Renting A Property - Deposits, Recurring Costs, Tenancy Agreements And Responsibilities

Renting a property is not as easy as just selecting a place and moving in. There are the deposits, recurring costs - and in the case of commercial properties, Tenancy Agreements to sign as well.
Cost of living family.

Renting a property whether for own stay or running a business is common in today’s world where many are not ready to purchase their own property yet.

While renting is much easier than buying a property, there are still may factors to look out for.

This complete guide to renting both residential and commercial properties will cover:


Deposits And Recurring Costs

Deposits and Recurring costs are the two main things that a renter has to be concerned about. Below are some of the biggest costs of renting a property.

1. Upfront Costs

  • Earnest Deposit

Upon deciding on a property, a renter will need to pay an upfront amount of money to “book” the property. This is called an earnest deposit.

  • Security Deposit

A security deposit is to protect the unit’s owner against any damage caused by a renter.

Damaged property by renter

In case there is any damage to a property, the unit owner has the right to deduct the cost of repairs from the security deposit when the tenant moves out.

The security deposit also protects unit owners from tenants who move out without notice.

The grace period is usually 2 months, but if the tenant moves out without giving notice, the tenant has the right to deduct the 2 months rental from the security deposit.

  • Utility Deposit

A utility deposit is usually collected when the tenant is in charge of paying the utility bills.

In case the tenant defaults on the utility bill payments, the landlord has the right to deduct the cost from the utility bill deposit. The utility bill deposit is usually 1 month of the unit’s rental.

  • Purchase Of Furniture

Depending on whether the unit comes unfurnished, partially furnished or fully furnished, a renter may have to set aside funds for furniture.

Unfurnished units are usually cheaper than fully furnished units, so if staying for long term, it may be more cost effective for a renter to purchase their own furniture rather than rent a fully furnished unit.

Also read: Best Places for Second Hand Furniture in Malaysia


2. Recurring Costs

The above are the upfront payments that need to be made. Recurring costs on the other hand are the costs that need to be borne periodically - mostly monthly.

  • Monthly Rental Payments

The most obvious recurring cost is the monthly rental, hence renters need to make sure that the rental fits their monthly budget.

  • Utility Bills

Utility bills are another given should the tenant be in charge of paying the utility bills themselves.

The cost of this will not be known until the tenant moves in, but they can enquire the approximate cost from the landlord.

  • Parking Fee

Parking fees are usually only applicable in multi-unit or multi-storey buildings. If the units does not come with its own parking lot, the tenant will need to come up with extra funds for it.

  • Unit’s Premises

The location of the unit will play an important role. If renting for own use, the unit should be close to the tenant’s place of work and perhaps places of education if there are school going children.

If the unit is for a business, then the renter should look into the area’s accessibility via highways and maybe public transportation.

  • Tenancy Agreement Fees

These fees are usually applicable only to the rental of commercial properties as they require more formal rental documents.

The Tenancy Agreement is usually drafted by the landlord’s lawyers, and stated in the agreement will be the below items among others:

  • Who pays for the utility bills
  • What can the premises be used for
  • What are the penalties for damage to the property
  • How long will the contract last for
  • Landlord’s rights to inspecting the property

The Tenancy Agreement usually costs approximately 20% to 25% of the rental fees.

  • Stamp Duty

Once the Tenancy Agreement is drafted, it will need to be submitted to the government office. This will require Stamp Duty costs, which is usually borne by the landlord.

  • Guarantor fee

A guarantor is occasionally required especially if the renter has a lack of credit history.


Read more about what do all these terms mean and learn more about Earnest Deposits, Tenancy Agreement fees and utility bills in this comprehensive guide of Deposits and Recurring Costs of Renting a Property.


Identify Potential Properties

Now that you understand the initial setup costs and recurring costs, the next step is to identify potential properties for rent.

If you already know exactly what you want, using a property website such as PropertyGuru to search for residential properties for rent or commercial properties for rent shorten the property hunt.

With these two pages, property hunters will be able to enter the exact requirements of their property such as:

  • Built-up area
  • The number of bedrooms or bathrooms
  • Tenure
  • Furnishings
  • Age of listing

The factors that should be taken into consideration during the search are:

1. Location

The location of a property is very important, whether for own stay or for business.

Those looking for a home to stay in will want a premise that is close to their place of work, or their spouse’s place of work.

They should also be comfortable with the neighbourhood, and preferably familiar with it.

Commercial property renters should on the other hand know whether their business depends on high traffic or is a light industrial company that requires much transportation of goods.

The former should be in an area with high traffic, while the latter in a spot which has easy access to land, air and sea transport.

2. Size

The size of a unit is also important. For example, renters with families will need bigger homes to accommodate all the members of the family.

A commercial property on the other hand will need to know how much storage space they will need.

Would they need just a small office sufficient for 4 people to run their business from? Or would they require a large store room to store their goods?

3. Facilities

The facilities of a development are just an important.

For example, a family with children may want to rent a property that has the convenience of a childcare centre and perhaps a swimming pool for their toddlers to learn swimming in.

A commercial property renter may on the other hand want to look at the facilities of the garbage disposal system and perhaps the security of the area.

4. Safety

The safety of an area is non-negotiable when renting a property, as an unsafe area is not conducive for either work or own stay.

5. Prestige

Depending on the tenant, the prestige of the area may or may not be of importance.

A business that wishes to give a good impression to their clients may want to search for a more prestigious address, while higher ranking personnel looking for a home for rent may want a unit in a more prestigious area.

6. Lease Term

A lease term is the period that a renter is bound to rent the property.

After the lease ends, the landlord may choose not to extend the lease which the renter will need to move out then, or the landlord may choose to raise the rent.

7. Call Up The Agents

After compiling a list of potential properties for rent, a renter should begin making appointments to view the units.

When visiting the units, property renters should probe the history of the unit for additional information. Among some of the things to ask are:

  • How long has the unit been in the market
  • If it has been long, why can’t it been rented out yet?
  • Are there any issues with the unit?


Learn more on how to identify great properties for rental income by location, size, facilities, accessibility, safety and lease terms with Features of a Good and Profitable Rental Property You Need to Know.

To find trusted and specialised agents, renters can also visit the Find Agent page. Via this page, renters will be able to search for state-specialised agents.



Arrange For Viewing Appointments

In order to not lose track of the essentials, property renters should bring a list of their criteria with them when visiting a property.

This will help them to keep track of what they truly need - a view that may get skewed after they visit too many units.

Below are a few questions that should be asked of the property agent:

  • What does the rent include?
  • Are there additional bills? If yes, approximately how much will they cost. If you are sharing a unit, how will the bill be split?
  • How much deposit is required, and how will the deposit be secured?
  • What is the duration of the contract?
  • Are pets allowed?
  • Is there any parking lot included in the rental?

If you are renting a commercial property, below are some additional questions to ask:

  • Will I need to pay any fees to set up the Tenancy Agreement?
  • Is it a fixed term tenancy or a periodic tenancy?
  • Will the unit be furnished? If yes, will it be partially or fully furnished?

If the unit comes with electrical appliances, make sure to check that all of them are in working order.

This is to ensure that the landlord does not later put the blame on the renter for spoiling the appliances.

All the taps and showers should also be checked to ensure that they have a good flow of water.


Signing The Agreement

Once you have found your ideal property, the next step would be to sign pay the deposits.


As mentioned above, the deposits that need to be paid is the earnest deposit, security deposit and utility deposit.

The earnest deposit is usually 1 month’s rental, and the security deposit another month’s rental.

The utility deposit is usually also 1 month’s rental, hence a renter will in total need to come up with 3 months of deposit when they first rent a property.


Signing The Tenancy Agreement

The signing of the Tenancy Agreement is usually not applicable to residential unit renters, as the documents that they need to sign are not so formal if at all.

Commercial unit renters will on the other hand need to sign the Tenancy Agreement.

To a commercial unit renter, a Tenancy Agreement is akin to a Sale & Purchase (S&P) agreement.

It is the document that will state all the terms and conditions for renting the properties, the responsibilities of the tenant to the landlord and vice versa.

Among some of the things noted in the Tenancy Agreement will be the:

1. Names Of The Landlord And Tenant(s)

This is a very important section to get right in the Tenancy Agreement, as getting the name wrong will mean that the contract is void. Also if the name is wrong, it will be hard to fight the case in court if there is any dispute.

2. Address Of The Property Which Is Being Let

This is also a very crucial part of the contract to get right, as getting the address of the property wrong may mean a long battle in court as there will be a dispute to the property being rented out.

3. Date Of The Tenancy’s Commencement

The Tenancy Agreement will state the beginning of the contract.

At the end of the tenancy’s agreement, all terms will be void and an extension of the contract should be carried out, or a new contract should be drawn up.

4. Parts Of Property Tenant Is Allowed To Use

In some cases, not the entire unit is being rented out, only a small part of it. If this is the case, then the Tenancy Agreement should state precisely which part of the property can be used by the renter.

5. Duration Of Tenancy

As mentioned under the Date of Tenancy, the duration of the tenancy is just as important - as this is the period that the tenant will be bound by the terms and conditions of the contract.

At the end of the tenancy agreement, the landlord can choose to either extend the contract or draw up a new one.

6. Rental And Bill Payments

The rental amount will be stated in the contract, as will the utility bills that the tenant will need to bear.

7. Services Provided

Should there be electrical appliances in the unit, they will also be listed down in the contract as well as the tenant’s responsibility over them.

8. Length Of Notice

In the case that the renter decides to terminate the contract early, the penalty fees if any will be stated in the Tenancy Agreement.

All other terms of early termination of the contract will also be stated in this section. Ending the Tenancy Agreement early is also known as Break Clause.


Learn more about what are the important clauses that should be stated in the Tenancy Agreement when renting a property and what Renters should note with Signing Your Tenancy Agreement - What You Should Check before Signing.

After ensuring that both parties agree to all the terms in the contract, both landlord and tenancy will need to sign the contract.

The document will then be sent to the Malaysian Inland Revenue Authority, which the cost of the Stamp Duty is usually borne by the tenant unless otherwise agreed.


Responsibilities Of The Landlord And Tenant (iv)

The relationship between a landlord and tenant only just begins when they sign the documents. Thereafter, each party is responsible for the other in different ways.

1. The Responsibilities Of A Tenant

A tenant should always honour the Tenancy Agreement. They should be responsible for the property they are renting, and treat it as their own. Below are some of the things that they should look out for.

  • Look After The Property

Looking after the property is an integral part of the contract.

For residential properties, this means taking care to keep the unit clean and tidy, and not trashing it; and for a commercial property, it would also mean taking care of the cleanliness of the property.

  • Take Care Of Provided Appliances

There are usually some form of appliances included in a rented unit, whether they are air-conditioners or perhaps a refrigerator.

Whatever the electoral appliances put at the unit for the tenants usage, they should be used with care.

  • Do Not Make Changes To The Unit Without Permission

This is something that is usually stated in the contract, whether for residential or commercial units for rent.

For residential units, the landlords usually doesn’t allow any permanent changes in the unit such as repainting a room or perhaps nailing things to the wall.

For commercial units, the landlord doesn’t usually allow for renovations.

In the even that renovations are necessary, the landlord should be informed and all renovations should be carried out with the landlord’s consent.

  • Contact Your Landlord In Case Of Spoiled Appliances

The appliances that are provided to the tenants may sometimes malfunction or spoil. In these cases, the landlord should be informed and the repairs should be carried out by the landlord.

In the event that the tenant feels that the time frame that the landlord requires to fix the machinery is too long, she has to inform the landlord and ask if she is able to hire her own repairman and charge the bill to the landlord.

  • Familiarise Yourselves With The Appliances

Oft times, the appliances provided may be complicated to use. If this is the case, always ask the landlord how to operate the machinery if you are unsure about it.

This is to avoid spoiling the machinery.

  • Know Thy Neighbours And Be Considerate

Your neighbours can be your best friend or worse enemy. As a friend, they will be able to tell you if there is a break-in at your unit, or whether there might be an electrical or water shortage in the area.

As an enemy however, a bad neighbour can make life exceedingly and pettily miserable.

To keep your neighbours happy, be considerate. Keep your noise level to the minimum at night, do not hog space on their land and so on.

2. The Responsibilities Of A Landlord

As the tenant is responsible to the landlord, the landlord is also responsible for its tenants.

The landlord’s job is not just to collect rent, but to ensure that the everything in the unit is working at tiptop condition at all times.

  • Maintain Structure And Exterior Of The Property

While the tenants are expected to take care of the cleanliness and tidiness of the unit, it is the job of the landlord to ensure that the structure and the exterior are in great condition at all times.

This includes fixing leaking ceilings, cracking wall paint and mouldy walls.

  • Insure The Building Against Fire And Floods

If the property is located on low ground, whether a commercial or residential property, the landlord should always buy insurance to cover the possibility of a flood.

The other insurance that should be obtained by a landlord for his property is the fire insurance. This will protect both tenant and landlord should an emergency occurs,.

  • Deal With Issues Related To Water, Electricity And Gas Supplies

Should any issue arise in terms of utility bills, such as an internet that doesn’t run smoothly or the electrical box’s metre reading going wrong, landlord should always deal with the problem.

This is because the utility bills are ultimately tied to the landlord’s name, hence it would be easier for the landlord to settle any dispute

  • Maintain The Appliances And Furniture

When a tenant informs the landlord about broken appliances, the landlord should get the appliances repaired as soon as possible.

This is to avoid inconveniencing the tenants, especially if it is a particularly essential piece of appliance such as a washing machine or refrigerator.

When sending a repairman over, the tenants should be given a minimum of 24 hours notice.

  • Annual Gas Safety Check

If applicable, the gas supply in the unit should be checked periodically to avoid any accidents. This will ensure the safety of the tenant, and the safety of the landlord’s unit.


Read more about the Responsibilities of a Tenant and a Landlord and find out about the do's and dont's of tenants and landlords.


Renting can be less expensive and less hassle compared to owning a home but the place will never be your's to own.

There will always be some debatable points of the pros and cons of home ownership vs renting a place.

If you have decided that buying a house is at your best interest, you might be interested in the following comprehensive guides of home ownership:



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