Understanding The Rental Agreement In Malaysia

If you are landlord, you may heard about rent control. Luckily (for you), it does not exist in Malaysia as it has been abolished a few years ago and thus the rental can be negotiated freely.  In fact, there is no specific law that regulates the duties and responsibilities of both landlords and tenants, but there are still have some basic guidelines for rental agreements which the landlords have to be followed.

Understand the renting procedure

Once the tenant accept the terms and conditions for the rentals, the tenant will be required to pay a several deposits. The first deposit is “Earnest deposit” which is usually one months’ rent and it is a booking deposit. Once the landlord received the earnest deposit from the tenant, which means that the landlord cannot rent the property to another tenant. The “Earnest deposit” can be eventually used as the first month’s rent.

After agreeing terms and conditions, both landlord and tenant have to sign the rental agreement within the 7 days. After signing the rental agreement, the tenant has to pay two months’ rent as “Security deposit” and a half month’s rent as “Utility deposit”

In order to make the rental agreement become valid, the landlord has to bring this agreement to Malaysian Inland Revenue Authority and get a stamp onto this agreement. In addition, the tenant has to bear its stamp duty.

Eviction and termination of rental agreement

Although there is no any specific laws for landlords and tenants, but, in the event of the tenant defaults on rental or refuse to move out the property, landlord can then utilize the Eviction Order under the Specific Relief Act 1950 to against the problematic tenants. Landlords must have consult their lawyer on the related details and costs before making such decision (those costs aren’t cheap).

For terminate the rental agreement, whoever party wishing to terminate the rental agreement, they have to give 2 to 3 months written notice. A renewal of the agreement, it has to be agreed upon from both landlord and tenant.

There is a clause that usually stated in rental agreement, which is “diplomatic clause”. This is comes into effect if the tenant requires an early termination for some reasons. The tenant has to show evidence of why he /she has to do so, for example an employment dismissal. This clause can only take effect after the first 12 months of lease. A 2 months written notice is required.

Source: WMA Property