Short-term stays and the law

KUALA LUMPUR (Nov 7): Short-term stays – some people like them but some prefer them to be not around. They are sort of polarising.

And the latest landmark decision by the Federal Court last month in the case of Innab Salil & Ors vs Verve Suites Mont’ Kiara Management Corp has not cooled things down.

The apex court ruled that management corporations and joint management bodies could ban short-term rentals through their own house rules.

The Federal Court’s decision applies not only to condominiums and apartments but also to townhouses and landed gated and guarded homes that are stratified, reported The Edge Malaysia.

So, are short-term stays doomed?

“It is worth noting that that the decision does not prohibit short-term rentals across the board, as it depends on whether the rules of a property development allow or disallow such an arrangement,” wrote the weekly.

“To my mind, it will be a misconception to say that the Federal Court decision has far-reaching consequences to prohibit all short-term rentals. It must be noted that, in the Salil case, the house rules of that particular apartment, which were passed at the Joint Management Body meeting, clearly endorsed the prohibition of short-term rentals,” Lawyer Ranjan N Chandran, a commercial and construction partner at Hakem Arabi & Associates told the business publication.

Ranjan said “there should be no problem allowing short-term rentals if the house rules of the particular apartment or condominium permit it”. But he also added that states such as Penang and Selangor want to “impose blanket bans on short-term rentals in strata buildings”.

“Imposing the proposed blanket bans on short-term rentals will adversely affect the tourism industry in Malaysia, which is already seriously going through a slowdown, owing to the Covid-19 pandemic,” he explained.

He added that there is no justification for the blanket bans “if there are regulations and controls in place”.

It has been reported earlier that the Malaysian Productivity Council proposed limiting the number of rental days to between 90 and 180 days in a year.

Meanwhile, Zico law partner Jeyakuhan S K Jeyasingam said: “Homebuyers with the intention of investment via short-term rental business activities are advised to take necessary steps to ensure that the targeted property allows for short-term rentals across all platforms, including but not limited to Airbnb, Agoda Homes and Booking.com.”

“Similarly, to provide assurance to homebuyers, developers can also opt to enter into deeds of mutual covenants with the purchasers, expressly specifying the use of the relevant property for short-term rentals, and restricting the making of by-laws that prohibit short-term rentals within the property,” he added.

Read the full report in this week’s The Edge Malaysia

Get the latest news @ www.EdgeProp.my

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