Renting in Malaysia? Here are 5 common legal problems you can easily avoidalmost 5 years ago Denise C.
Imagine this scenario. You are a young adult, ready to start your adult-ing life. You excitedly research some homes to rent and you head off to view the properties. After much searching, you finally find your dream home. It is the perfect living space for you to spread your wings as a young, cool adult without emptying out your wallet. Then it is time to sign the tenancy agreement with the landlord. You then fumble and freeze because you are suddenly gripped with a powerful feeling of uncertainty like, “Holy cow. Is this real?”
You hesitate at signing because you don’t understand what the contract is talking about and you know from reading our articles that the moment you sign a contract, you would be bound by it regardless of whether you understand it or not.
So this is where we swoop in again to lend you a helping hand and tell you the 5 things you need to look out for before committing to whole year of renting that place you love through signing a rental (or tenancy) agreement (plus, you can impress the parental units with your adult-ing abilities).
1. Be that overzealous person and inspect everything
Maybe some of you are a little shy to inspect all the stuff in the house especially if the agent and the landlord are fluttering over your shoulders, scrutinising your every move. Or maybe you are just eager to sign the document and move into the house or maybe you just think that the friendly agent and landlord wouldn’t dupe you...right? But here is the thing – regardless of whether you are shy, eager, or trusting, it never hurts to inspect the house (and furnishings if it comes furnished) before you sign the contract.
There are two main reasons for this. The first is that if, after signing the contract, you realised that some parts (or some furniture) of the house are actually damaged. If you ring up the landlord to repair them, he might actually be able to refuse your request if your contract stipulates that you have conducted a check on the house and found everything to be in a good condition. You might argue that the damage was there before you moved in but since contractual terms are stronger than mere words, you probably wouldn’t be able to rely on that assertion.
The contract could also state that you accept the house on an “as-is” basis. An “as-is” basis means that you agree to take the house in its current condition. So it means that if you didn’t realise that the house has a leaky sink because you failed to check out the property, you would not then be able to complain that your landlord gave you a faulty home.
The second reason for checking everything before you sign the contract is to ensure that you get the landlord to fix any defects with the property before you move in, saving you on some hassle of dealing with post-moving in repairs. Aside from that, some landlords have actually been known to deduct a certain amount from your first month’s rent in exchange of you taking care of the repairs yourself.
For example, if the leaky sink needs RM300 to fix and you spotted this problem before signing the contract, you might be able to negotiate with the landlord to shave off RM300 from your first month’s rent if you fix the leaky sink on your own. Of course, negotiating in this manner after the contract has been signed is not entirely impossible but it would probably be best to do it before a legal contract has been signed.
On a side note, if your house comes with “white goods” (which are basically things like a fridge, washing machine, dryer, etc.), you should make sure to test out the appliances before signing the contract and making sure that they are listed down in the inventory which is usually attached to the tenancy agreement. It is also advisable to get your landlord’s confirmation in writing that all the white goods are in a good and working condition.
While you are getting his confirmation about the working condition of things in the house, you should also ask the landlord if he would give you some time (usually 2 weeks to a month) to discover any defects in the house and/or furnitures. This grace period works off the basis that it would be rather impossible for you to find out whether the washing machine shrinks your clothes unless you have been using it for awhile. So, this grace period would allow you to test everything in the house well and still have the peace of mind that should something go wrong, your landlord would be able to help you out.
This leads us to our next issue of…
2. Covenants are your best friends
We don’t mean that making a blood pact is the best thing you could ever do with your landlord (although if both parties are agreeable, why not?). In law, the term “covenant” means a promise made in a contract. Since it is made in a contract, it has more oomph than your normal promises. By oomph, we mean that you can actually be sued for breaking a covenant.
The reason why covenants were brought up is because you see them in every tenancy contract. Usually along the lines of, “The Tenant hereby covenants that...” followed by a long list of words that you probably skimmed through because you think that the contract is standard. However, this is where you might want to actually sit down and read what kind of landlord and tenant covenants are found in your contract because it basically tells you the duties and responsibilities that you and your landlord respectively have.
Typically, your responsibilities, as a tenant, would include things like:
- To pay the rent and utilities’ bill at the agreed time.
- To keep the house and everything in it (this can include things like lights and furniture) in a good condition (with the exception of normal wear and tear).
- To only use the house for the purposes that you rent it and not for an illegal purpose (so, don’t turn your bachelor pad into a gambling den).
- To not be a nuisance or cause annoyance to the neighbours (basically, don’t be that neighbour).
- To not carry out any renovations without the landlord’s permission.
For the landlord, their responsibilities would usually include things like:
- Maintaining a fire insurance for the property.
- Paying all the necessary charges related to the property such as the quit rent, assessment, maintenance fees etc.
- Allowing their tenant to enjoy quiet enjoyment of the property if the tenant observes his part of the agreement. This means that the landlord cannot just his set of keys to enter your house without permission. He also doesn’t have the right to demand you to open the house to him without reason.
- Maintaining the “major” things in the house such as the piping, electrical wirings and any other structural repairs.
The covenants that are provided above are just examples which are non-exhaustive and like any other contract, are always subject to negotiations. This leads us to our next point of…
3. Who pays for repairs if something breaks down?
You know that you have to pay the rent and the landlord pays all the government taxes but what about when the aircond he provides you with breaks down? Or what if the ceiling suddenly develops a leak? If you live in an apartment or condo, we have covered the issue of leaking ceilings in another article but just to give you a quick recap, to find out who is responsible to repair a leak in the ceiling, you would first have to notify the landlord and the management office of the leak.
The management office would then have to conduct investigations to find out what caused the leak in the first place. For cases involving leaking ceilings, the law presumes that the unit above caused the leak and would start their investigations there. If the unit above yours did cause the leak, the owner of the said unit would have to bear the cost of repairs for you.
However, the situation involving spoilt furniture or a broken down aircond is not as straightforward as the law does not touch on it. Basically, in order to find out who is responsible to make repairs, your contract needs to be looked at.
Given that all contracts are negotiable, there is no standard answer as to how who should be responsible for repairing the fixings in the house that you have rented. The only thing to do would be to scrutinise the contract before you sign it and understand what you are signing. If there is no indication of who should pay for repairs, be sure to discuss it with your agent and landlord and have such a term written down in order to avoid any confusion in the future.
Aside from figuring out who pays for what repairs, another important question that most renters have is why do they have to pay so many different charges.
4. Deposits and bookings – why and when do you pay them?
If you have ever gotten close to renting a home, you would have probably heard the agent throw out words like, “First time payment is RM4,500” and your eyes bulge in horror as you squeak out, “But...the rental is only RM1,000?”
This is where you need to know about a lil thing called deposits and booking fees. We will break down what each payment means and when (or if) you can get the payments back.
Some of you might have heard the terms, “earnest deposit” and “booking fee” and think that they are two different payments. Actually, we did some digging around because we were a bit confused too. It turns out that both these terms are used for the same purposes and are essentially interchangeable terms.
The earnest deposit/booking fee is generally used to show your interest in renting the place. It usually amounts to half a month’s rent and the amount you paid under this category would be deducted from your first month’s rental.
It is widely accepted that once you have paid this deposit, the landlord is not allowed to show the property to any other interested parties or rent them to another person (unless you back out of the deal). It is also an important point to note that the deposit is payable to the agent, who would hold it in trust for the landlord until the contract has been signed and stamped. If you are worried about whether the agent and the housing agency that you are dealing with is bona fide, you can always head over to The Board of Valuers, Appraisers and Estate Agents Malaysia’s website and conduct a search on your agent’s registration number.
If you are wondering whether you should pay this deposit directly to the landlord, you can but it is usually not advised to do so. Besides, having a neutral third party to hold on to your money until the contract has been signed and exchanged would bring you greater peace of mind than leaving it with the landlord (we are not saying that all landlords are crooks but it never hurts to be cautious).
Aside from that, some of you may have encountered a situation where you were asked to pay the earnest deposit to the agent before he hands you the contract. But are you actually obliged to hand over money before you have never even seen the terms of the contract?
As a rule of thumb, earnest deposits are paid after negotiations have been completed. However, this negotiations are typically made orally and would be later included in the tenancy agreement. It is possible that earnest deposits are requested before you are presented with the contract in order to make sure that you do not change your mind after the contract has been drafted and to safeguard the landlord’s interests as well.
So while it is not technically illegal to ask you to pay the deposit before you are allowed to view the contract, be very careful about the terms under which you are paying the deposit. Be sure to ask questions such as what happens if the contract does not reflect what you agreed on, how can you get your deposit back, and under what scenarios would you lose your earnest deposit under. Also, be sure to request for a receipt which answers all the questions we mentioned and check that the receipt actually refers to a payment received for a security deposit.
It is also advisable to jot down all your negotiations and understandings that you and your landlord have agreed to so that there are no disputes when you finally get the written contract.
The security deposit usually amounts to two months’ rental and it is payable to the landlord at the same time you sign the tenancy agreement. The contract would tell you what the landlord is allowed to do with the deposit and when he is allowed to forfeit the security deposit. For example, your contract may state that the landlord is allowed to forfeit the deposit if you returned the house to him in a broken down condition (beyond normal wear and tear) and he has to use the deposit to repair his home.
Aside from using it for repairs, the contract may also contain terms that allow the landlord to forfeit the deposit if you decide to end your tenancy earlier than agreed upon. Knowing whether your landlord can forfeit your security deposit is a common question that many Malaysians have. However, as we have continuously reiterated throughout the article, a contract is always negotiable. Therefore, there is no one answer fit all for situations like these. It all boils down to reading the contract properly before you sign it and engaging in negotiations with your landlord.
Utilities deposit is used to cover things like the water and electricity bill. It is also payable to the landlord when you sign the contract and it can be used by the landlord to pay off any leftover balance from the bills if you failed to clear them before you move out.
A utilities deposit is usually one of the lowest deposit you would pay for. If you return the house to the landlord with all your bills paid up, then you are entitled to get this deposit returned to you.
This deposit only applies to houses that require an access card to enter. This would be gated and guarded houses, apartments, or condominiums. It is to cover the costs for a replacement card if you ever leave the property without returning the card to the owner.
5. Can my landlord “simply” increase my rent?
You may have been caught in that situation where you have been living happily in your rented home for 6 months and suddenly your landlord decides to increase the rent by 50%. You roll over in horror because an increase in 50% would mean that you would have to eat Maggi noodles for half a month and bread for the other half. The question then becomes, can they actually do this?
If your contract provides for it, then the answer is yes. This is where reading the contract is important again (yes, this writer is very aware that this article is taking on a nagging voice but this is important, guys). A properly worded term to allow for rent increase should tell you a few things:
- When the landlord is allowed to increase the rent (is it during the agreed term or only if you want to renew the contract)
- How much can the landlord increase the rent by (this can come in the form of caps such as a 15% cap from your current amount)
If the contract does not provide for a rental increase term, then make sure you put one in before signing the agreement.
Rent increases can also happen when you choose to renew your tenancy for another term (this can be referred to as a 1+1 contract i.e one year of tenancy which can be renewed for another year). Such clauses are known as options to renew and have covered this in another article alongside other clauses that you need to know about in a tenancy agreement.
The final message is always read before you sign
We know that we have reiterated this point over and over again but we cannot stress on how important this is. Contracts are always negotiable and the burden lies on you to make sure that you get the best deal and to always know what you are getting into.
A parting note to leave you with is whether you need a lawyer for tenancy agreements. The agents usually provide you with a contract themselves so it is not strictly necessary to look for a lawyer to vet through your agreement but with that being said, you need to make sure that the contract is drafted properly as there have been cases brought to court where certain clauses such as an option to renew clause was not enforceable because it was not drafted properly (we covered this in the article on important clauses that we linked above but if you are lazy to scroll up, we got you covered. Just click here).
A pro-tip for making sure that the terms wouldn’t run into problems in court is to make sure that they are not left vague. For example, if you are looking at a term for rental increase, don’t end with, “...at a rate to be mutually agreed...” as that is void for uncertainty under s. 30 Contracts Act 1950 and through the UK case of King’s Motors (Oxford) Ltd. v Lax:
“Agreements, the meaning of which is not certain, or capable of being made certain, are void.”
Now that you are armed with all the knowledge above, go ye forth into the world and be a savvy renter.