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HBA: Flawed survey to justify proposed Residential Tenancy Act (RTA)


The National Homebuyers Association (HBA) is calling out that the drafted laws of the proposed Residential Tenancy Act draft have incomprehensible sections. Not only would some of these laws be unnecessary, they can also be harmful to the average property owner. More robust discussions and in-depth studies are needed before the enactment of any rental law to avoid disharmony and social issues in Malaysia.

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The proposed Residential Tenancy Act (RTA) has been a hot topic of discussion since 2020 – which is unsurprising as Malaysia has never had any specific laws or acts governing landlords and tenants. The RTA is set to be tabled in the Parliament in Q1 2022 and the Malaysian government have been seeking feedback for the proposed enactment of the RTA through a one-month public consultation undertaken by the Ministry of Housing and Local Government (KPKT).

According to KPKT, the Residential Tenancy Act will be a milestone for the rental market in Malaysia as it will help protect tenants and property owners/landlords from any dispute that might arise for the duration of the rent, as currently there is no tribunal for issues relating to housing rental. Presumably, KPKT will study standards and benchmarks used in similar Rental Acts in New South Wales and Victoria, Australia and tailor them to the local context.

Red flags over drafted RTA laws

Noble objectives aside, HBA has raised several areas of concern in KPKT’s Proposed Survey and Drafting of the Residential Tenancy Act (Cadangan Kajian dan Penggubalan Akta Sewaan Kediaman).

Rental deposits will be taken away from landlords

If the law is passed, the 2+1 security deposit (two-month rental and one-month utility) which is common for most rental tenancies in Malaysia will no longer be held by landlords and instead will be parked in a yet to be named Government agency. The (future) Comptroller of Residential Tenancy would be authorised to manage the security deposits (parked under a neutral agency) ensure that the authorities would be able to address any conflict arising between landlords and tenants.

To quote Page 36 of the KPKT report,” The security deposit will be returned to the tenants once the tenancy agreement expires provided there are no expenses which need to be deducted from the sum. If there is any dispute, the matter will be referred to the tribunal.”

Should the Government decide to hold on to the rental deposits, it can ruin its own image in the eyes of the public.

Feedback collection marred by flawed sampling

The Government has conducted a survey to obtain justification for regulating landlord-tenant relations via the RTA. Unfortunately, this survey which purportedly was done to obtain public feedback only reached out to 0.009% of the total population! The respondents were far from being a solid representation of the 32.4 million Malaysians as they comprised of a mere 3,119 respondents, of whom:

  • 1,104 were residential owners
  • 2,015 were tenants

Proposed RTA survey
Page 15 of the Proposed Survey and Drafting of the Residential Tenancy Act

Moreover, seeing that 65% of the respondents were tenants, the survey results could be very much skewed towards the tenants’ interest.

Survey respondents mostly from selected races and locations only

Moreover, it is understood that 87% of the survey respondents are of Malay ethnicity. Only 13% has been allocated to the other races in Malaysia. Adding salt to the wound, the survey only reached out to respondents in Selangor, Kuala Lumpur and Putrajaya. Property stakeholders in many other cities, towns and states in Malaysia were never interviewed.

Previously KPKT has also shared that the Residential Tenancy Act will have a special focus on curbing ‘racist’ practices by certain landlords. This new law could open a new can of worms.

Vague information and lack of data provided to the rakyat

Chang Kim Loong

HBA secretary-general Datuk Chang Kim Loong has expressed concern over the survey which he says is biased towards the proposed RTA laws.

The KPKT report did not mention key information from the survey, leading Chang to question its validity and significance. For instance:

  • Were the survey respondents a cross-section of the T20, M40 & B40 economic groups and from different educational backgrounds?
  • The property owners/landlords and tenants who were interviewed – did it cover/combine both local and foreign respondents?
  • Was the survey carried out in both rural and urban areas?
  • HBA also questions whether this meagre group of 3,119 respondents is a clear representation of property owners/landlords and tenants of Peninsular Malaysia?

“Do we honestly think that a survey of this sort can be considered to be holistic enough to justify creating a rental law to govern the whole of Penisular Malaysia?” asks Chang.


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Are we going about the RTA the right way?

Some sections of the RTA bill is mystifying and I dare say it will not be accepted by the average man on the street. The Government is interfering in the market economy when there is no need for such government interventions. This meddling would only drive investors away . – Datuk Chang Kim Loong, HBA-

In this post-pandemic period, the Government should instead focus on macro issues which can help boost economic recovery, such as reviving the tourism and hospitality industry. Thousands have lost their jobs because of inappropriate and wholesale lockdowns. The RTA is actually unnecessary at this point in time, says Chang.

As aforementioned, the government is currently seeking feedback from interested parties and Malaysian citizens on its Proposed Survey and Drafting of the Residential Tenancy Act report via a one-month public consultation. Those who wish to provide their views on the proposed draft laws have until 28 February 2022 to do so on the Malaysia Productivity Corp’s (MPC) website.

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