Many will think that tenancy agreement is a simple document and it can be drafted easily, even by a layman. The question to be considered is whether that ‘standard’ tenancy agreement fully covered your interest being a landlord or tenant for the property?
In Malaysia, there is no specific legislation governing tenancy activities. Having said that, landlord and tenant are bound by the terms and conditions of the tenancy agreement. Hence, it is risky for one not to make a tenancy agreement as complete as possible. For example, if tenant terminates the tenancy agreement prior to the expiry of the term, can landlord forfeit the security deposits? Any other remedy available for landlord? This can be covered if the terms and conditions of your tenancy agreement are well drafted.
Less attention is given to renewal of tenancy agreement as well. People often grant a renewal of tenancy agreement orally. There is no rule stating that a tenancy agreement must be made in writing. However, it will be more complicated when resolving disputes as a verbal contract can be tough to prove in court.
In fact, it is not too costly for you to have a tenancy agreement to protect your interest. The costs incurred are as listed below.
LEGAL FEES
The standard legal fees chargeable for a tenancy agreement are as follows:-
For tenancy agreement
First RM 10,000 rental - 25% of the monthly rent
Next RM 90000 rental - 10% of the monthly rent
More than RM 100,000 - negotiable
For lease agreement
First RM 10,000 rental - 50% of the monthly rent
Next RM 90000 rental - 20% of the monthly rent
More than RM 100,000 - negotiable
STAMP DUTY
In order for the tenancy agreement to be admitted in evidence, it shall be stamped in accordance with the Stamp Act 1949.
Rental for every RM250, which is in excess of RM2,400 rental
Not Exceeding 1 year : RM1
Exceeding 1 but not exceeding 3 years : RM2
Exceeding 3 years : RM3
If the annual rental is below RM2,400, no stamp duty is incurred.
It is advisable for you to have a comprehensive tenancy agreement drafted and designed to fit your situation to avoid any dispute which may incur more cost and time consuming.