Tenancy agreement? Stamp duty? Termination? All these big words! What do they mean? We know that reviewing and signing a tenancy agreement for the first time can be DIFFICULT so we prepared a SIMPLE guide just for you

WHAT IS A TENANCY AGREEMENT?

Tenancy agreement is a contract that contains key terms of your tenancy throughout the tenancy period. It is to be signed between the landlord and tenant. There will be 2 copies of the agreement - one for the landlord and one for the tenant. The documents have to be stamped for it to be enforceable in the courts. (More on this later!)

WHY IS THERE A TENANCY AGREEMENT?

The tenancy agreement is super important since the landlord is entrusting his valuable property to you, and you are offering a fair sum of money to the landlord. It is used to set the rights and responsibilities between the landlord and tenant, and protect the interest of both parties in case there is a dispute.

The agreement is the most reliable point of reference for determining responsibilities of the parties involved. 

WHEN SHOULD I SIGN THE AGREEMENT?

The tenancy agreement is to be signed when you (tenant) and your soon-to-be landlord have agreed on the specific terms. This could be weeks in advance or up to the day of move-in. All terms and conditions included in the agreement are immediately active after you and your landlord have signed it. 

HOW MUCH DOES IT COST?

In Malaysia, the tenancy agreement can cost between RM300-600. Most of the time, the fee is charged by the agency and used to cover the cost of having a professional law firm to draft and review the agreement. 

When you rent on Instahome, our digital tenancy agreement only costs RM299 and we have made sure that our lawyers have drafted the terms clearly so that anyone will be able to understand it.

WHAT IS STAMP DUTY?

The documents have to be stamped at Lembaga Hasil Dalam Negara (LHDN) for it to be enforceable in the courts. The stamp duty rate is different based on the duration of the tenancy:

  • 1 Year - RM1
  • 1-3 Years - RM2

Now, time for the formula:

Tenancy Agreement Stamp Duty Formula Calculation

(Insta Tip: RM2,400 is deducted because the first RM2,400 of rental income is exempted for stamp duty.)

To make it easy for you, we used our tenancy agreement stamp duty calculator to do the math for you!

Tenancy Agreement Stamp Duty Calculator

Now that we have covered the basics, let’s dive in to learn what you should see on your tenancy agreement!

The Key Things to Review in a Tenancy Agreement

1.The Unit and its Address

The most important thing is the exact address of the property you are renting. Make sure you are not renting someone else’s home…

2.Date of Commencement and Expiry

Keywords to look for: Date of Commencement, Date of Expiry

The exact date when you can move-in and start staying in the unit, and also, the date which you will have to leave on. 

3.Deposits and Monthly Rental Fee

There are two types of payments you will have to make:

  • An initial payment including advance rental, security deposit and utility deposit, paid one time only. The security deposit and utility deposit is refundable.
  • Monthly rent that is to be paid every month until the end of the tenancy.

What is initial payment?

Advance rental: This is calculated on a prorated basis, from the day of move in to the end of your first month rent. For example, if you move in on the 15th of January, the advance rental shall be on 15th to 31st of January. This is not refundable as this constitutes your rent. For example, if the monthly rental fee is RM2000, the day rental fee would be RM66.67 (RM2000/30 days). If you’re moving in on the 21st of April, you would have to pay RM666.67 (RM66.67 x 10 days) of advance rental. 

Security deposit: Security deposit is a refundable deposit that is set by your landlord. It can be 1 month/2 months/3 months worth of rent. This deposit will be returned fully to you at the end of the tenancy agreement by the landlord. You will be able to receive a full refund if there are no damages done to the unit and there are no sums owing to the landlord or Instahome.

Utility deposit: Utility deposit is a refundable deposit, and it is commonly 0.5-1 month worth of rent. However if you default on the utility bill payments, the landlord has the right to deduct the cost from the utility bill deposit.

4.Early Termination

Keywords to look for: Break clause, Early Termination, Expat clause

What if you need to move out earlier than expected? What if you get a new job and relocate?

Usually, this would mean that you have to give a 2 month notice to the landlord, and lose your security deposit as a penalty for not fulfilling the tenancy agreement.

5.Inventory list

A list of furniture, fixtures, fittings or assets provided to you when you move-in. You need to return all these items in the same condition as before. 

6.Maintenance

The tenancy agreement should state clearly the responsibilities of the tenants and landlords. Generally, fair wear and tear is borne by you and structural defects are borne by your landlord. There are also tenancy agreements in Malaysia which do not detail out maintenance responsibilities, but classify responsibility according to a minimum damage amount instead. For example, “any damage repair that cost RM100 and below will be borne by the tenant.”

At Instahome, we worked with our lawyer to make sure responsibilities are stated as clearly as possible, so no one needs to worry about quarrelling over who to pay for your leaking aircond! 

Now you know the key things to be aware of before you sign a tenancy agreement! Want to know what’s unique about Instahome’s tenancy agreement? We make sure our tenancy agreement is written so that everyone can understand easily. Most importantly, it is 100% digital, so you can now review and sign in just two clicks on your mobile phone!