Before You Rent — Check This First
If you own the property (freeholder)
You are free to rent out rooms. No special permission is required under Malaysian law. However, check your:
- Strata by-laws — if you're in a condo, apartment, or gated community, the Joint Management Body (JMB) or Management Corporation (MC) may have rules on subletting, minimum lease terms, or tenant registration requirements.
- Bank mortgage terms — some home loan agreements require you to notify the bank if you're renting out the property. Check your loan agreement. Most banks allow it but want to know.
- House rules of your development — some developments require you to register tenants with the management office and provide copies of ICs.
If you're a tenant subletting a room
This is where many people get into trouble. In Malaysia, subletting without permission is a breach of your tenancy agreement and could get you evicted.
Check your own tenancy agreement first. Look for a clause that says "the Tenant shall not sublet or part with possession of the premises without the prior written consent of the Landlord." If this clause exists, you need written permission from your landlord before renting out any room.
- Get written consent from your landlord if subletting is restricted — email or WhatsApp confirmation counts.
- Review what's allowed — your landlord may agree to subletting but cap the number of tenants or prohibit short-term (Airbnb-style) use.
Drafting the Room Rental Agreement
Malaysia has no specific legislation regulating residential tenancies — the Contracts Act 1950 and general common law govern the relationship. A written agreement is not legally required, but it is strongly recommended. Without one, both parties are vulnerable in a dispute.
Simple agreement vs lawyer-drafted: For a room rental (not a whole unit), a simple self-drafted agreement is usually sufficient. Lawyer-drafted agreements cost RM300–RM700 and are worth it for high-value properties or long-term arrangements. For a RM500/month room rental, a clear self-drafted agreement is fine.
Key clauses to include
1. Parties
Full legal name, IC number, and address of both Landlord and Tenant. If the landlord is a company, include the company name and registration number.
2. Property and Room Description
Full address, unit number, and which specific room is being rented. Clarify what's included: parking, storage, use of common areas (kitchen, living room, bathrooms).
3. Rental Amount and Payment Terms
Monthly rent amount (in RM), due date (e.g., 1st of each month), accepted payment methods (bank transfer), and late payment penalty if any (e.g., RM5/day after 5-day grace period).
4. Tenancy Duration
Start and end date. Common options: month-to-month (rolling), 6 months, or 12 months. Specify whether the tenancy auto-renews or requires a new agreement.
5. Deposit
Security deposit amount (typically 1–2 months), utility deposit if any, when it will be returned (e.g., within 14 days of end of tenancy), and grounds for deduction (damage, unpaid rent, cleaning costs).
6. Utilities
How utilities (electricity, water, WiFi) are handled. Options: (a) included in rent, (b) split proportionally, (c) separate submetering. Be specific — vague utility arrangements cause most landlord-tenant disputes.
7. House Rules
No smoking indoors, no pets, no overnight guests (or with conditions), quiet hours, kitchen cleanliness standards, visitor policy. Make these explicit so there is no ambiguity.
8. Notice Period
How much notice either party must give to terminate the tenancy. Standard: 1 month for month-to-month; 2 months for 12-month agreements. Without this, either party can leave with no notice under common law.
9. Landlord's Right of Access
When you may enter the room (e.g., with 24 hours' notice for non-emergencies; immediately in an emergency). Do not omit this — entering a tenant's room without notice is technically a breach even if you own the property.
10. Repair and Maintenance Responsibilities
Landlord: structural repairs, major appliances (e.g., air-conditioning servicing). Tenant: day-to-day maintenance, replacing light bulbs, minor repairs below a threshold (e.g., RM50).
11. No Subletting
Specify that the tenant may not sublet the room or bring in additional occupants without your written consent.
12. Governing Law
This agreement is governed by the laws of Malaysia.
Have both parties sign two copies — each keeps one. For additional protection, have a witness sign. The agreement should be dated on the day it is signed.
Stamp Duty at LHDN
A tenancy agreement must be stamped by LHDN (Lembaga Hasil Dalam Negeri) to be admissible as evidence in court. An unstamped agreement is not void — it can still be enforced — but it cannot be used as evidence without paying a penalty to stamp it after the fact.
Deadline: Stamp the agreement within 30 days of signing. After 30 days, a penalty applies. The later you stamp it, the higher the penalty.
How to calculate stamp duty
Based on the Stamp Act 1949, the rate depends on the tenancy duration:
| Tenancy Duration | Stamp Duty Rate |
|---|
| 1 year or less | RM1 for every RM250 of annual rent |
| More than 1 year, up to 3 years | RM2 for every RM250 of annual rent |
| More than 3 years | RM4 for every RM250 of annual rent |
Example: Monthly rent RM700/month, 12-month tenancy
- Annual rent = RM700 × 12 = RM8,400
- Stamp duty = (RM8,400 ÷ 250) × RM1 = RM33.60 → rounded to RM34
Who pays? By convention, the tenant pays for stamping the tenancy agreement (the original copy). If there is a duplicate copy, stamp duty on the duplicate is a fixed RM10. In practice, many landlords and tenants split the cost or negotiate it.
How to stamp the agreement
-
Prepare two signed copies of the agreement
Both landlord and tenant sign. You can use the same template for both copies.
-
Visit any LHDN branch or use MyStamp Online
Bring both copies, both parties' IC copies, and payment. MyStamp (stamps.hasil.gov.my) allows online stamping — upload the agreement, calculate duty, pay online, and download the stamp certificate. No need to visit a branch.
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Pay stamp duty
Cash at counter, or online via FPX/credit card through MyStamp.
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Receive stamped agreement
LHDN stamps the original. If you used MyStamp, you receive a digital stamp certificate (equally valid). Attach it to your agreement.
Deposit Structure
Malaysia has no law setting a maximum deposit for residential tenancies. The following is convention for room rentals:
| Deposit Type | Typical Amount | Purpose |
|---|
| Security deposit | 1–2 months' rent | Covers unpaid rent, damage beyond fair wear & tear |
| Utility deposit | 0.5 months' rent (or RM200–RM500) | Covers outstanding utility bills at end of tenancy |
| Access/key deposit | RM50–RM200 | Refunded when access cards/keys are returned |
Best practice: Document the room's condition with photos and video (timestamped) on the day the tenant moves in. Do this again on the day they move out. This is your evidence if you need to make deductions from the deposit.
Returning the deposit
Specify a return timeline in your agreement — 14 days is standard. If deductions are made, provide an itemised breakdown in writing. There is no law mandating a specific timeline in Malaysia, so without a contractual term, disputes can drag on.
If the tenant leaves without notice: You may deduct the equivalent notice period from the deposit. Document this clearly in your agreement.
Income Tax on Rental Income
Rental income earned from property in Malaysia is taxable. It is assessed under Section 4(d) of the Income Tax Act 1967 as "income from rents." You must declare it in your annual tax return.
What to declare
- Gross rental income — total rent received during the year, including any advance rent.
- Allowable deductions — you can deduct expenses incurred to earn the rental income (see below).
- Net rental income = Gross income − Deductions — this amount is added to your other income and taxed at your personal income tax rate.
Allowable deductions for room rental
When renting out only a room (not the whole property), you can only claim a proportional share of expenses. If you rent out 1 of 3 bedrooms, you can typically deduct one-third of shared expenses.
| Expense | Deductible? | Notes |
|---|
| Quit rent (cukai tanah) | Yes (proportional) | Based on rooms rented ÷ total rooms |
| Assessment tax (cukai pintu) | Yes (proportional) | Proportional to rental portion |
| Mortgage interest (not principal) | Yes (proportional) | Interest portion only |
| Maintenance & repairs | Yes (proportional) | Not improvements — repairs only |
| Insurance premiums | Yes (proportional) | Fire, landlord's insurance |
| Management fees / sinking fund | Yes (proportional) | Strata property management fees |
| Furniture / renovation | No | Capital expenditure — not deductible |
| Loan principal repayment | No | Only interest is deductible |
Where to declare
- Form BE (individual without business income) — declare rental income in Part F "Other Income / Statutory Income from Rents."
- Form B (individual with business income) — declare in the same rent section.
- Filing deadline: 30 April each year for non-business individuals (Form BE).
Keep your records: Keep rental agreement, bank transfer records, and receipts for deductible expenses for 7 years. LHDN can audit up to 7 years back.
Penalty for non-declaration: Failure to declare rental income can result in a fine of RM1,000–RM20,000 or imprisonment. Most LHDN audits are triggered by large undeclared amounts — but the risk is real and growing as LHDN cross-references bank statements.
Frequently Asked Questions
Do I need a tenancy agreement to rent out a room?
Not legally required, but strongly recommended. Without a written agreement, both parties rely on verbal agreements that are almost impossible to enforce in a dispute. Even a one-page self-drafted agreement is far better than nothing.
Can I rent out a room in my condo without approval?
If you are the owner, you generally can — but check your building's by-laws. Some condos require minimum 3-month tenancy, tenant registration with the management office, or prohibit renting to certain occupant types. The by-laws are binding on all owners. Violating them can result in fines from the MC/JMB.
What happens if I don't declare rental income?
You are committing an offence under the Income Tax Act 1967. LHDN can audit your bank statements and issue a back-assessment (with penalties and interest) for up to 7 years. The penalty for willful non-declaration ranges from RM1,000 to RM20,000. Practically speaking, LHDN has been cross-referencing Airbnb and bank transfer data increasingly — the risk of being caught is growing.
Can I charge whatever deposit I want?
Yes — Malaysia has no statutory cap on residential deposits. The market convention for room rentals is 1–2 months security + 0.5 months utility. You could ask for more, but tenants will simply go elsewhere. For a 1-year room rental, asking for 3–4 months deposit upfront is unusual and will deter good tenants.
My tenant stopped paying rent and won't leave — what do I do?
Follow the legal eviction process: (1) formal demand letter, (2) notice to quit per your agreement, (3) file for possession at the Magistrate's Court. Do NOT change the locks or remove their belongings yourself — this is illegal. Consult a lawyer once you reach the court stage. The process typically takes 3–6 months to resolve through the courts if the tenant contests it.
Who pays for repairs in a rented room?
Landlord: structural repairs, major appliances, anything that makes the property uninhabitable (e.g., broken roof, no running water). Tenant: day-to-day upkeep, replacing consumables, minor items (light bulbs, etc.) and any damage they caused. What counts as "fair wear and tear" (landlord's responsibility) vs damage (tenant's) should be specified in the agreement to avoid disputes.
Is Airbnb income treated the same as rental income?
LHDN treats short-term Airbnb income differently from long-term rentals. Short-term rental income may be classified as business income (Section 4(a)) rather than rental income (Section 4(d)), depending on the level of activity and services provided. This has tax implications — consult a tax professional if you run Airbnb actively. Additionally, most strata properties in Malaysia now explicitly prohibit Airbnb use in their by-laws.
Can I increase rent mid-tenancy?
No — you cannot increase rent during a fixed-term tenancy without the tenant's written consent. The rent is fixed for the duration of the agreement. On renewal, you can negotiate a new rate. If you have a month-to-month tenancy, you can increase rent with proper notice (typically 1–2 months), as specified in the agreement.
Do I need to register as a landlord anywhere?
There is no national landlord registration system in Malaysia for residential property. However: (1) LHDN requires you to declare rental income, (2) some local authorities require short-term rental operators to register, (3) your building's management may require tenant registration. No formal "landlord licence" is required for long-term residential room rental.