Basically all Mix Development is by nature are Service Apartment anything that build upon a commercial land falls under that category,is a recent trend by developer who are building condominium on commercial land or above shopping centers have being using term like Service Residence, Service Suite etc to market their property, it is just a marketing term which is misleading, under the present legislation, service apartments and condominiums adjoining shopping malls fall outside the category of residence.

According to National Property Information Center(NAPIC) report under section 3 The Housing Development (Control and Licensing) Act 1966 (as amended 2002):

1)serviced apartments which is defined as short-term accommodation either owned by an individual as a second home, as corporate housing or as an investment that maybe run as a hotel.

2) The owner may occupy the unit himself or elect a management company to rent the unit on a daily, weekly, monthly, yearly or timesharing basis.

So by law it is legal to rent out their apartment on daily basis and renting out apartment run by individual owners are consider residential use not commercial use where by commercial use is running a laundry, office or mini market etc.

Hope this clarify your question.

Hi Good Day, yes it is by nature all mix development falls under the term Service no matter which term it use Service Residence/Apartment/Suite etc, and another thing is Home Stay are difference from Short Term Accommodation, Home Stay is where by you need to register with the Ministry Of Tourism and you get an agent ID, you invite the guest from overseas to stay with you while you show them the local culture on the other side Short Term Accommodation run by individual owner are differ they do not stay with the tenants do not show them the culture and renting out for stay is consider a residential use not commercial use.

You cannot build a residential apartment on a commercial land and if the apartment on top of a mix development are consider residential it mean there are another piece of land on top of the commercial land, because residential property can only be build on a residential land and you cannot have a land on top of another land.

Hope this clarify out.

This post has been edited by NikAriff: Jun 19 2015, 08:47 AM

Yes you can ask your JMB/JMC to call for a AGM/EGM and get all owners consent to agree to implement a rules to stop the short term rental, but you need refer to your SPA, if you SPA is do not contain Schedule H then there is an issue it mean is not residential, some Mix Development that come with hotel do have rules in the SPA that owners cannot do Short Term Rental and that is difference cases, if your SPA do not have such rule and by implementing a rule to stop the STR by law is illegal it self and if the owners want to SUE the JMB they will have sufficient evidence to bring them to court, in this case the committee are still able to make new rules but they have to get the consent of all the unit owners mean if you have 500 unit you need to have 500 signature to agree and implement it to prevent legal action from owners that run STR.

Hi Good Day,

In which part of the document does it states out that short term stay or daily use is commercial use?

I agree with you that mostly the management office will disallow owner to run short term stay but also to add in that this will need to look into their residents handbook and SPA as well, because if is in the house rules then calling for a AGM/EGM for majority vote can change or add rules to control, but if is the rules implement by the AGM/EGM are against the rights of SPA then we might have a problem, to my understanding SPA for residential falls under schedule H and SPA for Mix Development do not falls under this we might need to clarify this with the Authority but as usual the authority is inefficient.

Regards
Nik

Hi thank for sharing I shall go through the document and will be giving you my opinion soon.

This post has been edited by NikAriff: Jun 19 2015, 10:22 AM

Hi to my knowledge there is no law in Malaysia that differentiate STR and Long Term Rental, the only law that differentiate is anything that is below 3 years is consider Rental and Anything that is above 3 year is consider a Lease and there is no control that Rental must be at least how many days, or months or years.

If this is the law then STR is not illegal and for the tenancy agreement to stamp it or not is up to the owner and the tenant the stamping only come to play when there is a dispute arise from the rental and the case need to bring to court, but still if is not stamp the owner can stamp it later and pay a fine.

Correct me if I am wrong.

Thanks

Hi to my knowledge there are 2 type of service apartment one that can be converted and run by hotelier that need license and another is run by individual owners that do not need a license but as long as the apartment is not private residential and is falls under service apartment like Regalia Resident in kuala lumpur.

Hi Good day,

Just gone through the document.

The Royal Malaysian Customs document on the GST and how it will apply to accommodation (in particular, paragraphs 5 - 10). This clearly states that service apartments which are sold for residential purposes (are demmed "residential" ; we cannot run a hairdressers' or an office there) are not subject to GST because they are not "commercial".

However, apartments run as a timeshare (paragraph 10e) ARE deemed to be "commercial" and are subject to the GST.

So this mean is clear that STR do some how are legal, in some way if they do it correctly.

Hi,

Back to the actual question that Cas firstly ask we need to resolve:
1) Is Mixed development apartment falls under service apartment no matter is service residence or service suite.
- to my understanding any apartment that build on top of a commercial land falls under "service" and developer have use the term to mislead buyer. (Where can we get a solid proof to define it)

2) if is consider a service apartment can individual owner rent out daily?
- If time sharing club house are allow the main differ is they have a license and individual owner do not have, but it still mean STR do exits legally.

Regards
Nik

This post has been edited by NikAriff: Jun 19 2015, 08:25 PM

As mention in the articles:
if it is erected on any land designated for or approved for commercial development, it is not considered 'housing accommodation' as defined under the Housing Development (Control and Licensing) Act (Housing Act).

It say as long as is build on top of a commercial land is not consider housing accomodation, so to you question yes it is Service Apartment according to this articles.

Hi Cas,

Since there is no law that control a tenancy period less the 3 years, if daily rental is consider a commercial use then month or yearly will also be classify as commercial use as well, this issue still falls on the grey area, the best is the management introduce strict rules to control it or may be you can suggest finger print access only system to be implemented but not sure if this will be control by the Personal Data Protection Act, if is finger print access only then is very hard for STR to carry out because only people that register the print can access.

Regards
Nik