The following are some useful information on renting a property in Malaysia.

1. FACTORS TO BE CONSIDERED:

(i) location;
(ii) neighborhood;
(iii) transportation access; and
(iv) usage

2. DIFFERENCE BETWEEN LEASE AND TENANCY

If the contract term is below three (3) years, it is called a tenancy. If the contract term is beyond three (3) years, it is called a lease.

Legally, leases are registrable with the Land Office and the lessees have a registered interest in the land upon registration.
The interests of a lessee is better taken care of / protected compared to a tenant under a tenancy as they only have an equitable interest on the land i.e. their interests would be subject to those with registered interests.

However, all tenants/ lessees are entitled to the quiet enjoyment of the property subject to the terms and conditions of the governing written document.

Under the common law jurisdiction of Malaysia, the right of quiet enjoyment and the actual possession of the tenants/ lessees are highly protected.

3. DOCUMENTATION AND PROCEDURES

There are no fixed rules on the form of agreement for tenancy. However, it is common practice that upon signing of the tenancy, two (2) months’ rental is paid as deposit, one (1) month rental is paid advanced and a utility deposit that is normally fixed at one (1) month rental subject to the parties’ agreement.

A lease can be registered with the relevant land authority by submitting a duly completed Form 15A prescribed under the National Land Code of Malaysia.

4. STAMPING FEE

All tenancy/lease agreements are required to be stamped as failure to do so would render the agreement inadmissible in court in the event a dispute arises.

The stamping fee calculation is based on the amount of monthly rental payable and also the tenancy period. The formula below set out in the Stamp Act 1949 is used to calculate the required stamping fee on the original document.  
 

For example: If a property is rented out for RM800 a month for a 2 year period:

The yearly rental shall be RM9,600.
The stamp duty shall be: (RM9,600 – RM2,400) / RM250 = RM29 X 2 years = RM58 (for the original copy)

5. LEGAL FEES

The legal fees for drawing up a tenancy/ lease agreement would depend on the amount of rent payable monthly. The Solicitors’ Remuneration Order 2005 has set out the formula below to calculate the legal fees.

Tenancy:

Lease:

6. FAILURE TO PAY RENT

Enforcement of the terms in the tenancy agreement can be done by formally demanding for the arrears and stating that failure to comply with the demand will result in commencement of a legal action (writ of distress action or notice of forfeiture to terminate the tenancy).

Before an action of forfeiture can be taken, the Landlord/ Lessor must first issue a notice in writing specifying the particular breach, entailing the tenant to remedy the breach and make compensation (if required). Forfeiture would terminate the tenancy.
A writ of distress action is taken out without the involvement/knowledge of the tenant (ex parte). It does not terminate the tenancy but allows the landlord to seize and auction off the tenant’s/ lessee’s property (except personal belongings such as clothes and tools of trade) to recover the arrears.

It must be noted however that as a writ of distress does not terminate the tenancy, there is a risk that the tenant/ lessee may fail to pay rent again resulting in the need for another writ of distress action. Further, should the tenant contest the action, it would be a lengthy and costly process.
 
(Article contributed by Chur Associates)