A Tenancy Agreement ought to have the property details, rental sum and deposits, tenancy period and renewal option, landlord’s responsibilities, tenant’s obligations, house rules, restrictions and constraints, as well as how to solve disagreement.

Recently, we heard from a few tenants talking about the bad experience of renting a room in the past. We feel there is a need to share the importance of tenancy agreement to landlords and renters.

There are occurrences where verbal understandings are a great deal more simpler than making an agreement; and there are house owners and property investors who lease their premises dependent on verbal agreements. Usually they seal the deal with a handshake instead of a complexity of contract and added cost of consulting a legal expert. It is convenient but strongly inadvisable due to resolving conflict that will get complicated.

This is a legal covenant between a landlord and tenant that outlines the duties and obligations of each party during the tenancy period.

It also provides a detailed description of the property being rented out, along with its furniture, fixture and other amenities.

To make the document as comprehensive as possible, landlords are advised to engage an attorney to draft a Tenancy Agreement, while potential tenants can consult their own lawyer to scrutinise the contract and ask for revisions before mutually agreeing to a final version.

However, hiring an attorney to create a tenancy contract can be costly, so many Malaysian landlords opt to draft their own tenancy agreement and currently there are no federal rules that regulate the scope of it. This means either the landlord or tenant can add as many terms and conditions as possible, making the contract full advantageous to either party. Can check out this article from New Straits Times as well.

A Tenancy Agreement should include the following:

1. Property Details: 

Demonstrate what sort of house is being rented and where it is found. In non-landed properties like apartment suites, determine the unit number. Likewise, make it understood in case you’re leasing its whole level or only a part like a room. It’s prudent to show the condition of the property – will it include such as a fridge, air conditioning and cooking appliances? In the event that the last is valid, the landowner needs to remember a stock for the understanding, and the occupant needs to affirm and reconfirm the presence and state of these things before marking.

2. Tenancy Period and Renewal Option:

Indicate the date when the arrangement is marked just as the beginning date of the rental time frame and when it will it end. We may add the terms and conditions of the tenant right to renew or extend the tenancy.

3. Landlord’s Responsibilities:

These include payment of annual property tax and maintenance fee (unless rental is cheaper than market price and both parties agree) ; as well as make sure that the furniture and appliances provided are in good working condition.

4. Tenant’s Responsibilities:

One of the main roles of a tenant are paying the rent and utilities on time. Besides, other responsibilities are maintaining the appliances, furniture and interiors; obeying with house rules and informing the landlord of problems and structural defects.

5. House Rules and Prohibitions:

Mention what the tenant is not allowed to do. For example, a tenant is not allowed to sublet the premises or have pets in the premises.

6. How to Resolve Disputes:

This part contains the dispute resolution process, very important for prevention of some scenarios that happen usually. For example: in the event of late payment of the rental what penalty will be assigned on.

Can look this up as well for more solutions of common problems house owners are facing. 

7. Rental Amount and Deposits:

State the exact monthly rent the tenant needs to pay, along with the payment’s due date and how it should be paid (e.g. cash, bank deposit, or wire transfer). Also indicate the amount for the Earnest Deposit, Security Deposit and Utility Deposit.

Other than the monthly rental payment, landlords usually require tenants to make a first payment which breaks down to earnest deposit (booking fee), security deposit and utility deposit.

1. Earnest Deposit (or more familiar with booking fee)

This is the booking paid to reserve the rental unit so that the property owner won’t rent it to other potential tenants for the next seven days or the period that agrees from both parties. This is typically equivalent to one month’s rent. This is usually given to the landlord along with the tenants “letter of offer”, a one-page document that expresses the intention to rent a specified property but Maxihomes practice a much more simple way.

At the point when the tenure formally begins, the Earnest Deposit is generally used as rental for the primary month of occupancy.

2. Security Deposit

Consider this as a bond that will be deferred for the proprietor if the tenant ruptures the tenure understanding, such as abandoning the premises sooner than concurred. Be that as it may, if the occupant fulfills the agreement and there are no issues all through the tenure, the whole sum will be refunded when the tenure finishes.

This is typically equivalent to two months’ worth of rent, and if the tenant runs away from the deal, this can be utilized as charges for cleaning and repairing damages, as well as replacing fittings, appliances and keys.

3. Utility Deposit

The main purpose is to pay any outstanding utility bills that have not been paid of the tenancy period, like water, electricity and sewerage. This is typically 50% of the rent for one month.

Important: Please note that the Security Deposit and Utility Deposit are given to the proprietor upon inking of the Tenancy Agreement. Make sure it is stated in the agreement as well.

Any questions can email us here or visit our website at https://maxihomes.com.my/. Our team is ready to assist you and solve your questions.