Navigating the realm of property rentals, whether for personal accommodation or business operations, has become increasingly prevalent in modern society, with numerous individuals opting for rental arrangements instead of immediate property ownership.
While the process of renting might appear more straightforward compared to buying real estate, it is essential to remain attentive to various crucial factors. This comprehensive manual on renting properties, encompassing both residential and commercial domains, aims to address:
A. Deposits And Recurring Costs
For individuals seeking to rent a property, two primary areas of focus are deposits and ongoing expenses. The following outlines major financial aspects to contemplate when entering a rental agreement:
1. Upfront Costs
- Earnest Deposit
After selecting a preferred property, individuals interested in renting are obliged to provide an initial payment as a means of reserving the space. Termed the “earnest deposit” this monetary commitment functions as evidence of the renter’s sincere desire to secure the chosen rental unit.
Typically amounting to 2% of the property’s total value or equating to the first month’s rent, the earnest deposit ensures the property cannot be leased to another party once the payment is made.
- Security Deposit
A security deposit serves as a safeguard for the property owner against any potential damage incurred by the tenant.
In the event of property damage, the landlord retains the authority to subtract repair expenses from the security deposit upon the tenant’s departure.
Beyond this protective measure, the security deposit also offers a layer of assurance to property owners when tenants vacate the premises without providing prior notice.
Unlike the earnest deposit, a security deposit requires a higher financial commitment due to its protective nature. Typically equivalent to two months’ rent, this deposit is designated for security purposes.
Usually, tenants are granted a two-month grace period to inform landlords of their intention to move out. However, if a tenant leaves without proper notice, the landlord is entitled to deduct the equivalent of two months’ rent from the security deposit.
For tenants who have maintained a commendable record, including timely payments and no property damage, a complete refund of the security deposit can be anticipated upon the conclusion of the tenancy agreement.
- Utility Deposit
When a tenant takes on the responsibility of paying for utility expenses, it’s customary for a utility deposit to be collected as a precautionary measure.
In the event that the tenant does not fulfils their obligations regarding utility bill payments, the landlord is entitled to use the utility deposit to cover the accrued costs. This deposit usually equals the monthly rental fee for the unit.
Similar to the security deposit, if all outstanding utility costs are resolved by the end of your lease agreement, the utility deposit will be returned to you in full.
- Furnishing
The financial consideration for furniture could vary based on the level of furnishing in the unit—unfurnished, partially-furnished, or fully-furnished.
While fully-furnished accommodations may encompass essentials like study furniture and seating, additional items like a larger wardrobe or supplementary furnishings might require separate funding.
Opting for unfurnished units often entails lower costs compared to fully-furnished ones. For individuals planning an extended stay, it might prove more economical to invest in personal furniture rather than selecting a fully-furnished unit for rent.
2. Recurring Costs
The aforementioned pertain to initial payments, but what about ongoing expenses? These are the costs that arise at regular intervals, predominantly on a monthly basis.
Foremost among these recurring expenditures is the monthly rental fee. Consequently, renters should ensure that the rental amount aligns with their monthly budgetary constraints.
Consistency in punctual monthly payments is crucial. Timely adherence is advisable to maintain a positive landlord-tenant relationship and prevent any scenarios where landlords might feel compelled to seek out tenants for payment collection.
Tip : Set a monthly reminder on your phone or laptop to alert you when it’s time to make payment.
- Utility Bills
Utility bills also constitute a recurring responsibility when tenants are accountable for these expenses.
The precise amount remains uncertain until the tenant’s occupancy commences, but they can seek an estimated figure from the landlord.
Commonly, utility bills encompass charges for electricity and water. However, some landlords might opt to exempt either of these costs. Nonetheless, it’s recommended not to exploit such waivers, as ethical conduct is essential in these matters.
- Parking Expenses
Parking charges generally come into play within multi-unit or multi-storey complexes. In cases where the rental unit lacks an accompanying parking space, tenants must allocate additional funds to cover this expense.
- Location Selections
The unit’s location holds significant significance. For personal residential rentals, proximity to the tenant’s workplace and, if applicable, the educational institutions of any school-going children, should factor prominently in the decision.
In the case of business-oriented rentals, the renter’s focus should shift toward assessing the accessibility of the area, considering factors like highway connectivity and potential use of public transportation networks.
- Tenancy Agreement Fees
These fees are typically relevant when leasing commercial properties due to the more formalised nature of their rental arrangements.
The Tenancy Agreement, often composed by the landlord’s legal representatives, encompasses the following details:
- Responsibility for utility bill payments.
- Permissible usage of the premises.
- Consequences for property damage.
- Duration of the contract.
- Landlord’s entitlement to inspect the property.
Both the landlord and tenant are required to sign the Tenancy Agreement, with both copies mandatorily stamped by the Inland Revenue Board of Malaysia (LHDN) to ensure legal validity within court proceedings.
The Tenancy Agreement typically incurs a cost of around 20% to 25% of the rental fee. This sum includes Stamp Duty fees and administrative charges. Stamp Duty fees are the tenant’s responsibility and are calculated based on each RM250 of the annual rental sum.
On the positive side, administration charges are less complex, assessed just once according to the monthly rental amount.
B. Identifying Suitable Properties
Now that you’re familiar with both the initial setup costs and ongoing expenses associated with rental properties, the subsequent step involves identifying potential rental properties.
If you already have a clear idea of your preferences, utilising our listing pages for browsing available residential properties for rent or commercial properties for rent can streamline your property search.
Through these resources, property seekers can specify their precise requirements for an ideal property, encompassing aspects like:
- Total floor area
- Number of bedrooms or bathrooms
- Lease duration
- Furnishing status (if applicable)
- Property age or listing date
As you embark on your property search, it’s imperative to consider the following factors:
1. Location
The location of a property is very important, whether for own stay or for business. Those looking for a home to stay in will want a premise that is close to their place of work, or their spouse’s place of work.
They should also be comfortable with the neighbourhood and its amenities, as well as preferably familiar with it.
Commercial property renters should, on the other hand, know whether their business depends on high traffic or is it a light industrial company that requires much transportation of goods.
The former should be in an area with high traffic, while the latter in a spot which has easy access to land, air, and sea transport.
2. Size
The size of the rental unit is very important. For example, families need bigger places to comfortably fit everyone.
Even though a studio apartment might be fine for now, it’s crucial to think about what might happen in the future, like if your family gets bigger.
For people looking for places for their businesses, it’s really important to know how much space you need to store things. Do you just need a small office for four people, or do you need a big storage area for keeping inventory?
When you’re renting, it’s not just about now – you need to think about what might happen soon. If you think your business might grow, it’s better to start with a bigger space. This can be cheaper than starting small and then having to get a bigger space later. Doing this can help you avoid losing money when you switch places, especially because of the deposits you can’t get back.
3. Facilities
The amenities within a development hold equal significance when searching for the perfect rental property.
For instance, a family with young children might seek a property equipped with conveniences like a childcare center and a toddler-friendly swimming pool for swimming lessons.
On the other hand, a commercial property seeker might prioritise features such as an efficient waste disposal system and robust security measures in the vicinity.
It’s not solely the property’s facilities that warrant consideration, but also the surrounding amenities. This encompasses essential factors like proximity to hospitals, clinics, police stations, educational institutions, places of worship, industrial establishments, and storage facilities. Striving for utmost convenience is pivotal in selecting a unit that aligns seamlessly with your needs.
4. Security
Ensuring the safety of the location is an absolute priority when considering a rental property, as an unsafe environment hampers both residential comfort and business operations.
But how can you ascertain if the area is secure and suitable?
Conducting a swift investigation into the locality’s crime statistics and personally visiting the area, especially during nighttime, can provide valuable insights. During your visit, be vigilant for the presence of security cameras (CCTVs), poorly lit corners, and potentially hazardous pathways. If any of these elements raise concerns or unease, it’s likely an indication that the property might not be the right choice for you.
5. Location Suitability
The importance of the area’s prominence can vary depending on the tenant’s preferences.
For example, a business aiming to create a positive impression on clients might prioritise a distinguished address. Likewise, individuals in higher-ranking positions seeking rental homes could look for residences in more renowned neighbourhoods.
6. Tenancy Period
A lease term defines the duration for which a renter commits to occupy the property.
Upon the lease’s expiration, the landlord may opt not to renew it, leading the renter to find new accommodations. Alternatively, the landlord might choose to raise the rent upon renewal.
However, there are scenarios where the landlord, on behalf of the tenant, extends the lease term, allowing the tenant to continue residing there. This mutually beneficial arrangement spares both parties the effort of seeking alternatives.
It’s crucial to acknowledge that this option isn’t universally applicable and hinges on the shared understanding, collaboration, and respect between the parties involved. Being an outstanding tenant can certainly strengthen the possibility of such agreements being feasible.
7. Engaging Real Estate Agents
Once a list of potential rental properties is assembled, renters should initiate the process of scheduling appointments to visit these units.
During these visits, property seekers should actively inquire about the unit’s history to gather supplementary insights. A few relevant questions to pose include:
- How long has the unit been available for rent?
- If it has been on the market for an extended period, what might be the reason for its unoccupied status?
- Are there any existing issues or concerns related to the unit?
To locate reputable and specialised property agents, renters can also explore the “Find Agent” page. Through this resource, individuals can discover agents with expertise specific to certain regions, ensuring a heightened understanding of properties in those areas.
C. Viewing Appointments
To remain focused on the essential aspects, property renters should carry a list of their criteria when visiting potential properties.
This strategy aids in maintaining a clear understanding of genuine needs, which can become distorted after inspecting numerous units. Additionally, it prevents being swayed by picturesque views, helping to avert overlooking issues like cracked walls or broken balcony railings.
While engaging with a property agent, renters should pose the following key questions:
- What does the rental fee encompass?
- Are there supplementary bills? If so, what is the estimated cost? For shared units, how will the bills be divided?
- What is the required deposit amount, and how will the deposit’s security be ensured?
- What is the duration of the rental contract?
- Are pets allowed on the premises?
- Is a parking space included in the rental?
For those considering commercial rentals, the following inquiries could be valuable:
- Will there be any charges associated with setting up the Tenancy Agreement?
- Is the tenancy a fixed-term arrangement or a periodic one?
- Will the unit be furnished? If so, to what extent?
- If electrical appliances are provided, it’s crucial to verify their operational status to prevent potential disputes with the landlord.
Conducting thorough checks of faucets, showers, power sockets, and appliances is vital to ensure they are fully operational, safeguarding against later accusations of damage by the landlord.
D. Preparing The Contracts
Once you’ve identified your perfect property, the subsequent phase involves finalising the tenancy agreement and submitting the required deposits.
As noted earlier, the deposits encompass the earnest deposit, security deposit, and utility deposit.
Typically, the earnest deposit amounts to approximately half a month’s rent, while the security deposit is equivalent to two months’ rent.
Additionally, the utility deposit usually stands at one month’s rent. In total, renters will need to allocate around three months’ worth of deposits when embarking on their initial property rental.
E. Signing The Tenancy Agreement
Whether it’s residential or commercial properties, renters or tenants are obliged to engage with a Tenancy Agreement, which bears a semblance to a Sale and Purchase Agreement (SPA).
This agreement serves as a comprehensive outline of the terms and conditions governing the property rental, delineating both the tenant’s and landlord’s obligations.
The Tenancy Agreement encompasses a range of particulars, including:
1. Names Of The Landlord And Tenant(s)
This section holds immense significance within the Tenancy Agreement, as any inaccuracies in the names can render the contract invalid. Moreover, if the names are incorrect, it becomes challenging to pursue legal action in case of disputes.
The names mentioned in the agreement must correspond exactly to the official records as per the individual’s Identification Card (I.C.). For instance, if your official name is Samantha, but it doesn’t match your I.C., it cannot be incorporated into the agreement.
2. Address Of The Property Which Is Being Let
Similarly, accuracy in specifying the property address is of paramount importance within the contract. An erroneous property address could lead to protracted legal conflicts and disputes concerning the legitimacy of the rented property.
The complete property address must encompass several key details, including the unit name, street name, postcode, section, any building name (if applicable), and the state.
3. Date Of The Tenancy’s Commencement And Duration Of Tenancy
The Tenancy Agreement outlines the contract’s commencement, its duration, and the termination date. Throughout this timeframe, the tenant is obligated to abide by the stipulations outlined in the agreement.
Upon the agreement’s conclusion, all terms therein will become null and void. Should the renter intend to extend the tenancy, either an extension of the existing contract should be pursued or a new contract should be formulated.
In anticipation of such scenarios, the agreement should incorporate clauses to address the renewal or extension of the tenancy.
4. Parts Of Property The Tenant Is Allowed To Use
In certain instances, the rental arrangement may involve only a portion of the entire property, rather than the entirety of it. In such cases, the Tenancy Agreement must explicitly delineate the specific section of the property accessible to the renter.
For complete clarity, the landlord is required to specify the property type, clarifying whether the rental encompasses the entire unit or solely a particular room within it.
5. Rental And Bill Payments
The comprehensive monthly rental sum, along with the tenant’s responsibility for covering utility bills, will be explicitly detailed within the contract.
This segment should also encompass the specified due date for payment submission, as well as any provisions outlining potential consequences in cases of late payment.
6. Services Provided
If the unit includes electrical appliances or furniture, these items will be listed in the contract, along with outlining the tenant’s obligations towards them.
The landlord is also required to indicate the condition of these appliances or furniture. During the renter’s inspection, the condition of these items must match exactly as described in the Tenancy Agreement.
7. Length Of Notice
If the tenant opts to terminate the contract prematurely, any applicable penalty fees will be outlined within the Tenancy Agreement.
This section will also encompass all other stipulations related to the premature termination of the contract, commonly referred to as a Break Clause.
Once mutual agreement on all terms within the contract is established, both the landlord and tenant are required to sign it.
Subsequently, the document will be forwarded to the Inland Revenue Board of Malaysia. Ordinarily, the cost of Stamp Duty is assumed by the tenant unless an alternate arrangement is agreed upon.
F. Responsibilities Of The Landlord And Tenant
The dynamics between a landlord and tenant extend beyond document signing, initiating their relationship. Following this, each party takes on distinct responsibilities toward the other.
1. The Responsibilities Of A Tenant
A tenant’s commitment to upholding the Tenancy Agreement is paramount. They must regard the property they rent with a sense of ownership, assuming the responsibility for its proper care. Here are some guidelines for tenants to adhere to:
Property Maintenance
Caring for the property is a fundamental aspect of the agreement. This entails maintaining cleanliness and tidiness within the unit, refraining from causing any damage.
The property’s upkeep is essential both internally and externally.
Appliance Care
If the rental unit is furnished with appliances such as air-conditioners or refrigerators, tenants should use them responsibly and with care.
Alterations with Consent
Altering the property without prior authorisation is typically stipulated in the contract, applicable to both residential and commercial rentals.
For residential units, permanent changes like repainting or wall fixtures are often restricted. In commercial units, substantial alterations like renovations might require landlord approval.
In instances where renovations are essential, the tenant should seek the landlord’s consent and ensure the alterations comply with the agreement.
Reporting Faulty Appliances
Malfunctioning appliances should be promptly reported to the landlord, who is responsible for arranging repairs.
If tenants feel that the landlord’s repair timeframe is too lengthy, they should communicate their concerns. Additionally, obtaining the landlord’s permission before hiring external repair services is crucial, with the bill subsequently charged to the landlord.
Appliance Familiarization
If the provided appliances are complex, tenants should seek guidance from the landlord on proper usage to prevent accidental damage.
Neighbor Relations
Neighbors can be valuable allies or potential conflicts. Establishing a friendly rapport with them facilitates the exchange of essential information, such as security concerns or local shortages.
Being considerate is vital. Maintain minimal noise levels during nighttime, respect property boundaries, keep the surroundings clean, and demonstrate good citizenship to foster positive relations.
2. The Responsibilities Of A Landlord
Just as tenants have responsibilities towards their landlords, landlords also hold obligations towards their tenants.
The role of a landlord goes beyond rent collection; it entails maintaining the rental unit’s excellent condition consistently.
Property Structure and Exterior Maintenance
While tenants are accountable for the unit’s cleanliness, landlords are responsible for ensuring the property’s structural integrity and exterior upkeep. This involves addressing issues like leaks, paint deterioration, and mold. Basic yard work, such as garden maintenance, might also fall under the landlord’s purview.
Fire and Flood Insurance Coverage
For properties in flood-prone areas, landlords should secure insurance to protect against potential floods. Fire insurance is also crucial. It safeguards both tenants and landlords during emergencies.
Utility-Related Matters
Landlords should handle utility-related problems, such as internet disruptions or electricity meter inaccuracies, given that utility bills are associated with the landlord’s name. Their involvement can expedite dispute resolution.
Appliance and Furniture Maintenance
Promptly addressing malfunctioning appliances reported by tenants is the landlord’s responsibility. This is especially vital for essential appliances like washing machines or refrigerators. Before sending repair professionals, landlords should provide tenants with at least 24 hours’ notice.
Annual Gas Safety Check
If applicable, regular gas supply checks should be conducted to prevent potential risks. This practice prioritises tenant safety and preserves the landlord’s property.
Renting can be less expensive and less hassle, compared to owning a home, but the place will never fully be yours to own. There will always be some debatable points of the pros and cons of home ownership vs renting a place. Whatever you choose, make sure that it’s within your budget!
Disclaimer: The information presented here is intended for general informational purposes only. MyPropertyPlaces.com does not make any explicit or implied representations or warranties regarding the information’s accuracy or suitability for a specific purpose, to the fullest extent allowed by law. While diligent efforts have been made to ensure the accuracy, reliability, and comprehensiveness of the information in this article at the time of its creation, it is not advisable to solely rely on this information for making financial, investment, real estate, or legal decisions. It is essential to seek guidance from a qualified professional who can consider your individual circumstances and provide appropriate advice. We do not assume any liability for decisions made using this information.
