Section A: Introduction:1. I did a quick summary of points that might be helpful to everyone. Basically, the guide touches more on prospecting and documentation. The only area that I do not have coverage is seizure and sale by landlord.
2. Objective:
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- First goal: mitigate and resolve dispute amicably
- Second goal: avert a litigation, strive to mitigate losses as much as possible.
- Third goal: to use documentation as a shield (defence) rather than a sword (attacking your opponent) should a litigation materialize.
3. Know you pressure points:-
(a) Tenant:
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- Ability to off-set rental (with basis of course).
- potential lost of renovation cost if evicted.
- potential lost/disruption to business.
(b) Landlord:
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- forfeit deposit
- lost of future income from rental.
- likely to initiate suit against tenant.
4. Rule of Thumb
(a) As much as possible, where a representation is made to you or if you have a complaint it should be documented and confirmed in writing.
(i) What is a representation?
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Ali (prospective tenant): hey Abu, do you offer any rent free period for renovation?
Abu (agent of landlord): yes we do, in fact we offer 6 months free rent.
Ali subsequently enters into an agreement and later finds out that the Landlord refused to give rent free period.
(ii) What is a complaint?
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Ali (now a tenant) communicates verbally: Hey Ah Chong, your roof is leaking and its causing a small pond to build up in my office!
Ah Chong (Landlord): Ok… ok… ok … will fix it.
[6 months later still not fixed and the tenancy is about to expire]
Ah Chong: hey the roof is leaking, why you no fix?
Ali: I told you already but you never come repair also!
Ah Chong: where got! You don’t deny responsibility. If you don’t fix the roof, I will forfeit your deposit.
Section B: Disclaimer:(a) The contents of this thread are meant for discussion purposes and should not be interpreted as legal advice. If you need legal advice please seek the assistance of an advocate and solicitor.
(b) The contents of this thread only apply in Peninsula Malaysia only and
EXCLUDES SABAH AND SARAWAK. Some principles may still apply but you will need to be selective in usage.
Section C: Prospecting Phase1. What to bring?
1.1 Camera or smartphone with camera
- take a picture of location, overall layout, fixture and fittings and defects.
1.2 Pen and notepad.
- you might need to sketch the premises.
1.3 Checklist
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- see sample in
Appendix A – Prospecting Checklist -
1.Appendix_A___Prospecting_Checklist.pdf ( 17.11k )
Number of downloads: 143
> if you need the MSWord version just PM Me together with your email address, the Forum doesn't allow me to post in Msword format2. What to ask?
2.1 Basic Questions
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2.1.1 Duration of tenancy.
2.1.2 Deposit required (how many months rental, utilities etc…).
- normally is 1 month advance, 2 months rental deposit and 1.5 months rental
2.1.3 When is rental payable?
2.1.4 is renewal option available?
2.1.5 how is or the basis in which the Landlord increase rental?
- good to know, normally landlord will be caught off guard by this question. You can roughly gauge your landlord’s expression then.
- If you want a guide, +1% above the Maybank 12 months Fixed Deposit Rate is considered pretty good.
2.1.6 check whether utilities have been fully paid up to date?
- you don’t want to end up paying previous tenant’s dues and ending up with the messy task of offsetting against rental.
2.1.7 check whether cukai pintu is paid up to date?
- if you are running a business for the long haul, I believe non-payment of cukai pintu will affect your license renewal
2.1.8 why did the previous tenant move out?
2.1.9 who pays for stamp duty?
- normally landlord will want tenant to pay all. If you have some bargaining power, you can try for equal or full.
2.1.10 is the person you are dealing with the agent or actual landlord?
- I doubt it would make much difference but it’s good to have a person who talk too much and over-promise.
2.1.11 are you allowed to sub-let?
- answer most likely is “no”.
2.2 Moving-in
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2.2.1 what is the procedures before renovation work commence?
2.2.2 is there any specific requirements that need to be observed?
2.2.3 will there be any fixture and fittings provided?
2.2.4 ask for rent free period for renovation.
- if you’re doing a business, every bit helps.
2.3 Moving-out
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2.3.1 What happens when the tenant prematurely terminate the tenancy?
- standard practice is to pay balance tenancy of the unexpired duration.
2.3.2 what is the procedures for moving out?
2.3.3 are there any specific requirements that need to be observed?
2.3.4 when does the tenant need to hand-over the keys?
2.4 Obligations
2.4.1 If there’s a defect who is responsible for the repairs?
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- Example: if there is a water leakage or there are cracks in the ceiling or walls.
- the rule of thumb is, tenants are generally responsible for the interior of the premises. Whereas the exterior and structural façade of the building is the responsibility of the landlord.
Section D: Documentation Phase1. Intro:
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1.1 In this phase, you can expect to receive a letter of offer from the landlord or a tenancy agreement or both simultaneously.
1.2 What you need?
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1.2.1 a pen, highlighter and notepad
- best you photocopy another set so that you can scribble on it.
1.2.2 Checklist
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- see sample in
Appendix B – Documentation Checklist-
1.Appendix_B___Documentation_Checklist.pdf ( 20.4k )
Number of downloads: 125
> if you need the MSWord version just PM Me together with your email address, the Forum doesn't allow me to post in Msword format2. Sample Clauses and Thier Use:
2.1 Landlord's obligations:
(a) Where the Landlord disposes of his property, you may not want the prospective Landlord to issue you an eviction notice simply because he feels that the tenancy agreement does not apply to him or your previous Landlord did not novate the tenancy agreement in favour of the prospective Landlord.
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to ensure that any charge, transfer, sale, disposal or the lease of the Premises or the land (if any) shall be subject to the terms and conditions of this Agreement. In amplification thereof, the Landlord shall do all acts necessary to cause the prospective transferee, purchaser or lessee (where applicable) to execute a deed of assignment or novation agreement (as the case may be) with the Tenants upon the same terms and conditions appearing in this Agreement;
(b) When the roof leaks you will know who to look for:
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to maintain the roof, exterior and main structure of the Premises including pipes and drains in good repair and condition throughout the tenancy hereby created;
© There are those obligations to local government or municipal in which the landlord is liable for. you know it crosses a boundary when the landlord ask you to pay for his income tax as well.
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to pay all present and future rates including but not limited to taxes, quit rents, assessments and outgoings in respect of the said Premises. Where the Tenant makes payment of the above on behalf of the Landlord, the Tenant shall thereafter have the right to set off or deduct any amount paid on behalf of the said Premises and any costs incurred in relation thereto from the Rental;
Section E: FAQ1. This is probably the most burning question of all. Can a tenancy be more than 3 years?
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Under the National Land Code, a lease is recognized as term exceeding 3 years (s.221 National Land Code 1965) and is capable of registration (s.292 National Land Code 1965). A tenancy on the other hand which is for a term not exceeding 3 years is exempted from registration (s.216 National Land Code 1965).
2. My Landlord became bankrupt or the property i am renting has been acquired by a 3rd party who has indicated that the tenancy does not bind him!
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Tenant may protect his interest by endorsing his claim on the registered document title of the Landlord/Owner (s.316).
3. Stamp duty doesn't cost millions (unless of course your rental is in the millions!). I don't answer questions as to WHAT IF i don't stamp my document, that's at your own risk.
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4. Rental Income (added: 26/5/2019)
Source-Rental Income DiscussionIf you intend to pay tax on rental income:
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QUOTE(David83 @ Mar 6 2019, 01:51 PM)
Read Page 18 onwards for Expense Relating to Income of Letting of Real Property
URL:
http://lampiran1.hasil.gov.my/pdf/pdfam/PR_12_2018.pdfRecurring expenses(a) Assessment and quit rent
Annual assessment paid to the local authority and quit rent paid to the land office.
(b) Interest on loan
Interest paid on loan taken to finance the purchase of real property which is rented out.
© Fire insurance premium
Fire insurance premium paid in relation to fire insurance policy taken on the real property which is rented out.
(d) Expense on rent collection
Rent collection fee and legal expense incurred to enforce rent collection.
(e) Expense on rent renewal
Expense incurred to renew tenancy or to change tenant.
(f) Expense on repair
Expense on ordinary repair to maintain the real property in its existing state.
Initial expensesInitial expense is not allowed a deduction from income of letting of real property assessed under paragraph 4(a) or paragraph 4(d) of the ITA since that expense is incurred to create a source of rental income and not incurred in the production of rental income. Examples of such expense are cost to obtain the first tenant such as advertising cost, legal cost to prepare rental agreement, stamp duty and commission for real property agent.
Expenses during a period the real property is not rented outExpenses incurred in relation to a real property during a period it is not rented out are not allowable in calculating the adjusted income from the letting of the real property. However, if the period the real property is not rented out occurs after it has been let out and it is clear that it is ready to be let out, then expenses during that period are allowable subject to subsections 33(1) and 39(1) of the ITA.
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QUOTE(okuribito @ Mar 18 2019, 06:12 PM)
Did not see monthly maintenance fee in your list. For example for condominiums /apartment. Is it allowed expense/deduction?
How about sinking fund? Is it allowed expense/deduction? TIA
QUOTE(David83 @ Mar 18 2019, 06:23 PM)
Yes you can for both.
According to this website:
https://www.liew.my/usr/pagesub2.aspx?pgid=264 This post has been edited by aurora97: May 26 2019, 06:39 PM