Rehda: Residential Tenancy Act should be reviewed and reconsidered carefully

PETALING JAYA (March 2): The Real Estate and Housing Developers’ Association Malaysia (Rehda) is cognisant of the Residential Tenancy Act (RTA) proposed by the Ministry of Housing and Local Government (KPKT), which recently went through a month-long consultancy period with affected stakeholders.

In a statement, Rehda acting president Datuk N K Tong (pictured) recognised the intention behind the proposed RTA that aims to facilitate some issues arising in the market. However, such an act should take into account the fact that not all tenants and landlords have the same needs and capabilities, and require different levels of protection, particularly tenants from the B40 group.

“While there are several points in the proposed act’s regulatory impact statement which may be helpful to resolve disputes that may arise between the parties involved in residential tenancy matters, we are also concerned on some proposals in the act, which should be relooked and reconsidered carefully otherwise, the impact could be detrimental to the industry,” said Tong.

Some of the main concerns highlighted is that the RTA should only be applicable in specific circumstances. In principle, Rehda strongly opposes the government’s intervention in what should be a private agreement between two parties. There may be situations, however, where the tenant is at a disadvantage compared with the landlord, thus requiring a higher level of protection. For instance, if the tenant is from the B40 group, the landlord and tenant are not on equal footing.

As such, Rehda proposed that the RTA should only apply to residential tenancies where the monthly rent is below RM750. This is based on the data provided in the regulatory impact statement and is considered the cut off point for the low and low-middle monthly rent range.

In terms of the security deposit placement that is being handed to a government agency, Rehda noted that such placements will open up the possibility of delays, such as for refunds and claims for damages due to the additional layers of bureaucracy.

Additionally, Rehda is of the view that KPKT’s plan to utilise the interest earned from the deposits to fund the administration of the RTA to defray the costs of managing the proposed tenant landlord database is misguided. This is because the cost should only be defrayed from taxes collected through the nation’s taxation system, and interest earned on the deposits should rightly remain the property of the depositor.

The association added that the amount of security and utility deposits should be payable by the tenant. The draft RTA proposes to set the amount of security deposit to two months’ rent and one month’s rent for utility deposit. This is where the amount of deposits to be collected should be left to market forces, and between the landlord and tenant — there is no one-size-fits-all scenario for tenancy arrangements, said Rehda.

Rehda explained that 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 work involved in evicting a defaulting tenant, all of which can take up to at least three months.

Rehda also strongly disagrees with any form of rent control, including the proposed restriction to limit the number and quantum of rent increases. The association said that 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 tenant, it added. Also, capping rent control will only retard investment in property and ultimately negatively impact economic growth.

In addition, the proposal to disallow a 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, said Rehda.

“The proposal for the establishment of an RTA tribunal may provide a 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 hope that the template will still allow room for amendments should both landlord and tenant be agreeable,” Tong concluded.

Edited by Racheal Lee

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