Residential Tenancy Act Malaysia 2020

Not all of you may be aware that the Malaysian Government is actually in the midst of drafting a Residential Tenancy Act. The law is currently being drafted and is likely to be completed by the end of 2020.

What is this Residential Tenancy Act?

This new Act is being developed to govern all matters related to rental and tenancies of property, as currently, Malaysia does not have a single Act that does this.

Right now, we only have a number of provisions in the National Land Code 1965 under Part 15: Leases & Tenancies.

This new Residential Tenancy Act will seek to address various issues not covered in Part 15 of the land code and help address issues such as racial discrimination and further protect both landlords and tenant from grey areas that exist in the current laws.

The Act is to be based on the Australian Residential Tenancy Act 1997 that is being used in Australian states, New South Wales and Victoria.

What are these grey areas that the Malaysian Residential Tenancy Act will seek to cover then?

Racial Discrimination

First and foremost, there is no law that protects landlords from making biased policies such as restricting tenants of a particular race to be able to take up tenancies in their units.

I do however agree that this should be left up to the landlord to determine who he allows to stay at his unit, but race should not be allowed to be a determining factor. We live in a multi-racial society and racial stereotypes should not be allowed to persist in areas such as this.

A landlord seeks to make money from his property and a tenant seeks to find lodging in a place that is suitable to them.

It is purely a business transaction allowing two separate parties to get what they need from each other.

Racial biases should have no place here.

Rental Rates

The Act is also supposed to help in giving both tenants and landlords an idea on the rental rates in their area.

At this point in time, landlords and tenants are able to negotiate on a fixed rental rate.

There is some concern that this new Act will regulate rental rates, stipulating rental amounts based on property type and size, but I believe that this is simply unrealistic.

There are far too many different types of properties and accommodation styles for the government to mandate fixed rates and also there will be difficulties in enforcing these rates.

This will also restrict the already limited options on property investors to make money from their properties and may even upset their current tenancies.

In a time when there is a massive overhang that urgently needs to be dealt with, putting more red tape will only worsen the problem at hand, further turning people away from property investment.

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The long-term rental market is already offering extremely poor yields and I believe our Housing Minister Zuraida Kamarudin knows that doing so would only result in a metaphorical ‘hanging’ of our already ‘overhanged’ housing market.

What the Act will do, with regards to rental rates, (in my opinion) is help give a reference for affordable rental rates based on location specifically for government housing projects. This will allow the government to work out costings for affordable homes being developed for the target B40 group.

Tenancy Agreements

Whereas the actual tenancy agreement is concerned, there are a number of laws in Malaysia that facilitate and safeguard both landlords and tenants based on the tenancy agreement such as the Contracts Act 1950, Civil Law Act 1956, Distress Act 1951 and the Specific Relief Act 1950.

These acts cover various legislation on disputes or conflicts that arise from breaking of the tenancy agreement, payment disputes and even eviction but are all separate acts in their own right which cover a variety of issues.

This leaves a lot of room for loopholes and different judgements depending on the individual cases.

The Residential Tenancy Act will form a comprehensive and all-encompassing Act that will put all these issues under a single umbrella allowing for a separate Tribunal to be established that can handle all these issues without the need for tenants or landlords to take the matter to the small claims court.

If the Australian Acts are followed closely, this will lead to minimum rights and responsibilities that every tenant and landlord will agree to whether or not it is included in the Tenancy Agreement that has been signed.

These minimum rights will be pertaining to payment of rent, rent arrears, and rent increases; rental agreement terms and the correct procedures; landlords’ access to premises; administration of security bonds; additions to the premises; and expectations of privacy and security.

It also prevents parties from adding any additional unfair terms into the tenancy agreement that will result in making any of these added terms in the  agreement void.

It also states that any agreement that is made not in accordance with the Act will be subject to strict fines.

This will provide protection for both landlords and tenants that neither party will be able to cheat or cause the other party financial detriment.

Conclusion

Personally, I feel that this is another step in the right direction by the Malaysian Government to improve the overall property market landscape ensuring that all parties involved in the space are protected by the law.

There should not be much to worry about with the implementation of this new Act which has been scheduled to be tabled by the end of this year.

If we are to feel anything, we should be happy that the property sector is under the watchful eye of the Malaysian Government and that things are being done to improve the landscape of both long-term and short-term rental regulations in the country.