rental tenancy act

MIEA: Provisions for Residential Tenancy Act (RTA) is imperfect and inadequate, further engagement with stakeholders necessary.

Press Release: MIEA: Provisions for Residential Tenancy Act (RTA) is imperfect and inadequate, further engagement with stakeholders necessary.

The Malaysian Institute of Estate Agents supports the efforts of the Ministry of Housing and local government [KPKT] in the formulation of the Residential Tenancy Act (RTA), says Ms. Chan Ai Cheng the President of the association. The time is right to model after more established property markets around the world in how they manage Landlord and Tenant relationship via a similar act. The Residential Tenancies Act 1997 in Australia is certainly one to model after providing a more structured framework for landlord and tenant relations.

Our real estate practitioners who represent the larger community of owners /landlords are concerned on the various provisions in the proposed act. The main concern is that of Deposit collection where an independent institution is to hold the deposit on behalf of the Landlord. While this is practiced in many developed countries, administering the
refund where the landlords need to claim for cost of repairs on a timely basis will hamper his ability to get the repairs done on a timely basis and will result in income loss. This will directly impact the rental market especially when there are disputes and the tribunal may take as long as 120 days to resolve it. Where money is concerned, a faster, efficient and seamless process need to be introduced to administer this concern.

Collection of the rental deposit is going to create another adverse effect on the current practice as the booking fee or rental deposit to be collected shall not be more than 25% of the rental. i.e., if the rental is RM1000 the agent cannot collect one month’s rental deposit but only RM250. Rental deposits are presently one-months rental amount paid
upon acceptance of the rental offer and is used to offset the first month’s rent of the property. There isn’t a need to change this practice.

The new introduction is that the cost of preparing tenancy agreement is now to be paid by the landlords and not the Tenants as currently practiced. Given the proposed standardization of the Tenancy Agreement, probably fixing a processing fee for the tenancy agreement is sufficient which should just be a nominal amount. The provision for collecting of Security deposit not exceeding 2 months may be low as cost of replacement and repairs can run much higher for high end properties. As such there should not be a blanket fixed amount and should be a two-tier security deposit provision for property rentals of certain value to meet the contingencies.

Repossession of a rented premise by the landlord can only happen on the ‘order for possession by the tribunal’. This is an area that hopes to address the disputes between landlord and tenant in a more effective manner than how it presently is. This could be an area of concern if the timeline for settlement is too long and if all disputes require a
tribunal for settlement.

Any unpaid rental is to be claimed under security deposit which is against the norm as security deposit is meant to recover cost of repair for damages caused to the property by the tenant and not to recover unpaid rental as that is a breach of the Tenancy agreement.

There is also no provision for collection of utility deposits and one of the biggest challenges of Landlords are the unpaid utility bills by tenants. As real estate practitioners who are and will play an important role in supporting and adhering to the RTA, it is important to refer ‘Agents’ as specified in ACT 242 in the main definition of the RTA. It is not specific who agents are under the definition which we feel needs to be emphasized.

In general, we agree that much effort has been placed to get the Act right, there remains many weaknesses in the provisions of the RTA which needs to be further discussed and developed to have a practical and acceptable provisions with stakeholders. Rushing this will only anger and frustrate the property investors who are contributing to the economy and will result in loss of investor confidence in already a challenging time.

While we support the introduction of the Residential Tenancies Act as a solution for the Landlord and Tenant problems that the nation faces, there needs to be careful consideration of balancing Landlord and Tenant concerns that should not side one over the other. Pre – screening of tenants must become a precursor when identifying tenants and we are happy to state that MIEA is working towards this endeavor. We are in the midst of collating feedback from our practitioners on the provisions of the RTA which will be sent to KPKT.

While we recognize that there is no perfect Act or a perfect time for the introduction of an Act, we urgently request the intervention of the Honorable Minister of Housing & Local Government, YAB Prime Minister to extend the time to study further the nitty gritty of how this will work in real life and in real time. MIEA being the biggest stakeholder
where our practitioners who are acting as agents for landlords are ready to give further input to this cause.

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