Tenancy Agreement

In Detail

In Malaysia, tenancy agreements are governed by common law (Contracts Act 1950) and must be stamped under the Stamp Act 1949. The standard tenancy agreement structure is as follows: (1) Parties — landlord (owner) and tenant (renter), (2) Property details — address, unit number, furnished/unfurnished status, (3) Lease term — typically 12 months (1 year) or 24 months (2 years); month-to-month leases are rare, (4) Monthly rent — amount, due date (usually 1st of the month), payment method (bank transfer, cheque), (5) Security deposit — typically 2 months' rent + 1 month utility deposit + 0.5 month's rent as agent fee (if using an agent). Total upfront cost for tenant = 3.5–4 months' rent. Example: RM3,000/month rent = RM6,000 security + RM3,000 utility deposit + RM1,500 agent fee = RM10,500 upfront, (6) Responsibilities — landlord maintains structure (roof, plumbing, wiring); tenant maintains cleanliness and minor repairs, (7) Termination clause — typically requires 2 months' notice; early termination may forfeit the deposit, (8) Renewal option — tenant may have the first right to renew at a mutually agreed rate. Stamping requirements: (1) Tenancy agreements must be stamped within 30 days of signing, (2) Stamp duty is calculated as: 25% of annual rent for leases up to 1 year, or 50% of annual rent for leases 1–3 years, or RM1 for every RM250 of annual rent for leases exceeding 3 years, (3) Example: RM3,000/month x 12 months = RM36,000 annual rent. Stamp duty = RM36,000 x 25% ÷ 100 x RM1 = RM90 (for a 1-year lease), (4) Both landlord and tenant can be fined up to RM10,000 if the agreement is not stamped. However, in practice, many landlords skip stamping to save costs — this is risky because unstamped agreements are not admissible as evidence in court if disputes arise. For landlords, key tips: (1) Always stamp the agreement — it costs RM50–200 but protects you in case of non-payment or property damage, (2) Conduct a property inspection with photos before handover to document the condition, (3) Verify the tenant's employment and income (payslips, employment letter), (4) Require the full security deposit (2 months' rent) — it's your only recourse if the tenant defaults or damages the property. For tenants, key tips: (1) Insist on a stamped agreement — it protects your right to occupy the unit for the agreed term, (2) Document all defects during move-in (photos, written list) to avoid losing your deposit over pre-existing issues, (3) Clarify who pays for minor repairs (light bulbs, clogged drains) vs major repairs (aircon breakdown, roof leaks), (4) Understand the termination clause — if you need to leave early, you may lose 1–2 months' deposit. Common disputes: (1) Withheld deposits — landlords claim 'excessive wear and tear' to keep deposits; tenants claim normal usage. Solution: detailed move-in/move-out checklists with photos, (2) Rent increases — landlords demand 10–20% increases at renewal; tenants refuse. Solution: include a renewal rate cap in the original agreement (e.g., 'renewal rent increase capped at 5% per year'), (3) Unauthorized occupants — tenant sublets or allows extra people to stay; landlord objects. Solution: agreement must specify maximum occupants and prohibit subletting without consent.