Items that you should look out for when signing your tenancy agreement

Items that you should look out for when signing your tenancy agreement

Over the years, Malaysia’s property prices have been heading towards uptrend and due to that many have chosen to rent instead of buying a place. When we talk about renting, it is not just about residential, it also applies to new business startups as renting is easier for their budgets. Even rental has it’s own agreement, it is known as Tenancy Agreement. So, here’s how it works, once the property owner and the tenant have agreed on the property’s terms and conditions, they will sign Tenancy Agreement in order to protect both parties. With the rise of rental transactions every day, the chances of tenancy disputes has also increased. This explains why the Tenancy Agreement is crucial when sealing the rental deal.

In Malaysia, there is no law put into place to govern the legal framework of tenancy currently. Thus, the tenancy agreement is the instrument that binds the relationship between landlord and tenant legally. In the tenancy agreement, there are terms and clauses can be easily negotiated and modified to suit the individual requirements for both parties. Towards the end of year 2017, there was a proposal to formulate the Residential Rent Act in order to protect landlords and tenants. However, this proposed Act is needed to regulate the relationships between homeowners and tenants in order to protect their respective interest and rights. 

While putting our hopes and waiting for Residential Rent Act comes into effect, the tenancy agreement is the only document that protects the rights of the landlords and tenants. Fret not, we still have Contract Act 1950 where the tenancy agreement can rely on. Assuming both parties have entered into the agreement at their own free will on mutually agreed terms with referencing Contract Act 1950. However, due to legal jargon terms that is widely used in during the drafting of a tenancy agreement, many would not be able to fully understand what are the terms and conditions’ meaning. What’s even worse is that some may go ahead and sign the agreement without fully understanding what they have signed up for. To make agreement understanding easier for all, we are about to share the usual major terms to discuss, negotiate, confirm and verify before signing the agreement. 

1. The details of landlord and tenant

Well, it is the tenant’s responsibility to check and verify that the legal and rightful owner of the property by sighting either a duly signed and stamped Sales and Purchase Agreement in which the landlord had fully acquired the property or a copy of the individual/strata title. This is to ensure that the landlord is the rightful registered owner of the property that you are about to rent. There will be cases that the transaction will be aborted during the process of transacting and it might jeopardize your rental transaction causing all parties (including agent) to have wasted their time and effort in sealing the deal. Thus, it is better to be safe than sorry by confirming and checking all the details of both the landlord and tenant such as full name and NRIC number. 

2. Property’s address and details

In the tenancy agreement, make sure the address of the property is accurate and specify the exact area that is being rented, if it’s applicable. For instance, floor number, room types, number of rooms and etc. 

3. Period of tenancy and renew option

Your duration of tenancy should be clearly stated whether it is one year or two years. Besides, tenancy agreements usually include and option to renew clause whereby the tenant wish to renew the contract, the tenant may do so by giving a written notice in any form to the landlord prior to the end of the tenancy period.

4. Deposit and rental amount, payment mode and payment due

There are two deposits which are security deposit and utility deposit. Both deposits shall be paid by the tenant and to be kept by the landlord and shall be refunded to the tenant free of interest at the end of the tenancy. If the tenant breaches the contract or cause damage to the property, their deposits can be forfeited. Meanwhile for rental amount, both parties must agree on the monthly rental amount, method of payment and latest date payment. As for the utility bills, if the tenant is required to pay, it should be mentioned in the agreement too.

5. Tenancy’s purpose

It is also required to state the premise’s usage. For example, commercial, residential, warehouse or etc. As such, the premise should be strictly be used for the purpose that is stated and nothing else.

6. Termination

The exit clause is also important to be included in the agreement. Parties can also include the methods to terminate the tenancy agreement prior to the end of the tenancy period. 

7. Additional requests

If the leased out property includes electrical appliances like air-conditioning unit, water heater, microwave and etc, it should be clearly stated the electrical appliances’ quantity and who will be responsible for the maintenance of the appliances.