Tenancy Agreements in Malaysia: A Complete Guide for Landlords and Tenants

Renting property is part of everyday life in Malaysia, whether you’re a student moving to the city, a young couple renting an apartment, or a business leasing office space. However, many disputes happen because tenancy agreements are unclear, incomplete, or not legally stamped.

This guide explains everything you need to know about tenancy agreements in Malaysia — from what must be included, how to stamp the agreement, common disputes, and tips to protect both landlords and tenants.

What Is a Tenancy Agreement in Malaysia?

A tenancy agreement is a legally binding contract between a landlord (property owner) and a tenant (person renting the property).

It sets out the terms of occupation, including:

How much rent will be paid
How long the rental period lasts
What both parties are responsible for
The process if either party wants to end the tenancy early

Unlike some countries, Malaysia does not have a specific Residential Tenancy Act (though proposals have been discussed). Instead, tenancy matters are generally governed by:

The Contracts Act 1950 – ensures agreements are enforceable.
The National Land Code 1965 – covers property ownership and related rights.
Common law principles – as applied by Malaysian courts.

This means your written agreement is extremely important. If it is vague, disputes can become messy and expensive.

Difference Between Tenancy and Lease

People often confuse “tenancy” and “lease.” Here’s the key difference in Malaysia:

Tenancy: Less than 3 years. Usually residential or small business rentals. Not registered at the Land Office.
Lease: More than 3 years. Must be registered with the Land Office under the National Land Code. Common for commercial properties.

Most ordinary house and apartment rentals fall under “tenancy.”

Essential Clauses in a Tenancy Agreement

A solid tenancy agreement should cover at least the following:

1. Parties Involved

Full name, IC/passport number, and address of both landlord and tenant.
If the landlord is a company, include the company name, registration number, and authorized signatory.

2. Property Details

Full address of the rented property.
Type of property (apartment, condominium, terrace house, office lot).
Description of included items (furniture, appliances, fixtures).

3. Duration of Tenancy

Commonly 12 or 24 months.
Option to renew: state how many months before expiry the tenant must notify.

4. Rental Payment

Monthly rental amount and payment due date.
Accepted payment method (bank transfer, cheque, cash).
Late payment penalty (e.g., RM50 per week).

5. Deposits

The standard practice in Malaysia:

Security deposit: 2 months’ rent
Utility deposit: 0.5 month’s rent
Advance rental: 1 month’s rent

Deposits should be returned within a reasonable period (usually 30–60 days after tenancy ends) minus any deductions for damages or unpaid bills.

6. Landlord’s Responsibilities

Pay quit rent, assessment tax, and building maintenance fees.
Ensure property is habitable.
Handle major repairs (structural, plumbing, electrical wiring).

7. Tenant’s Responsibilities

Pay utilities (electricity, water, internet, Indah Water).
Keep property in good condition.
Repair minor damages (light bulbs, broken tiles due to negligence).
Not sublet without landlord’s written consent.

8. Termination Clause

Standard notice: 2 months in writing.
Diplomatic clause: allows early termination (common for expatriates). Example: “Tenant may terminate after 12 months with 2 months’ notice.”
Penalties if tenant leaves early without notice.

9. Renewal & Rent Review

Option for renewal should specify whether rent will increase and how it will be determined (e.g., based on market rate or mutual agreement).

10. Prohibited Activities

Using property for illegal purposes.
Making structural alterations without approval.
Keeping pets (if management rules prohibit them).

Why Stamping the Agreement Matters

In Malaysia, tenancy agreements must be stamped at Lembaga Hasil Dalam Negeri (LHDN) within 30 days of signing.

Stamp duty makes the agreement legally recognized and enforceable in court. Without stamping, you cannot rely on the agreement if disputes arise.

Stamp Duty Rates for Tenancy Agreements

Stamp duty is calculated based on annual rental (monthly rent × 12):

For 1 year or less → RM1 for every RM250 of annual rent.
For 1–3 years → RM2 for every RM250 of annual rent.
More than 3 years → RM4 for every RM250 of annual rent.

Example: If rent is RM2,000/month for 1 year → annual rent = RM24,000.
Stamp duty = RM24,000 ÷ 250 × RM1 = RM96.

Both landlord and tenant can agree on who pays the stamp duty, though usually tenants bear the cost.

Common Disputes and How to Avoid Them

1. Security Deposit Disputes

Landlords often refuse to return deposits citing “damages.”
Tenants can protect themselves by photographing the property during handover.

2. Late or Unpaid Rent

Landlords should specify late payment penalties.
If tenant defaults, eviction requires a court order (landlords cannot change locks illegally).

3. Repair Responsibilities

Disputes arise over “who pays.”
Clear wording (major vs minor repairs) prevents this.

4. Early Termination

Without a diplomatic clause, tenants may lose deposits.
Landlords should also state compensation if they terminate early.

Practical Tips for Landlords

Screen tenants carefully – request employment letters or company details.
Use written agreements – verbal arrangements are risky.
Keep proper receipts – rental and deposit payments should be documented.
Inspect property periodically – to ensure proper upkeep.
Consider insurance – landlord insurance can cover unpaid rent or damages.

Practical Tips for Tenants

Check landlord’s ownership – request copy of title deed or quit rent receipt.
Read every clause – especially on deposits, repairs, and termination.
Insist on stamping – unstamped agreements are not enforceable.
Keep proof of payment – bank transfers are safer than cash.
Clarify furnishing list – take photos of provided furniture/appliances.

What to Do If a Dispute Arises

If disagreements cannot be resolved, the following options are available:

Small Claims Court – for claims up to RM5,000 (no lawyer needed).
Civil Court – for larger disputes (landlord/tenant may need legal representation).
Tribunals – Malaysia currently does not have a tenancy tribunal, but future reforms may change this.

In practice, many disputes are settled privately because court cases are time-consuming and expensive.

Frequently Asked Questions (FAQ)

1. Can a landlord evict a tenant immediately if rent is unpaid?
No. A landlord must give notice and obtain a court order before eviction. Changing locks or cutting utilities is illegal.

2. Is verbal tenancy valid?
Yes, but difficult to prove. Always insist on a written, stamped agreement.

3. Who pays quit rent and assessment tax?
Usually the landlord, unless otherwise agreed in the contract.

4. Can tenants use the property for business if it is a residential unit?
No, unless the agreement allows it and local zoning laws permit.

5. What happens if the agreement is not stamped?
It is still valid, but cannot be admitted as evidence in court.

✅ Official Government & Legal References

Lembaga Hasil Dalam Negeri (LHDN) – for tenancy agreement stamp duty calculator & payment
👉 https://www.hasil.gov.my
National Land Code 1965 (Act 56) – reference to Malaysia’s property law
👉 https://www.agc.gov.my (Attorney General’s Chambers of Malaysia – Laws of Malaysia portal)
Contracts Act 1950 – governs enforceability of agreements
👉 https://www.agc.gov.my
Tribunal for Consumer Claims Malaysia (TTPM) – although tenancy disputes don’t usually go here, useful for related consumer rights
👉 https://ttpm.kpdn.gov.my

✅ Practical Guidance & Info

KL Bar Committee / Bar Council Malaysia – for finding a lawyer or legal advice
👉 https://www.malaysianbar.org.my
Judiciary of Malaysia (e-Filing / Courts info) – in case of eviction or deposit disputes
👉https://www.kehakiman.gov.my

Conclusion

Tenancy agreements in Malaysia are more than just a piece of paper — they are the foundation of a smooth rental relationship. Both landlords and tenants should take the time to draft a clear, fair, and properly stamped agreement.

By understanding your rights and responsibilities, you can avoid disputes, protect your money, and ensure peace of mind throughout the tenancy period.

Tenancy Agreements in Malaysia: What Landlords and Tenants Need to Know