A Checklist For Renting A Property in Malaysia: Tenancy Agreement And More!

Before you decide to rent that property, make sure you've thoroughly read the tenancy agreement, readied money for the stamp duty and legal fees, performed a background check on landlord, and inspected the property.
tenancy agreement, stamp duty, rent property

Let’s say you’re looking to rent a property in Malaysia. After a good period of house-hunting, you finally find the one that suits both your needs and your budget. 

When the time comes for you to sign the tenancy agreement, you may hesitate and think: "Am I really making the right decision? What do all these terms in the tenancy agreement mean?"

 

So, what's inside a Tenancy Agreement?

A tenancy agreement is the contract that’s signed by both the landlord and tenant. It should clearly state all the terms and conditions regarding rental of the property.

As a tenant, both you and the landlord should negotiate on the terms of the agreement before signing the contract – once signed, both of you will be bound by the terms stated in it.

Landlords commonly draft their own tenancy agreements, but it’s also good to have it reviewed by a legal professional of your choice.

This is to make sure that whatever's stated inside that piece of paper are fair for both parties and protects them equally.

You should always vet through the agreement before signing on the dotted line, or engage your own lawyer to look through it.

tenancy agreement, stamp duty, rent property

 

What to look out for in the tenancy agreement

Remember: You don’t want to blindly sign something, only to realise later that you’ve gotten yourself into a situation that's decidedly against your favour.

With that said, here are the main items (read: usually the cause of legal disputes) you'd need to keep an eye out for:

1) The monthly rent

The rent can usually be negotiated – however, most landlords usually have a specified monthly rental amount.

It’s good to ensure that both you and your landlord are in agreement on how much this amount will be. The tenancy agreement must also include a fixed date on when the rent is due.

The general rule of thumb is that the money should be paid by the first of every month, but you can negotiate with your landlord for a slightly later date, if need be. 

You should also clarify (and have down in writing!) the mode of payment for your monthly rent. Ensure that your landlord provides receipts for every payment you make.

2) The security deposit

tenancy agreement, stamp duty, rent property

The security deposit is usually equal to about two months’ worth of rent, and is payable to the landlord when you sign the tenancy agreement. 

This deposit is deductible by the landlord if you damage the property or its furnishings beyond reasonable wear and tear, and if you’re late on rent.

Your money may also get forfeited if you ever choose to end your tenancy before the agreed date.

BUT, if your tenancy runs without a hitch, your security deposit should be returned in full by your landlord.

Make sure that the tenancy agreement includes a clause that states when your landlord must refund the deposit.

3) The tenant’s and landlord’s personal particulars

The tenancy agreement must also include the full names of both tenant and landlord, any identification or passport numbers, contact details, and current addresses of both parties.

tenancy agreement, stamp duty, rent property

 

Now, how do I go about with the stamp duty and legal fees?

There are legal fees and stamp duties involved in the drafting of the tenancy agreement. As a tenant, you’ll be the one to pay for these, and to the Lembaga Hasil Dalam Negeri Malaysia (LHDN).

1) Stamp duty

Stamp duties will apply if the annual rental of the property exceeds RM2,400. If the annual rental is below RM2,400, no stamp duty is payable.

For every RM250 in excess of RM2,400 in annual rental:

  • For a rental period that is less than one year: RM1
  • For a rental period that is between one and three years: RM2
  • For a rental period that is more than three years: RM3

2) Legal fees

If the rental period is less than three years, these are the legal fees payable:

  • For the first RM10,000 of annual rent: 25% of the monthly rent
  • For the next RM90,000 of annual rent: 20% of the monthly rent
  • Where the annual rent is in excess of RM100,000: Negotiable 

If the rental period is more than three years, these are the legal fees payable:

  • For first RM10,000 of annual rent: 50% of the monthly rent
  • For the next RM90,000 of annual rent: 20% of the monthly rent
  • Where annual rent is in excess of RM100,000: Negotiable 

tenancy agreement, stamp duty, rent property

 

Have you conducted background checks on your landlord?

We cannot begin to emphasise how important it is to make sure that you’re actually renting from the REAL landlord (and not some scam artist).

You can politely request to view the land title of the property you’re renting, and verify that the person you’re dealing with is the same one listed on the title.

If there's a management office for the property, all the better; you can also verify the owner through them.

Part of your background check could also include contacting past tenants and learning about their experience of dealing with the landlord.

A landlord might seem nice in person, but if he or she has a history of negative feedback from previous tenants, you might want to reconsider renting from him/her.

 

Time to inspect the property!

tenancy agreement, stamp duty, rent property

When it comes to inspection of the premises, don’t be afraid to thoroughly scrutinise everything.

Even if the landlord and the agent (who manages the tenancy on the landlord’s behalf) are hovering over your shoulder, it’s well within your rights to make sure you’re renting a property in good condition.

You can also make sure that any defects you find are first addressed by the landlord before you move in.

If you move in, and find a leaking pipe for example, your landlord may not agree to fix it if you bring it up to them. 

If the property you’re renting comes with appliances like washing machine, fridge, and dryer, test that the appliances work first.

The tenancy agreement should come with an inventory list of included appliances, and your landlord should also have in writing that all of these are in good working condition.

You should also ask if your landlord can give you a grace period for discovering and reporting defects within the property and its appliances/furniture. 

Above all else, trust your gut instinct! If you still don’t get a good feeling about a place, please don’t sign that contract!

Some unscrupulous landlords have very sneaky ways of tricking tenants into unfavourable deals - check out our guide on what to look out for so you don’t get scammed!

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