Want to solve the affordability problem? Build up the rental market, says lawyer

PETALING JAYA (Sept 21): A lawyer has advocated for the rental market to be strengthened with more comprehensive laws that sets the terms of a tenancy agreement and address disputes between the landlord and tenant as a way of easing the pressure of making homes affordable on the public sector.

More robust tenancy laws will protect the rights of both landlords and tenants, making renting a more viable option for people who cannot afford their first homes yet, said Amir Toh Francis & Partners advocate and solicitor Ivan Chan in a report by The Sun.

According to him, there were no tenant-landlord provisions under the Housing Development Act, while the National Land Code defines the tenancy agreement in terms of its duration and if the agreement can be endorsed or registered, among others.

However, it does not prescribe the mandatory terms of a tenancy agreement and covers disputes, giving both parties the freedom to contract.

This could lead to conflicts, due to lopsided agreements favouring the party with more bargaining power, leaving the party with less bargaining power with less protection.

Examples of sources of conflicts include landlords being slow to refund deposits, deposits being withheld, unpaid rent and challenges in evicting tenants.

In the event of an impasse, both the landlord and tenant may have to head to court, spending more time, money and effort, he said.

Chan added that tenant-landlord relationships fall under the Law of Contract and Common Law and the tenancy agreement, which is governed by the Law of Contact, is the only agreement that regulates the relationship between landlord and tenant.

With a proper mechanism in place, both parties may instead head to a tribunal, a less formal platform for conflict resolution.

He also recommended that Malaysia study the Private Housing (Tenancies) (Scotland) Act 2016 for best practices to be used in the formulation of its own
Residential Tenancy Act.

The act, which applies to the private residential rental market, requires that landlords be registered with the Scottish Landlord Register to ensure that they are “fit and proper” before they are allowed to rent out a property.

To be eligible, prospective landlords are required to have a good track record, no prior convictions, and must not be involved in fraud, dishonesty, violence and drugs.

Failure to comply can result in fines of up to £15,000 (RM81,000), said Chan.

The act also provides for a Model Tenancy Agreement which outlines core rights and obligations for all tenancies, and a tenancy deposit scheme where the deposits are ring-fenced whereby they are held by third parties, to prevent landlords from using the funds for invalid purposes.

At the end of the lease, the landlords and tenants can consult the third party tenancy scheme to determine if the deposit can be returned in full to the tenant or not.

In the case of a dispute, they can go to the First-tier Tribunal for Scotland Housing and Property Chamber, which will decide if the deposit can be returned or not, or how much can be deducted from the deposit if the landlord does not wish to return the full amount. 
In addition, landlords are also not allowed to increase the rent more than once within a 12-month period and must give three months' notice to their tenant first.