Renting a factory or warehouse is a big step for any business.
 

But before you sign the lease, it's crucial to understand tenant rights in Malaysia and how they shape the landlord tenant relationship.
 

Knowing your legal standing can protect your operations, prevent conflicts with your landlord, and ensure your investment is secure.

 

What are the rights of a tenant?

A tenancy agreement gives you, the tenant, the right to exclusive possession of a property for an agreed period.
 

This means you can use the space without interference from the landlord, as long as you follow the terms of your contract.
 

This key right is supported by others, such as the right to a safe, functional property and the right to privacy.
 

These protections ensure the factory or warehouse you lease is suitable for its purpose and that your business can operate without unexpected disruptions.

 

Tenant Rights in Malaysia

Many business owners are surprised to learn that Malaysia does not have a unified Tenancy Act for rental agreements.

Instead, tenant rights are governed by a range of different applicable laws:
 

• Contracts Act 1950: This act governs the tenancy agreement itself, treating it as a legally binding contract. It addresses conflicts related to the agreement's terms.
   
• Civil Law Act 1956: Payment disputes are handled under this act, ensuring a framework to resolve disputes and financial disagreements.
   
• Distress Act 1951: This specifically covers matters related to eviction, providing clear guidelines for both landlords and tenants.
   
• Specific Relief Act 1950: This vital act prevents landlords from evicting tenants or making properties inaccessible without a valid court order, protecting your right to uninterrupted possession.
   
• National Land Code 1965: This legislation formally defines what constitutes leases and tenancies within the Malaysian legal framework.
   
• Common Law or Case Law: For overarching rental disputes, these precedents may also guide decisions, adding another layer of protection.
   

Rights of Tenant Against Landlord

 

 

 

Responsibilities of Tenants

 

Missed payments can result in arrears and may lead the landlord to pursue legal action or claim for unpaid rent, potentially putting your tenancy at risk.
 

Tax Applicability for Renting Industrial Properties

Effective July 1, 2025, a service tax will apply to the rental or leasing of tangible assets, including commercial buildings, factories, and warehouses.

This tax is imposed on the lessor (property owner) if they are a registered person with total taxable value exceeding RM500,000 within 12 months.

Exclusions:

• Residential property rentals (including SOHO or serviced apartments used as housing).
   
• Rental of reading materials (e.g., books, magazines).
   
• Assets located outside Malaysia.
   
• Financial leases (where ownership transfers to the tenant at the end of the term).

Tenant Exemptions You Need to Know

• Small and Micro Enterprises (SMEs): If you're an SME registered under MyPMK, you can be exempt from service tax on rental or leasing services.
   
• Non-Reviewable Contracts: Contracts signed and stamped by LHDN on or before June 9, 2025, with fixed prices and no adjustment clauses, are exempt from service tax from July 1, 2025, to June 30, 2026. This protects existing tenants under fixed-rate agreements from retroactive taxation during the first year of implementation.
   
• Public and Local Authorities: Federal and State Governments are fully exempt. Local Authorities (PBT) receive a temporary exemption from July 1 to September 30, 2025. After this period, rentals provided by local councils become taxable.
   
• Group Relief: If a tenant and landlord are companies within the same corporate group, rental services may be exempted. This applies if intergroup taxable services do not exceed 5% of the total group service value.
   
• Aircraft and Ship Rentals: Rentals of aircraft (excluding drones) and ships (excluding floating platforms) are exempt from service tax starting July 4, 2025.

 

Tips for Tenants in Malaysia

• Scrutinise the Tenancy Agreement: Never sign a contract you do not fully understand. Read every clause carefully, especially those concerning rent, deposits, repair obligations, renewal options, and termination. If needed, seek legal advice before signing.
   
• Document Everything: Maintain a written record of all communication with your landlord, including repair requests and notices. Keep copies of your tenancy agreement, receipts, and any correspondence.
   
• Conduct a Thorough Inspection: Before moving in, inspect the property with the landlord or their agent. Take detailed photos and videos of its condition, noting any existing defects. This evidence will be invaluable if disputes over damages arise later.
   
• Understand the Exit Clause: Be clear on the conditions for terminating the lease. Know the notice period required, and any penalties associated with early termination.

Stay Informed, Stay Protected

Knowing your rights and responsibilities as a tenant is about building a secure foundation for your business and avoiding problems.

At Industrial Malaysia, we connect businesses with prime industrial properties across the country.

Our expertise ensures you find a space that meets your needs and a lease that protects your interests. Explore our listings today and take the next step in scaling your business.