Tenancy Agreement Malaysia 2026: Stamp Duty, Deposit Rules and Key Clauses to Protect Both Sides

A tenancy agreement is not legally required, but it is strongly advisable. Without a written agreement, disputes about rent, deposit, notice periods and repairs have no clear basis for resolution. A properly stamped tenancy agreement is admissible as evidence in court. Verbal agreements are difficult to enforce and leave both landlord and tenant exposed.

Stamp duty on a tenancy agreement is calculated on the annual rent. For a tenancy of up to 1 year: RM1 for every RM250 (or part thereof) of annual rent. For 1–3 years: RM2 for every RM250 of annual rent. For more than 3 years: RM4 for every RM250. Example: monthly rent RM2,000 = annual rent RM24,000. For a 1-year tenancy: RM24,000 ÷ RM250 = 97 × RM1 = RM97. The Inland Revenue Board (LHDN) issues the stamp. Stamping should be done within 30 days of signing.

The standard deposit structure is: 2 months' rent as security deposit, 0.5 months' rent as utility deposit, and 0.5 months' rent as advance rent (first month pro-rated). Total = 3 months' rent upfront at signing. Some landlords request a higher security deposit for furnished properties. There is no statutory cap on deposits in Malaysia's private rental market, but deviating significantly from the 2+0.5+0.5 norm is unusual.

During the tenancy period, the landlord cannot increase the rent above the agreed amount in the signed tenancy agreement. Rent increases can only take effect when the tenancy is renewed or at the end of the existing agreement. Any proposed increase should be communicated before the renewal date and agreed in a new or renewed tenancy agreement. Unilateral mid-tenancy rent increases are a breach of contract.

A standard residential tenancy agreement includes a notice period of 1–2 months for either party to terminate after the initial fixed term. During the fixed term itself (e.g., the first 12 months), termination typically triggers a penalty (forfeiture of deposit for tenants, or return of deposit plus additional month's rent for landlords who terminate early). Always include the notice period explicitly — without it, disputes about how much notice is required are common.

If the landlord wrongfully withholds the security deposit at the end of the tenancy, the tenant's recourse is to: (1) Send a formal demand letter by registered post. (2) File a claim at the Tribunal for Consumer Claims Malaysia (if the disputed amount is within RM25,000 — tribunalpengguna.com.my). The Tribunal is relatively fast, low-cost and does not require a lawyer. For amounts above RM25,000, the Magistrate's Court is the appropriate venue. Always do a final joint inspection and take photos.

Generally: the landlord is responsible for structural repairs, roof, major plumbing and electrical systems, and maintaining the property in a tenantable condition. The tenant is responsible for maintaining the property in a clean condition, minor repairs (changing light bulbs, keeping drains clear), and paying for damage caused by their own negligence. Define these clearly in the tenancy agreement — the more specific, the fewer disputes.

A diplomatic clause allows early termination of the tenancy if the tenant is required to relocate for work (typically due to transfer or end of assignment). It is common in tenancy agreements for expatriates. The standard diplomatic clause requires a minimum initial stay (typically 12 months) and notice of 2 months, with no deposit penalty for the early exit. If you are an expat on a fixed-term work assignment, include this clause — without it, early termination triggers full deposit penalties.