Airbnb, Malaysian Law and You. Is Airbnb Legal in Malaysia?
Here’s the question, is Airbnb legal in Malaysia? Can I rent my condominium or apartment on Airbnb? There is no question Malaysia’s short-term rental industry is booming. Over half a million guests stayed at Airbnb’s in Kuala Lumpur during 2017, and with Malaysia’s tourism contributing over RM80 billion to the local economy per year, Airbnb and other short-term rental platforms are becoming more and more attractive to attentive property owners.
Short-term rentals have a lot going for them – they’re flexible, easy to administer (particularly with the help of professional property managers), and really take advantage of flourishing tourist numbers to deliver better returns than traditional rentals.
But among all the amazing news, you may have heard some stories of legal doom. “I heard that condominium just banned Airbnb”, says your friend’s cousin. “I heard running an Airbnb is actually illegal”, mentions your nosey neighbour. So, are these stories true? Could you be in trouble by jumping into Malaysia’s booming short-term/homestay rental market?
The short answer: in 90% of cases, no.
Let’s dive into a little more detail and sort some of the truth from the rumours with a handy little list of questions you can ask yourself about your potential short-term rental unit.
1. Is my property on a residential title?
If your unit is situated on a residential title development, there are some checks you should do to determine if there may be any obstacles to running an Airbnb.
a. Are short-term rentals prevented under your development’s by-laws?
If your development’s by-laws contain terms that prohibit short-term rentals, you won’t be able to operate an Airbnb without violating the building’s by-laws. This could result in a maximum penalty of RM200 per violation, as per section 32 of the Malaysian Strata Management Act 2013.
If your development’s by-laws do not contain terms prohibiting short-term rentals, you’re in the clear! However, even though it is always a host’s responsibility to operate homestay rentals without causing any disturbance to the neighbours, you are advised to be extra cautious and low profile in this type of buildings. If the neighbours feel disturbed, they can then vote to implement a new bylaw to ban Airbnb in the next AGM. Continue reading below to understand more about it!
b. Can a development ban short-term rentals?
Yes and no – again, it gets a little tricky.
In residential developments, the Joint Management Body or Management Corporation can impose rules and by-laws by to regulate the use and enjoyment of the building – with a potential for fines for owners that breach any by-laws. These rules are established by building management voting them into effect during their Annual /Extraordinary General Meetings. Banning short-term rentals would require a special resolution, which needs 75% of the meeting votes to pass (instead of a simple majority like regular resolutions). So yes, building management can certainly try to ban Airbnb.
However, section 70(5)(a) of the Malaysian Strata Management Act 2013 states:
“No additional by-law shall be capable of operating to prohibit or restrict the transfer, lease or charge of, or any other dealing with any parcel of a subdivided building or land.”
As the Act does not restrict a lease to have a minimum length, a lease can be of any length from 1 day to years. A by-law banning short-term rentals would restrict the lease of a unit. This would be inconsistent with the provision quoted above, and would make the special by-law, if enacted, legally questionable.
Having said that, challenging the building management or JMB with this clause might be time consuming or costly. It is more advisable to avoid any confrontation by hosting with a low profile. For example, you can set a minimum number of nights to 7 nights to reduce the traffic to your property and attention received.
2. Is my property on a commercial title?
If a development has a commercial title, there should be no issues running Airbnb in that development. Typically, mixed development, serviced apartments, SoHo and SoVo units are located on commercial titles, so running an Airbnb in these units should not pose any legal issues.
It is quite common that sometimes the management or JMB of such buildings also attempt to ban Airbnb, unknowing of the rights of the owners over their commercial title properties. Most of the time these happened simply due to lack of knowledge and confusion when they learnt that other condominiums have successfully banned Airbnb. However, based on what we gathered from different sources, confirms that homestay rental is allowed in any properties on a commercial land title.
If you are an owner of such building and is being penalised or banned from renting on Airbnb, here’s what you could do.
Check with your management or JMB whether they are aware of your rights as the owners over short term rentals in a commercial title building.
If they are unsure, or insist, request them to clarify with your city council before enforcing any ban or penalty on you.
3. Is my property located in Sabah?
Sabah is the only Malaysian state where the state government has declared Airbnb illegal. If you’re located in Sabah, sadly, you’re out of luck.
If your property is located anywhere else in the country, there are no federal or state laws banning short-term rentals like Airbnb. There was a period in 2016 in which Penang Airbnb hosts were facing strict clamp downs on Airbnb properties, with Majlis Penbandaran Pulau Pinang (MBPP) coming after them with fines and summons. However, this enforcement seems to have slowed down since.
Riding the short-term rental rush
Malaysia’s Airbnb boom is in full-swing, and it doesn’t look like slowing down anytime soon. According to Airbnb, Malaysian hosts welcomed 1.5 million guests in 2017 alone – and it’s only risen from there, feeding Malaysia’s exploding tourism industry and helping to cover the 23,600 daily hotel room shortages.
Will the government ban short-term rental? It’s impossible to say for sure. However, with the importance of tourism to the Malaysian economy and additional benefits of short-term rental for the local property market, market leaders expect that any position taken by the government of the day will be supportive of the short-term rental industry.
With short-term rentals largely legally secure in Malaysia, now is an ideal time for property owners to tap into this prospering market. Whether you run your own Airbnb or engage professional, hassle-free property managers, this is your best opportunity to maximise your investment’s growth and ride Malaysia’s short-term rental wave.
See updated news about Airbnb legality here.
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