Did you know that Malaysia has yet to pass a law that regulates the relationship between tenants and landlords to this day?
There’s news stating that a new Residential Tenancy Act will be enacted in about two years’ time. But until then, the Tenancy Agreement is the single most important legal document that you can ever have that governs both parties.
While most of the details regarding your tenancy are clearly stated in the agreement itself, there are many concerns that have been raised by our readers and customers that we are able to address in this article.
So what are the most common questions asked by landlords and tenants?
1. Since there is no Tenancy Act, how can we be sure that the tenancy agreement is legally binding?
While there has yet to be a single defining law that governs everything tenancy related, our current system still employs bits and pieces from other laws and enforce upon them. Some of which are stated here:
- Contracts Act 1950 – Gives tenancy agreement its legal weight
- Common-Law – Basic tenancy laws that we have inherited since the commonwealth days
- Civil Law Act 1956 – For matters related to rental payments.
- Distress Act 1951 – Rights of tenants if landlords wish to evict the tenants
- Specific Relief Act 1950 – Restriction on landlords when it comes to eviction, utilities cut etc. without the proper court permission
2. Who prepares the Tenancy Agreement?
Although it is common for the landlords to draft the tenancy agreement using templates available online, it is still recommended to hire a professional lawyer to handle all matters legal-related.
Hiring a legal expert will without a doubt, incur legal fees and stamp duty, all of which is listed here:
- First RM10,000 rental – 25% of the monthly rent
- Next RM90,000 rental- 20% of the monthly rent
- More than RM100,000 – negotiable
Stamp duty :
- Annual rental below RM2,400 – no stamp duty
- Rental for every RM250 in excess of RM2,400 rental
- Less than 1 year: RM1
- Between 1-3 years: RM2
- More than 3 years: RM3
Eg. Mr Lim is renting an apartment for his family at RM1,300 per month.
Legal fee: RM1,300 x 25% = RM325
Stamp Duty: (RM15,600 (annual rent) – RM2,400) / RM250 x 1 year = RM52.80
The total fees should amount to RM377.80, usually borne by the landlord, which is not bad of a price considering the legal protection received and the assistance of a professional.
It is also highly recommended not to use any random online templates for your tenancy agreement. A tenancy agreement should be a legal document that is drafted out after a series of negotiation between both parties, and each will turn out slightly different from each other,
One tenancy agreement that works well for one landlord does not necessarily translate just as well to another landlord.
3. What should I do if my tenant doesn’t pay rent?
This is by far, one of the biggest headaches a landlord has to face. It is important not to opt for extra-judicial activities, such as splashing red paint, make threatening phone calls etc. that may hurt your legal standing when the matters eventually go to court.
Here are some steps you can do to recover your losses:
Step 1: Make a formal demand
It can be an email or even screenshots of a WhatsApp message etc. You have to make clear demands that are reasonable and actionable, and you must gather proof that the tenant has formally acknowledged that they have received the demand, which can be as simple as an “ok” message.
Step 2: Get a court order
You should not, by any means, evict the tenant by force as you are restricted under the Specific Relief Act 1950. It is sad to say that securing a court order is a lengthy and costly procedure, but it is the legal way to do so.
You are, however, able to suspend the water supply if and only if it is clearly stipulated in the tenancy agreement, as in the case of Premier Model (M) v. Philepromenade Sdn Bhd .
Step 3: Apply for small claims
If the amount of rent owed is less than RM5,000, you can also look into a small claims procedure. This process does not require a lawyer, which will save on costs, and you are able to file for a claim all by yourself.
All you have to do is head over to your local Magistrates Court and fill in Form 198, obtain the Court’s seal on all four copies of your form, which they will then give you a hearing date. You would have to send a copy to your tenant, show up in court, and the rest is history.
Being a landlord is never easy. Hence, if you do manage to stumble upon a responsible, well-mannered tenant who is a good paymaster, sometimes it pays to lower the rent the following year just to keep them around.
But most importantly, everything we have mentioned so far heavily hinges on the tenancy agreement, and it is important to always to safeguard a copy of this document and pay very good attention when drafting it.
Or, you can leave the heavy footwork to Ohmyhome’s Landlord Agent Services. Here at Ohmyhome, we use data-supported and technological-driven approaches to find you the right tenant, fast and easy!
Calling +6016-299 1366 to speak with our dedicated customer care team that has your interests in mind!