Things To Look Out For In Tenancy Agreement

Things To Look Out For In Tenancy Agreement | During the recent Budget 2019 discussion, the only property related act was announced is the Real Property Gain Tax (RPGT or CKHT 1A). There were many efforts and initiatives announced by the Ministry of Finance that is to help the property market. We are told by Bank Negara that we are currently facing a shortage of affordable housing after reviewing the data. According to Bank Negara’s quarterly bulletin, our country’s maximum affordable house price has to be capped at RM282,000, based on the housing cost-burden approach. Meanwhile, the actual median is RM313,000 which is far from reach for many because the median national household income is only RM5,228. Over the recent years, the launch of property market monitor Housing Watch by Bank Negara Malaysia, the central bank has found the problem with home ownership was not the lack of access to credit yet having insufficient income and houses in Malaysia are generally being too expensive. Besides, this is not the first time the Malaysia’s central bank has flagged the unaffordability of homes in the country. While there are certain hacks and tips to work around the issues even you have averse relationship to a long-term relationship with your bank or struggling with living costs, financial independence or financial freedom can no longer be a dream. Renting is the last option now. For now it may sound like a practical choice, the question is are you well protected as a tenant? 

In Malaysia, tenant-related act is not completely comprehensive to cover and protect the tenant. So far, the only property-related act that was discussed and abolished is Control of Rent Act 1966 that applied to rent-controlled premises or ‘pre-war’ buildings (colonial buildings built before World War 2). Here’s a list of the laws to get familiarize with: Contracts Act 1950, Civil Law Act 1956, Distress Act 1951, Specific Relief Act 1950 and Common Law/Case Law. Then, we have the Act 56 of the National Land Code 1956 which is a short-term agreement usually not more than 3 years. It is vital that every agreement made has to be in black and white on a paper in order for the tenancy agreement to kick in; ensuring tenant like you are well-protected.

There are some terms you will need to look out for in the tenancy agreement before getting it to be stamped and officially legally bind.

1. Monthly rental

In Malaysia, both homeowners and potential tenants have the freedom to negotiate the rental rates freely where the landlord will state the range they are looking for and it is tenants decision to comply. You can go to property listing platform like PropertyGuru to survey and compare the rental of similar units within the area. Once both landlord and tenant agreed to the rates, your agreement should indicate the amount and date of the monthly rental to be paid to the landlord.

2. Security deposit

The purpose of security deposit is to serve as an ‘insurance’ of sorts for the landlord in case if there’s tenant inflicts damages to the landlord’s property. This included any of the furniture provided during the tenancy period. It also serves to protect the landlord in the event the tenant fails to pay his rental. It is also common that the security deposit to be paid upfront two months’ gross rental and a half month of utilities, just in case there are any outstanding utility bills left behind by the tenant. Always check your tenancy agreement in detailed before paying for your rental and deposit because when everything is signed with errors, deposit cannot be forfeit.

3. Landlord and tenant details

Details like full name, I/C passport number, and address of both parties must be spelled out in the tenancy agreement should there be any problems arise with the tenancy.

4. Commencement and end date

The day you are given keys is the day the commencement date for the tenancy. Meanwhile, the date you move out is your end date. In the agreement, this should also include the notice period for tenants to serve and pack their things before moving out ore renewing their tenancy.

5. Special requests or requirements

In Malaysia, it’s pretty common to see the clause ‘No pets allowed’ or ‘no smoker’ in the policy that usually ties in with the unit’s joint management body. Click here to see the duties of joint management body. Go through with your landlord every of the special requirements, this will help you avoid possible conflicts with landlord in the future.