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Malaysia - Property Letting
Using a Letting Agent – Using Local Advertising
A letting or estate agent who has a lettings bureau is the best way to ensure that you are legally renting out your property. Always ensure you use a fully licensed estate agency before entering any agreement. You can rent your property directly and have a lawyer draw up a legal and binding rental agreement. There are many online platforms where you can advertise your property and local papers do have a classified section.
Renting out Your Property
Property owners who register with an agent are liable for the estate agency fees. These do not apply to the prospective tenant. This amount can be factored into the rent and rental prices will be area specific and you will receive advice on this from your letting agent.
Rental income is subject to 28 per cent tax and is payable with your income tax to the state. If you are resident in Malaysia this will be submitted with your income tax. If you are resident overseas, you will add this to your income tax return in your foreign country if your home country has a bi-lateral tax agreement with Malaysia. This is so you don’t pay tax in two countries.
Rental properties are rented out as unfurnished or furnished properties. Unfurnished properties will usually have kitchen appliances included. Beds, wardrobes and lounge furniture are provided by the tenant. Furnished properties will include all of the above and it is vital that this is stipulated on the agreement.
Utility bills are kept in the owner’s name and it is perfectly acceptable to ask for a 25 per cent deposit as a security for these. This can be added to the deposit. The utility bills can be factored into the rent. This includes, telephone, internet, water, gas and electricity.
If you are renting a property out which is in a building where there is a service charge for the maintenance of communal areas, this charge can also be factored into the monthly rent.
Deposits are usually one or two months’ rent in advance and is payable with the first month’s rent as is a security deposit and returnable at the end of the tenancy term. A full inventory is highly recommended to ensure you and your tenant are protected.
If you’re using an estate agent, a tenancy agreement will be drawn up for a period of one year or two in some cases. Short term agreements can be arranged and are quite common in major cities. It’s a matter of choice and what your personal requirements are.
Once all deposits have been funded then the agreement is drawn up. Both parties will sign the agreement and each will have a copy. Your lawyer or estate agent will draw up the agreement and there is no standard agreement but the majority detail the names of both parties, the tenancy term detailing the start and end of the term, responsibilities of the tenant and you, the landlord and the rent due each month.
In the agreement, it is recommended that you detail the property be left in the same condition it was at the beginning of the term. You can add an exit clause detailing the rent due if the tenant gives notice on the property prior to the tenancy term ending.
The agreement is subject to government stamp duty and this is paid by the tenant. This is a percentage of the annual rent.