PETALING JAYA: The Real Estate and Housing Developers’ Association (Rehda) Malaysia has objected to the Residential Tenancies Act (RTA) proposed by the Housing and Local Government Ministry (KPKT) on the ground of several points in the proposed act that could be detrimental to the industry, according to Rehda acting president Datuk NK Tong.
He said Rehda recognised 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 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.
“We also support the creation of a residential tenancy agreement template but we hope that the template will still allow room for amendments should both landlord and tenant be agreeable,” he said in a statement.
Among the main concerns highlighted by the association include that the RTA should only be applicable in specific circumstances; security deposit placement with a government agency; the amount of security and utility deposits payable by the tenant; rent control; and prohibiting the landlord from claiming unexpired term rent.
“We strongly oppose the government’s intervention in what should have been a private agreement between two parties. However, there may 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 is from the B40 group, thus the landlord and the tenant are not on equal footing.
“Rehda proposes that the RTA should only apply to residential tenancies where the monthly rent is below RM750 a month, which according to the data provided in the Regulatory Impact Statement, is considered the cut-off point for classification as falling within the low and low-middle monthly rent range,“ he said.
He said security deposit placement would 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 including to defray the costs of managing the proposed Tenant Landlord Database is misguided, as the cost should only be defrayed from taxes collected through the nation’s taxation system. Interest earned on the deposits should rightly remain the property of the depositor,“ he said.
He said the draft RTA proposed to set the amount of security deposit to two months’ rent and one month’s rent for utility deposit.
“Rehda views that the number 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, 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,“ he said.
Also, Rehda strongly disagrees with any form of rent control including the proposed restriction to limit the number of rent increases and to 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 only fair to leave the rental rate to be determined between the landlord and the tenant. Further, capping rent control will only retard property investment and ultimately negatively impact economic growth.
“The proposal to disallow landlord to claim the rent of unexpired term in the event of breach by the tenant is unjust. A defaulting tenant should not be given protection since the landlord is the one who will suffer when a tenant is in breach,“ he said.
He said 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.
Rehda 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.
