Here’s what you need to know about the proposed Residential Tenancy Act

Property News/ 26 February 2022 Leave a comment


The Ministry of Housing and Local Government (KPKT) is looking to receive feedback from the public and stakeholders on the proposed enactment of the Residential Tenancy Act (RTA) via the Malaysian Productivity Corp’s (MPC) website.

According to the website, the one-month public consultation which begun on January 28,2022 and is slated to end on February 28,2022.

The website allows Malaysians to submit feedback and read the accompanying document titled – Proposed Survey and Drafting of the Residential Tenancy Act (Cadangan Kajian dan Penggubalan Akta Sewaan Kediaman).

What is the proposed Residential Tenancy Act?

The Residential Tenancy Act is a statute aimed at specifically protecting landlords and tenants.

Dedicated landlord and tenant legislation exist in countries such as the United Kingdom, Australia, New Zealand, and Canada to ensure that both parties are protected and some instances, to minimise housing discrimination.

Malaysia is long overdue for its own iteration of a residential tenancy act as existing laws are inadequate, arguably pro-tenant and current processes for recourse are impractical.

Current recourse for landlords and tenants in Malaysia include:

  • Contracts Act 1950 – to cover conflicts on the tenancy agreement
  • Civil Law Act 1956 – to cover payment disputes
  • Distress Act 1951 – covering matters of eviction
  • Specific Relief Act 1950 – prohibits landlords from evicting tenants or making the property inaccessible to tenants without a court order
  • Common Law/Case Law – any court decisions covering disputes

Current means of recourse are lengthy and cost far more than the value of security deposits, limiting access to justice in the event of disputes, eviction or beaches of agreement between landlords and tenants.

The KPKT research document states that the administrative cost of court proceedings is around RM 1,236 for Magistrates Court and RM 1,476 for the Sessions court – with legal fees estimated around RM3,000 to RM15,000.

The setting up of a tribunal, as seen with The Strata Management Tribunal for example, can drastically reduce time and costs as well as avoid the need for legal representation.

Proposals for Malaysia’s Residential Tenancy Act

According to the KPKT’s research document, the proposed suggestions for Malaysia’s Residential Tenancy Act are:

  • To ensure specific clauses to protect and preserve the rights of landlords and tenants from gaps in existing laws
  • Provide a template tenancy agreement to reduce unfair terms and conditions in the best interest of all involved
  • Provides processes for administering and regulating small rentals, transfers of rentals to third parties and determination of the rental period if the owner sells the premises, the premises are involved in an auction or in the event of death of any party.
  • Ensure that the rental housing is in a livable condition and all parties sign the agreement after the inspection of the premises has been implemented.
  • Set the notice period that must be given by homeowners and tenants so tenants are not forced to move out ahead of schedule.
  • Establishment of a special Tribunal to resolve disputes of the parties involved in residential rental transactions.
  • Provide a residential rental database to collect and store relevant data as big data that can assist in the policy-making process as well as the improvement of law enforcement.
  • Cohesion of provisions in other statutes in force and to avoid creating an overlap between provisions that require consequential amendment to other acts.
  • The implementation of the Residential Rental Act is regulated by a Comptroller of Residential Tenancy who is to be created to ensure residential rental transactions and the relationship between homeowners and tenants is efficiently managed, effective and uniform in all states in Peninsular Malaysia.
  • Creating a residential rental database for the purpose of collecting public data (big data) that can be used by the government to study rental sector trends residence in the country and formulate relevant policies to ensure the ecosystem of residential and legal rental transactions will be improved from time to time.

However, the document also suggests the Comptroller of Residential Tenancy would be authorised to manage the security deposit to minimise conflicts between landlords and tenants.

The report states that the security deposit will be returned to the tenant once the tenancy expires and no expenses are to be deducted. Any disputes will be referred to the tribunal.

In effect, security deposits are no longer in the landlord hands so both landlords and tenants would have to go through the government for claims or refunds.

Another cause for concern is the proposed ‘rent control’ (Section 3.6) and the tribunals power to examine rental rates (Page 38) as the impact in might have on the free market.

If the legislation aims to regulate rental rates of public housing premises then it would contradict any current by-laws or agreements that prohibit the renting out of public housing projects.

Ultimately, the Residential Tenancy Act would be a necessary step forward however certain proposals could prejudice the free market or the very landlords and tenants it aims to protect.

The Act is expected to be tabled in Parliament in the middle of this year and come into effect in the middle of 2023. Malaysians may submit their feedback via the MPC website via this link.

Source: PropertyAdvisor.my

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