plus professional fees and debris removal, in the joint names of owner and contractor, together with third-party liability insurance. Ask for the policy and the premium receipt. More: Building with cash

BQ (Bill of Quantities)

A breakdown of every material and item of work with its quantity and unit price. A quotation calculated from a BQ is far more accurate than a per-square-foot rate, because it starts from the actual drawings. The detailed estimates in our catalogue are calculated this way.

Building setback

The minimum distance the council sets between your house and each boundary of the lot. It means you cannot build over the whole plot. Our land check uses a cautious estimate of 45% of the lot area as buildable; the real figure is set by the council and the shape of your lot. More: Land check

Caveat

An entry on the register that blocks dealings in the land. A private caveat that binds the land stops the owner registering any new dealing, a financier's charge included, while it stands. A Registrar's caveat is entered by the Registrar, for example to protect the state or an heir under age. An official search shows both. More: Land check

CCC (Certificate of Completion and Compliance)

Issued by the professional who submitted the plans (the PSP) — an architect, an engineer or a registered building draughtsman — confirming the house was built to the approved plans and is safe to occupy. In force since 12 April 2007, replacing the CF system. Without a CCC, your house is officially not yet fit to occupy. More: Council approval

CCRIS

The Central Credit Reference Information System, run by Bank Negara. A record of your loans and repayment pattern over the last 12 months. Every financier checks it. You can get your own report free through eCCRIS or an AKPK kiosk, and it is worth doing before you apply. More: Bank loan

CF (Certificate of Fitness)

The certificate of fitness for occupation under the old system, issued by the council. Replaced by the CCC. You may still hear the term used interchangeably with the CCC.

Charge

The interest a financier registers over your land title as security for the financing. It is removed when the financing is fully settled. This is why the land must be in the applicant's name before financing can be approved. More: Bank loan

CIDB

The Construction Industry Development Board of Malaysia. Construction contractors must be registered with CIDB. Registration can be checked publicly on the CIMS portal, and you should check it for any contractor you are considering. More: Council approval

CIPAA 2012

The Construction Industry Payment and Adjudication Act 2012 (Act 746): a fast route for payment disputes under written construction contracts. Section 3 excludes a contract by an individual for a building of under four storeys wholly for his own occupation — so a contract to build your own home is usually outside CIPAA, and you rely on the contract terms and the courts (or arbitration, if the contract provides for it). More: Payment schedule

Conversion of land conditions (NLC section 124)

An application under section 124 of the National Land Code to change a land's category or express conditions — for example, from agriculture to building. The State Authority decides, not the council; in Selangor applications have been made on e-Tanah since 26 October 2023. It involves a land premium and takes months. Do not wait for it to finish before checking your financing eligibility; both can be handled at the same time. More: Land check

CPC (Certificate of Practical Completion)

In the standard contract forms, issued when the works are complete and have passed their tests, even if minor outstanding work or defects remain that do not affect use. Half the retention is usually released after the CPC. More: Payment schedule

CTOS

A private credit reporting agency. Different from CCRIS: it covers court actions, bankruptcy and summons records. Old arrears you have forgotten sometimes appear here. More: Bank loan

CTR (Cash Threshold Report)

Banks must report to Bank Negara when RM25,000 or more in physical cash goes into or out of one account in a day, in one transaction or several. It is a routine report, not an accusation; splitting deposits to avoid it is an offence. Pay a contractor by transfer, not cash. More: Building with cash

Defects liability period (DLP)

The period after completion during which the contractor must make good defects at its own cost — 12 months in the CIDB 2022 form if the contract states none, 24 months under Schedule G. It ends with the Certificate of Making Good Defects. The end of the DLP does not end your rights at law. More: Warranty

Design & build

A contract model in which one party is responsible for both design and construction. You do not appoint the architect and the contractor separately, so there is no room for disputes between them when something does not work on site.

DSR (Debt Service Ratio)

The percentage of your net income already going to debt repayments. Banks set a ceiling, usually around 60% if your net income is below RM5,000 and 70% at or above it. The DSR, not the advertised rate, is what decides how much you are approved for. More: Bank loan

EPF Akaun Sejahtera (formerly Account 2)

Since 11 May 2024, EPF Account 2 has been called Akaun Sejahtera (Account 1 became Akaun Persaraan, and Akaun Fleksibel was added). Housing withdrawals, including to build a house, come from Akaun Sejahtera. It is a source of cash, not a financing route. Limits and conditions are set by EPF and revised from time to time. More: EPF withdrawal

ExPA (exemption from planning permission)

Some councils exempt one detached house from planning permission — MBSA (Shah Alam) since 1 October 2017. The house still needs building-plan and engineering-plan approval. Not every council grants this exemption. More: Council approval

Express conditions

Specific conditions recorded on the title about the permitted use of the land — for example 'residential house' or 'agriculture'. They are checked together with the land category: an express condition can rule out a house even where the National Land Code allows one in general. More: Land check

Fixed rate vs floating rate

A fixed rate does not change over the financing tenure — LPPSA charges a fixed 4.00% up to RM750,000 and 4.50% on any balance above that. A floating rate moves when the OPR moves, which means your monthly instalment can rise. Almost every bank home loan in Malaysia is floating rate. More: LPPSA or bank?

Form B (notice of commencement)

Notice to the council that work is about to start, lodged at least four days before work begins, after the plans are approved and the structural plans submitted. Work started before that can be fined under Act 133. More: Council approval

Form G (G1–G21)

Stage certificates signed during construction by the professional responsible for each part of the work — foundations, structure, roof, wiring, plumbing and so on. The CCC cannot be issued until all are complete, and a Form G missing from a subcontractor is the most common cause of a delayed CCC. Not to be confused with the Energy Commission's Forms G and H, which concern electricity supply. More: Council approval

Forms 7C, 7D and 7G (conversion)

National Land Code forms for conversion. Form 7G is the notice demanding the premium and rent once a conversion is approved; if they are not paid within the time it states, the approval lapses on its own. Form 7C is the memorandum that endorses the new category and conditions on the title. Form 7D is only for section 124A, where land is sub-divided and converted together. More: Land check

Forms G and H (Energy Commission)

Forms under the Electricity Regulations 1994: Form G certifies the supervision and completion of the electrical installation, Form H its testing. They go to the electricity supplier before supply is connected. These are different from the council's Forms G1–G21. More: Workflow

Ibra'

A rebate in Islamic financing. Under SPPSAi the ceiling profit rate is 7% a year, but through ibra' you pay the same effective rate as the conventional SPPSA. More: LPPSA or bank?

IBS and the IBS Score

Industrialised Building System: building with components made in a controlled environment, on site or in a factory, then transported and assembled. CIDB's IBS Score measures how much of a building is built that way, out of 100: up to 50 points for the structure, 20 for walls and 30 for other solutions. Large components need vehicle access to the site. More: Workflow

JPPH

The Valuation and Property Services Department. For LPPSA, JPPH values the property (free for government officers, in about eight working days) and inspects the build's progress before money is released, at the 20%, 35–75% and 95% stages. More: LPPSA financing

Land title (geran)

The land ownership document. It states the registered owner, the area, the land-use category and the express conditions. The first two pages of your title are the most important documents in this whole project. More: Land check

Land-use category

Recorded on the title: building, agriculture or industry. On agricultural land the National Land Code (section 115(4)(a)) allows a house for the owner on no more than one-fifth of the lot or 2 hectares, whichever is less, if the express conditions do not rule it out. The council and the financier still make their own decisions. Anything else needs the land converted first, which involves a land premium. More: Land check

Lock-in period

The early period of a bank loan during which settling it in full incurs a penalty, usually 3 to 5 years. Important if you plan to refinance or sell within that time. More: Bank loan

LPPSA

The Public Sector Home Financing Board. It provides home financing for civil servants at a fixed 4.00% (4.50% on any balance above RM750,000), with instalments deducted directly from salary. The amount approved is the lowest of the price, the JPPH valuation, the amount applied for and the maximum eligibility; if that is less than the contract price, you pay the price difference (wang beza) first, before LPPSA releases anything. More: LPPSA financing

LTHO

Houseowner insurance (or takaful) that LPPSA makes compulsory alongside MRTA/MRTT, from LPPSA's panel. The premium can be financed with the financing. More: LPPSA financing

Malay Reserve land

Land under the Malay Reservation Enactment (which applies in Selangor, Negeri Sembilan, Perak and Pahang). A Malay holding cannot be transferred, charged or leased to a non-Malay, and in Selangor a charge can be given only to a body listed in the Second Schedule of the Enactment. Ask your financier whether it can take your land as security. More: Land check

Margin of finance

The percentage of the value a financier is willing to finance. 90% is the best case for a bank loan; 80% is more usual for building on your own land. The rest is your contribution. Check the basis: some banks work the margin on the completed value including the land, but at least one published build product works on the lower of market value and the building-contract price, so the land's value does not necessarily reduce your contribution. More: Bank loan

MRTA / MRTT (and MLTA / MLTT)

Mortgage Reducing Term Assurance (or Takaful). Insurance that pays off the remaining financing if the applicant dies or becomes permanently disabled. LPPSA makes it compulsory, from its panel. For banks, the products we checked state it is optional but strongly encouraged, and some also offer 'level term' plans (MLTA/MLTT) as an alternative. The premium can be included in the financing. More: LPPSA financing

Official search (carian rasmi)

A certificate issued by the Registrar under section 385 of the National Land Code: the current registered owner, every charge, caveat and lease still in force, the express conditions, restrictions in interest, and any dealing waiting to be registered. A copy of the title in a drawer can be years old; an official search is not. In Selangor it costs RM50. Whoever asks for one sets its maximum age: MBPJ wants it no more than six months old, LPPSA no more than 12 months. More: Land check

OPR (Overnight Policy Rate)

The overnight policy rate set by Bank Negara. Floating home loan rates move with it through the SBR. At 4.30%, a 1% rise adds roughly RM270 to the monthly instalment on a RM450,000 loan over 30 years. More: Bank loan

OSC (One Stop Centre)

The council's counter and committee that receive and decide plan applications, usually online (for example OSC 3.0 Plus). How long a decision takes depends on the date of the OSC meeting. More: Council approval

PBT (local authority)

The local council that approves your building plans — a municipal council, district council or city hall. It also charges processing fees and sets the building setbacks and technical conditions. More: Council approval

Performance security deposit

Security from the contractor to the owner: in the CIDB 2022 form (Option Module F), 5% if the contract states none, held until the CPC. It applies only if your contract selects it. More: Payment schedule

Planning permission (KM)

The council's approval that the use and layout of the site suit the local plan. Whether one house needs it varies by council: some ask for it in their checklist, some grant an exemption (ExPA). More: Council approval

Price difference (wang beza)

The difference between the contract price and the financing LPPSA approves. You must settle it first, before LPPSA releases any financing. Line up where it comes from (savings, EPF, or a second charge with LPPSA's consent) before you sign a contract. More: LPPSA financing

Prime cost sum (PC sum)

A sum in the contract for work or supply by a sub-contractor or supplier the owner nominates. When the real cost is known, the PC sum is deducted and the actual cost (plus the contractor's agreed profit and attendance) is added, so the contract price can go up or down. Ask which items in your quotation are PC sums.

Progress claim

A payment claim sent to the financier after a stage of work is completed and verified. The financier pays the contractor directly, so you do not hand over cash at each stage. This claim format is what panel contractor status makes smoother. More: Payment schedule

Provisional sum

A sum in the contract for work or supply that cannot be fully defined when the price is set. It is spent only on written instruction and valued like a variation, so its real cost can differ. A quotation that leans heavily on provisional sums is less certain than it looks.

psf (per square foot)

How construction rates are published in Malaysia. Be careful when comparing: two quotations at the same psf can cover very different scopes, which is why the list of exclusions matters more than the rate itself. More: House packages

PSP (Principal Submitting Person)

The registered professional who submits the plans to the council and is responsible for issuing the CCC: an architect, an engineer, or a registered building draughtsman (only for buildings of up to two storeys and 300 m²). The homeowner cannot sign it themselves. More: Council approval

Restriction in interest

A limit on the title on who may take the land or how it may be dealt with — for example 'may be transferred, leased and charged with the consent of the State Authority'. It means the financier can register its charge only after the state has consented, so apply early. More: Land check

Retention

In the standard contract forms (CIDB 2022, PAM 2018), 5% is held back from each certified payment if the contract states none; half is released after the CPC and the rest after the defects liability period. In our schedule the last 5% is paid at handover, after a joint inspection and once the defects list is cleared — it is not held through the warranty period. More: Payment schedule

SBR (Standardised Base Rate)

The base rate banks use for new retail loans since 1 August 2022. Bank Negara sets the SBR equal to the OPR, and your loan rate is the SBR plus the bank's spread. The spread may rise only if your own credit risk changes. More: Bank loan

Schedule G

The standard sale and purchase agreement for landed houses under the Housing Development Act (Act 118) regulations, which applies to developers building more than four units — not to you building one house on your own land. It still matters because its Third Schedule sets stage payments, and LPPSA's guideline for Jenis 2 refers to it. More: Payment schedule

Small estate distribution (Form A, Form DDA)

An estate worth no more than RM5 million (and, for a non-Muslim, with no will) is distributed by the JKPTG Estate Distribution Office, not a court. You apply online at MyLAND with Form A; heirs who cannot attend the hearing send their consent in Form DDA. It usually takes 4 to 6 months. Inherited land that has not been distributed cannot be charged for financing. More: Land check

SPPSA and SPPSAi

LPPSA's two schemes. SPPSA is conventional, 4.00% on a reducing balance, covered by insurance. SPPSAi is Islamic, a 7% ceiling rate with ibra' so you pay the same effective rate, covered by takaful. You cannot switch schemes once approved. More: LPPSA or bank?

Stakeholder

A neutral party, usually a lawyer, who holds money on behalf of two parties and releases it only on the agreed terms or with every party's written consent. LPPSA can release money to the contractor or to a stakeholder lawyer; if you build with cash, you can arrange one yourself. More: Building with cash

Stamp duty

A tax charged on transfer and charge documents. For construction financing, it is charged on the financing documents, 0.5% of the loan on the principal document. Some bank packages absorb this cost; ask specifically. More: Zero Deposit

Temporary occupation licence (TOL)

A yearly licence over State land, not a title. It ends at the end of the year, has to be renewed, cannot be transferred and ends on the holder's death. With no title, there is nothing to charge as security for financing. More: Land check

Variation order (VO)

A change of scope agreed after the contract is signed. It is agreed in writing, with a price, before the work is done. A VO during construction costs more than the same change made before work starts, because it involves redoing work or swapping materials. More: Payment schedule

Zero deposit scheme

Building with no cash deposit to the contractor, because the value of the land you already own acts as equity in the margin calculation. It depends on the financier's margin basis: some banks finance on the lower of market value and the building-contract price, so check with yours. Nor does it mean no cost at all, because legal fees, stamp duty, valuation and insurance still apply. More: Zero Deposit

Come across a term you do not understand? WhatsApp us and we will explain it — and add it to this page if it helps others.