What You Should Check Before Signing Your Tenancy Agreement

PropertyGuru Editorial Team
What You Should Check Before Signing Your Tenancy Agreement
Setting up a business is not all just about finding the right product and marketing it.
It involves working out a suitable rental budget, and if you are setting up a physical business, the premises of the business makes just as big of an impact.
If you have already found your ideal business premise, read on to find out what else it entails and what are the necessary steps to take leading up to signing the Tenancy Agreement.

Pay Your Deposits

room for rent, property for rent, tenancy agreement
Upon the renter’s confirmation that they wish to rent the unit, the renter will need to pay several deposits. The required deposits are as follows:

1. Earnest Deposit

An Earnest Deposit is paid to the landlord as a show of good faith that the renter is serious about renting the property.
The Earnest Deposit is usually a month’s rental. Upon making this payment, the landlord will not be allowed to rent the unit out to other potential tenants.

2. Security Deposit

A security deposit is paid to protect the landlord against irresponsible tenants.
This security deposit will be used to cover any damage caused by the tenants, and also any possible unapproved renovations to the unit.
This deposit will hence be held up to 15 days after the lease has ended, providing a suitable period of time for the landlord to check their unit and make the necessary repairs.

3. Utility Deposit

The responsibility of the utility bills in commercial properties usually falls onto the renter. A utility deposit will however be collected from the renter in case they default on their utility bill payments.
The utility deposit is usually about half a month of the rental fees.

What Your Tenancy Agreement Should Include

room for rent, property for rent, tenancy agreement
The Tenancy Agreement is akin to a Sales & Purchase (SNP) agreement when purchasing a property.
It is the document that will entail what the renter will get with their unit, all the terms that they will be bound to, and all the conditions that the landlord will have to honour.
Among the most important items that should be recorded accurately in the Tenancy Agreement are as follows.

1. Names Of The Landlord And Tenant(s)

As the Tenancy Agreement will be a legal binding document, ensuring that the names are correct is important.
In case of a misspelled name, it is possible that if there is any dispute, the party with the misspelled name will be unable to fight a winning case in court.

2. Address Of The Property Which Is Being Let

Getting the address of the property down correctly in the Tenancy Agreement is also very important, otherwise it may mean that the renter never rented the property that they were meant to.

3. Date Of The Tenancy’s Beginning

Getting the date of the beginning of the tenancy right is important, especially if there is a time sensitive item in the Tenancy Agreement – such as a contract period.

4. Parts Of Property Tenant Is Allowed To Use

If the renter is only renting part of the entire unit, is important that is stated clearly within the Tenancy Agreement which part the renter is allowed to use.
It is also important to state in the Tenancy Agreement what the unit is allowed to be used for.
Check out properties for rent

5. Duration Of Tenancy

Clarifying the duration of the tenancy is important, as this is the duration that the renter is bound to the terms and conditions of the contract.
This is especially important for the landlord, as upon expiry of the contract, the tenant is no longer bound to the terms and conditions of the contract.
There are contracts with fixed term tenancy and contracts with no fixed term – which in this case the contract is also known as a periodic tenancy.

6. Rental And Bill Payments

The amount of the rental should be clearly stated in the contract. The bills that should be paid for by the tenant should also be clearly stated, whether they are utility bills or the assessment taxes and land taxes.
Whether the rental can be increased or not periodically should also be stated in the contract.

7. Services Provided

If there are electrical appliances in the unit, it should be stated who is responsible for the maintenance of the appliances.

8. Length Of Notice

In the event that the renter decides to end the tenancy early before fulfilling the contract, the Tenancy Agreement should also state the notice period to the landlord.
This is also known as the “Break Clause”.
After ensuring that everything in the Tenancy Agreement is in order, both landlord and renter will have to sign the document.
This document will then be stamped by the Malaysian Inland Revenue Authority, where the cost of the Stamp Duty is usually borne by the tenant unless otherwise agreed.
Disclaimer: The information is provided for general information only. PropertyGuru International (Malaysia) Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.