Tenancy Agreement in Malaysia

A tenancy agreement is the contract that sets out the terms on which a property is rented, for a term not exceeding three years. It is the main document that decides what a landlord and a tenant can do when something goes wrong, so what it says matters more than what was discussed.

Tenancy or lease?

In Malaysia the distinction is the length of the term. A letting for a term not exceeding three years is a tenancy and is not registrable under the National Land Code, although it can be protected by endorsement on the title. A letting exceeding three years is a lease and is registrable against the title.

This matters because a registered lease binds a later buyer of the property, while a tenancy depends far more on what the agreement itself provides. Getting the classification wrong at the drafting stage causes problems later.

What a properly drafted tenancy covers

• The term, the rent, the deposit and the utility deposit, and how each is dealt with at the end
• What the deposit may and may not be used for, and when it is refunded
• Who repairs what, and who insures what
• Whether subletting or assignment is allowed
• What counts as a breach, and what notice is required before the landlord acts
• Renewal and early termination, including any break clause
• An inventory of fittings, furniture and appliances handed over

When you need a lawyer

• Commercial premises, shoplots, offices, factories and any tenancy with a business at stake
• High value residential lettings, or tenancies to a company rather than an individual
• Where the landlord wants a guarantor or additional security
• Where fit-out works, renovation or signage rights are part of the deal
• Where a previous tenancy ended badly and the landlord wants stronger remedies drafted in
• Where a tenant is being asked to sign a landlord's agreement and wants it reviewed before committing

Stamping

A tenancy agreement should be stamped. An unstamped agreement can still be admitted in evidence, but only after the duty and any penalty are paid, which is an avoidable cost and delay at exactly the moment you need to rely on the document. We attend to stamping as part of the engagement.

Common mistakes

• Using a downloaded template that does not match what the parties actually agreed
• No inventory, so there is no record of the condition of the property at handover
• Silence on who pays for repairs, so every breakdown becomes an argument
• Taking matters into your own hands when rent is unpaid, such as changing the locks or removing belongings, instead of following the process in the agreement and the law
• A term of more than three years drafted as a tenancy, so it is not registered and does not bind a later buyer

Frequently asked questions

Is a tenancy agreement compulsory in Malaysia?

There is no requirement to have one before a property is let, but without a written agreement the parties have very little to rely on when there is a dispute about rent, deposits, repairs or termination. Almost every tenancy dispute we see turns on what the agreement did or did not say.

Who prepares the tenancy agreement, the landlord or the tenant?

It is usually prepared by the landlord's solicitor, and the tenant is entitled to have it reviewed before signing. For commercial tenancies both parties commonly take their own advice.

Can a landlord change the locks if the tenant does not pay rent?

Self help of that kind carries real legal risk for a landlord. The proper routes are those set out in the agreement and in law, including the recovery process available to landlords. Take advice before acting rather than after.

What happens to the tenancy if the property is sold?

That depends on the terms of the tenancy, whether it has been endorsed on the title, and what the sale and purchase agreement provides. Buyers should always ask whether the property is tenanted before signing.

Can a tenancy be for more than three years?

A letting for a term exceeding three years is a lease rather than a tenancy, and is registrable against the title. It should be documented and registered as a lease, not drafted as a tenancy.

Related services

• Lease Agreement
• Land Search
• Sale and Purchase Agreement
• Property Transfer & Transaction
• Memorandum of Transfer (MOT)
• Loan Agreement
• Discharge of Charge
• Caveat of Property
• Foreigners Buying Property
• Property Lawyer Malaysia

This page is general information about property law procedure in Peninsular Malaysia and is not legal advice for any particular situation. How a matter is handled depends on the title, the state and the facts, and Sabah and Sarawak have their own separate land legislation. Speak to a lawyer about your own circumstances.