Understanding Tenancy Agreements in Malaysia

What is a Tenancy Agreement?

A Tenancy Agreement (TA) is a legally binding contract between the landlord and tenant in Malaysia. It outlines the rights and obligations of both parties for the duration of the rental. Under the Specific Relief Act 1950 and common law, this document is enforceable in court — but only if it has been properly stamped at LHDN.

Key Clauses You Must Check

1. Rental Amount and Due Date The agreement must clearly state the monthly rent, when it is due (usually the 1st of each month), and acceptable payment methods. Check for late payment penalty clauses — a common rate is 8% per annum on overdue amounts.

2. Security Deposit Structure Standard practice in Malaysia:

• 2 months security deposit
• 0.5 month utility deposit
• 0.5 month advance rent (first month)

Total upfront: typically 3 months of rent. For a RM2,800/month unit, that means RM8,400 before you move in.

3. Tenancy Period and Renewal Most tenancies run for 1 or 2 years. Check the renewal clause: does rent increase automatically on renewal, and by how much? A cap of 5–10% is reasonable. A clause with no cap is risky.

4. Diplomatic Clause (Critical for Expats) If you are working in Malaysia on an employment pass, insist on a diplomatic clause. This allows early termination — typically exercisable after 12 months with 2 months written notice — if you are retrenched, transferred, or your pass expires.

5. Repair Responsibilities Tenants are typically responsible for repairs under RM150–200. Anything above falls to the landlord. Ensure this threshold is clearly written. Landlords are responsible for structural issues, major plumbing, aircon compressors, and fixed appliances.

6. Access and Privacy The landlord cannot enter the property without reasonable notice (usually 24 hours) except in genuine emergencies. Ensure this is stated in the agreement.

Who Pays Stamp Duty?

By default, the tenant pays stamp duty on the tenancy agreement. As of 2025, the rates are:

• 1-year tenancy: RM1 per RM250 of annual rent
• 2-year tenancy: RM3 per RM250 of annual rent

For a RM2,800/month unit on a 2-year lease (annual rent = RM33,600): stamp duty = RM403. Always stamp within 30 days to avoid penalties.

Final Advice

Never sign an unstamped agreement — it cannot be admitted as evidence in court. Read every clause. If anything is unclear, consult a licensed property agent or lawyer before signing.