The proposed Residential Tenancies Act (RTA) has raised concerns among the stakeholders of the property industry that will be affected once the Act has come into full force.

The RTA, proposed by the Ministry of Housing and Local Government (KPKT), is undergoing a month-long consultation period with affected stakeholders. 

According to Real Estate and Housing Developers' Association (Redha) acting president Datuk NK Tong, the association has submitted their comments on the proposed Act to the ministry.

“Whilst there are several points in the proposed Act’s Regulatory Impact Statement which may be helpful to resolve disputes that may arise between the parties involved in residential tenancy matters, Redha is also concerned on some proposals in the Act which we believe should be relooked and reconsidered carefully otherwise, the impact could be detrimental to the industry,” he said. 

Among the main concerns highlighted by the association includes the applicability of RTA. Redha is against the government’s intervention in what should have been a private agreement between two parties. 

However, the association believed that there might be situations where the tenant is at a disadvantage compared to the landlord, thus requiring a higher level of protection. 

For instance, if the tenant falls under the B40 category, thus the landlord and the tenant are not on equal footing. As such, Redha proposes that the RTA should only apply to residential tenancies where the monthly rent is below RM750 a month. This amount is considered the cut-off level for the low and low-middle monthly rent range. 

The security deposit placement with a government agency raised another concern. According to Redha, such placements will open up the possibility of delays such as refunds and claims for damages due to the additional layers of bureaucracy. 

Additionally, KPKT’s intention to utilise the interest earned from the deposits to fund the administration of the RTA as well as to defray the costs of managing the proposed Tenant Landlord Database is said to be misguided, as the cost should only be defrayed from taxes collected through the nation’s taxation system. 

They suggest that the interest earned on the deposits should rightly remain to the depositor’s property.

The draft RTA proposes to set the amount of security deposit to two months’ rent and one month’s rent for utility deposit. Redha mentioned that the amount of deposits to be collected should be left to market forces and agreement between landlord and tenant. 

There is no one-size-fits-all scenario for tenancy arrangements. In some cases described by Redha, collecting only two months’ deposit will leave the landlord exposed to losses due to the lengthy process of collecting rental, calling a breach and the legal process involved in evicting a defaulting tenant, all of which can take up to three months at the very least.

Redha disagrees with any form of rent control, including the proposed restriction to limit the number of rent increases and limit the quantum of rent increases. All rental levels and renewals should only be driven by market forces. 

As there may be different requirements and demands on the property from tenants, it is believed to only be fair to leave the rental rate to be determined between the landlord and the tenant.  

In addition, they believe capping rent control will only retard investment in property and ultimately negatively impact economic growth.

According to Redha, the proposal to disallow landlords to claim the rent of unexpired term in the event of breach by the tenant is unjust. They believe that a defaulting tenant should not be given protection since the landlord is the one who will suffer when a tenant is in breach.                                                                                                                                                        

“Redha recognises the intention behind the proposed RTA, which among others aim to facilitate some issues that arise in the market. However, such an Act should take into account that not all tenants and landlords have the same needs and capabilities and require different levels of protection, particularly tenants from the B40 group. 

“The proposal for the establishment of an RTA tribunal which may provide a much more affordable and quicker access to justice for all involved parties, although laudable, the process of handing down judgements should be shortened to seven days instead of the proposed 60 days,” said Tong. 

He said Rehda supports the creation of a residential tenancy agreement template but hoped that the template will still allow room for amendments should both landlord and tenant be agreeable.

“Should it come into fruition, the Act must help to ease the process for any disputes that occur instead of adding lengthy procedures and making it more difficult for any resolutions to be achieved,” added Tong.  

Redha supports the government’s initiative to protect tenants and believes that existing legislations are protective enough. The ultimate goal should be to make any new legislation effective for the Rakyat. 

By layering unnecessary complexity, the unintended consequence is that rents may trend upwards as landlords factor in any additional burden that they have to take on, said the association.

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