Project Description

Guide on Property Investments for Rental Property – Tenancy Agent

Due to rising property prices in Malaysia, many are opting to rent instead of buying. This applies to new business start-ups where premise renting is easier on their budgets. On of top of that, the availability of property renting websites like iProperty has also made it easier for both property owners and potential tenants to get in touch.

Once agreed on the property, tenants and owners will sign a Tenancy Agreement in order to protect the welfare of both the parties. However, with the rise of rental transactions chances of tenancy disputes has increased. Therefore, here are some useful information that landlord or tenant should know before signing Tenancy Agreement.

Why need Tenancy Agreements?

Currently there is no law to govern the legal framework of tenancy in Malaysia. The one and only document that governs the relationship between the landlord and the tenant is the Tenancy Agreement. The terms and conditions can be easily negotiated and modified to suit the individual requirements of both parties. However, Parliament has proposes the formulation of the Residential Rent Act to protect landlords and tenants.

Until the Residential Rent Act comes into effect, the tenancy agreement is the only document that protects their rights. A tenancy agreement falls under the Contract Act 1950 which assumes both parties have entered into the agreement at their own free will. However, due to legal jargons used in the tenancy agreement, many would not fully understand what the terms and conditions mean. In the worst case scenario, some will go ahead and sign the agreement without fully knowing what they have signed up for.

  1. Verify the details of landlord and tenant

It is the tenant’s responsibility to verify that the landlord is the legal owner of the property by signing a duly-signed and stamped Sales and Purchase Agreement. Check whether the landlord had acquired the property and a copy of the individual/strata title stating the landlord as the registered owner. Confirm and check all the details of both the landlord and tenant.

  1. Address and details of the confirmation property

Ensure the address of the property is accurate and specify the exact area that is being rented, if applicable. For example, first floor, master bedroom, etc.

  1. Tenancy period and option to renew

The duration of tenancy should be clearly stated. Tenancy agreements usually include an option to renew clause whereby the tenant wish to renew the contract, he/she may do so by giving a written notice to the landlord prior to the end of the tenancy period.

  1. Deposit and rental amount

Both the parties have to agree on the monthly rental amount, including Goods & Services Tax (GST) if the landlord is a GST registrant. There are two deposits – security deposit and utility deposit – which shall be paid by the tenant and to be kept by the landlord and shall be returned to the tenant free of interest at the end of the tenancy. The deposits can be forfeited if the tenant breaches the contract or cause damage to the property.

  1. Payment mode and payment due

This clause specifies how the landlord wished to be paid and when is the latest date the payment should be made. If the tenant is required to pay the utility bills, that should also be mentioned.

  1. Purpose of the tenancy

Parties would be required to state what the premise is used for. For example, commercial, residential, warehouse, etc. And the premise should strictly be used for the purpose that is stated and nothing else.

  1. Maintenance and Upkeep Responsibility

If there are electrical appliances like an air-conditioning unit, water heater or microwave oven, it should be clearly stated who is responsible for the maintenance of the appliances.

  1. Termination

This is an important part of the agreement as it states the exit clause. Parties can include the methods to terminate the tenancy agreement prior to the end of the tenancy period.