Tenancy Agreements Malaysia, part 2

https://www.nst.com.my/property/2018/06/379903/drafting-and-stamping-tenancy-agreement

By NST PROPERTY – June 14, 2018 @ 12:53pm

THIS is the second part of a four-part series article to be used as a simple guide to tenancy agreements for landlords who wish to rent.

It covers tenancy agreements in Malaysia, what they are, why you need it as a landlord, the tenancy process, deposit amounts, and sample tenancy agreement as a reference.

SIGNING OF TENANCY AGREEMENT

When you and your tenant have come to an agreement on the tenancy agreement, both parties need to sign it.

However, it is not a valid legal document (ie. admissible in court) until it is stamped by Lembaga Hasil Dalam Negeri Malaysia (LHDN) or Inland Revenue Board of Malaysia.

You can bring the agreement to your nearest LHDN office to get it stamped.

There will be a charge for this, known as the stamp duty.

During your visit to the LHDN office, you will also be asked to submit two application forms, namely PDS 1 and PDS 49(A). You can view these forms at the LHDN website.

Structure of a tenancy agreement (and downloadable template) Tenancy agreements, like any other legal document, are carefully worded by lawyers to make sure that there is minimal room for misinterpretation.

Unfortunately, that also makes it full of legal jargon that can be difficult to understand.

Here we provide a simple breakdown of the common clauses found in a tenancy agreement.

We have also provided a sample tenancy agreement containing all the clauses mentioned below. You can download and amend it as needed. Download sample tenancy agreement.

DEFINING THE AGREEMENT

The next part of the document establishes some definitions, including the “landlord”, “tenant”, and “demised premises”.

To make the paperwork easier, the first part of the agreement does not contain any actual details of the property, contact details, rental amounts, etc. It simply refers to a separate section known as the “Schedule” and the “Inventory”. All the actual information is entered in the Schedule.

Defining the duration of the tenancy, rental amount and deposits

The next three clauses specify the tenancy start and end date, rental amounts as well as the security deposit and utility deposit. Again, all the actual deposit amounts are included in the “Schedule” section later on. Example:

Now this agreement witnesseth as follows:

1. Agreement to let

The landlord hereby lets and the tenant hereby takes a tenancy of the demised premises together with the use and enjoyment of the common facilities used in conjunction with the demised premises to be held by the tenant for the term of tenancy specified in Section5of the schedule hereto (hereinafter referred to as the “Term of Tenancy”) from the date specified in Section 6.1 of the schedule hereto (hereinafter referred to as the “Commencement Date”) to the date specified in Section 6 of the Schedule hereto (hereinafter referred to as the “Expiry Date”) at an agreed monthly rental specified Section 7 of the schedule hereto (hereinafter referred to as the “Reserved Rent”) payable in advance by the date of each and subsequent calendar month specified in Section 8 of the schedule hereto and subject to the terms and conditions hereinafter contained.

2. Rental

The tenant shall upon execution of this agreement pay the landlord the sum specified in Section 9 of the Schedule hereto (receipt whereof the landlord hereby acknowledges) (hereinafter referred to as the “Deposit”) as security for the due observance and performance by the tenant of all his duties and obligations hereunder and on its part to be performed and fulfilled. The deposit shall be maintained at this figure during the term of tenancy and shall not without the previous written consent of the landlord be deemed to be or treated as payment of rent and the same shall be returned to the tenant free of interest within a period of not more than thirty (30) days from the date of expiry or sooner determination of the term hereby created less any sum as may then be due to the landlord for damage caused to the demised premises by the tenant (damage due to normal wear and tear excepted).

3. Deposit

The tenant shall also upon the execution of this agreement pay the landlord the sum specified in Section 10 of the schedule hereto (hereinafter referred to as the “Utilities Deposit”) as deposit towards water, electricity, gas and sewerage charges. The utilities deposit less any sums as may then be payable by the tenant (if any) towards such utilities shall be refunded free of interest to the tenant on the expiry or sooner determination of the term hereby created.

This article first appeared on Recommend.my. It is written for informational purposes only and does not constitute legal advice from Recommend.my. You should always look for professional help before entering into a legally binding agreement.

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One Response to Tenancy Agreements Malaysia, part 2

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