Are you a landlord who is experiencing trouble with your tenants? Are they damaging your property or not paying the rent? Do you know what to do if things go wrong with the tenancy? All of these are possible when you renting out your property. If you are lucky, you might get a prompt rent payment tenant and they will take good care of your property for you. But the question to ask, what are the odds of getting these perfect tenants?
Explore the next few tips to avoid and how to handle when the relationship between the landlord and the tenants turned sour.
1)Let the tenant sign the tenancy agreement.
As a landlord (the owner of the property), you have to protect yourself. Thus, preparing and getting the tenant to sign the agreement is highly recommended. The last thing you want is to have disputes with no binding documentation with you. For instance, you rent out your property and the tenant promised to rent it for 24 months. All of these are discussed and conveyed verbally. Just after 6 months, the tenant decided to quit and asking the security deposit back. The problem with this scenario is that there is no term that states the tenant has to give at least one month notice to the landlord. In this case, the tenancy falls short and the landlord has to look for another tenant to rent the vacant property.
2)Getting the tenancy agreement stamped. When you successfully rented out your rental property, a tenancy agreement has to be signed between you as landlord and your tenant. It is a legalized document that both parties agreed on the terms and conditions of the tenancy agreement. Tenancy agreements are usually signed before the tenant is moved in. A tenancy agreement which is not stamped is not void or unenforceable by itself. However, such agreement may be rejected as evidence if it is required to be produced in the court. In that event, any party who wishes to produce the unstamped document will have to pay the stamp duty payable and penalty before such document can be received as evidence.
3) Tenancy agreement stamp duty
Finding the stamp duty rate for tenancy agreement through Inland Revenue Board of Malaysia (LHDN/Hasil) is like finding needle in a haystack. It is not as straight forward to find anything on the website. However, a quick reference can be found via Malaysia Institute of Estate Agent (MIEA) website.
4)Tenancy vs Lease
A tenancy is usually refers to a shorter period of up to three years. Any longer than three years becomes a lease. Which is why stamp duty is chargeable for RM2.00 for up to three years only. Anything more than 3 years onwards will become a lease and chargeable stamp duty is different.
5)When the tenant fails to pay their rent
There are chances that the tenant will fail to pay for their rent. Rent in arrears can spell a problem. Keep a close check on rent payments and build a constant relationship with them to make sure that you contact the tenant promptly as soon as they fall into rent arrears. A simple call to remind them will do. But sometimes, the tenant just couldn』t pay for their rent because of 『genuine』 financial issue etc. In that case, you as the landlord have no choice but to reduce the risk for further loss by repossess the property as soon as possible. That is of course, refer to the terms in tenancy agreement for the event of default.
6)Preventing a bad tenant.
Being a landlord, the last thing you want to have is a bad tenant. There is little you can do when they already moved in. The landlord may have to file an eviction summons in court if he wishes to recover the property. This is only possible when an eviction notice has been served to the tenant by giving some time for the bad tenant to move out. Only after such given time lapsed, the landlord can take out a court order for eviction. All of these are unnecessary if you can see the telltale signs of bad tenant, such as:
Why do I have to sign any agreement/ documents?
If the prospect tenant can』t bother to sign or at least read the content of the agreement/document, they may as well can』t be bother if you ask them to pay for their arrears or if there is a complaint from neighbour about your tenant. Even so, you may have to explain to them nicely why it is important to sign the tenancy agreement and explain the terms how they will affects both the landlord and tenant. This is because some prospects are not bad tenant but just fear of signing agreements for not knowing what they are getting themselves into.
My last landlord did not ask/require for me to do this/that
Just because the previous landlord did not give them anything to sign or any requirement doesn』t mean that’s the standard you should follow. You should have your own policies or procedures that suit you best. Some landlords actually asked for 12 months in advance post-dated cheque for their shop lot to be given by the tenant before they can even consider of renting to them. The argument is that if the tenant can produce 12 months cheque in advance, it means the tenant/company is financially capable and sincere in renting the shop. This indirectly reduces the risk of arrears or late payment.
I need an apartment for next month!
As a landlord, there may be times when the property being vacant for weeks or months. When a prospect shows up and said he/she wanted to rent the property,suddenly you treat them like an angel to save you from disaster. The key is to never skip your renting process such as getting the tenancy agreement sign and stamped, verification steps, such as if they are student they should be able to produce student ID or any form of verification etc. Don』t get caught in the urgency to rent and subsequently ended up with defaulters and eventually hideous eviction process.
I』ll sign the agreement when I moved in
Never let your to-be-tenant moved in before they could sign the tenancy agreement. Everything needs to be in place before you handover the key to your property e.g. to have security deposits received, tenancy agreement signed, pre-signed cheques received, etc. If they are sincere, these would have been done at least two weeks before.
The prospect questions your process and procedures
As a customer or user, it is fair to ask for any questions before we actually commit to buy or take up a service. However, when the prospect ask you a lot of questions and subsequently debate each one of them, then this indicates that he or she may not be a suitable tenant for you. If you rented out your property for years, then you』ve already know what works and what’s not.
You feel nervous when the prospect nears you
Follow your instinct. Do not rent your property to the person that you are not comfortable with. This is referring to the prospect that has a short tempered and tend to raise their voice when they disagree with something that you proposed. When this happens, needless to proceed further but to cut short the meeting to prevent anything happen in the future that makes you feel intimidated.
7)Your fixed furniture and equipment (FF&E) damaged when tenant leaves.
You rented out your property with some furniture inside e.g. sofa, kitchen cabinet, wardrobe, bed, table etc. When the tenant leaves, you find some of the furniture broken or damaged to the extent that they are not repairable. In this case, the tenancy agreement plays a major role in helping you to recover the loss. When drafting your tenancy agreement, you must advise your lawyer to include such clause that in the event of any damage to the FF&E items, you as the landlord has the right to deduct from security deposit. Though by standard, you have to return the security deposit when your tenant leaves. In addition, when drafting your tenancy agreement, be sure to include itemise list of what FF&E items included when the tenant is moving in. This is to avoid dispute in the future, where the tenant claim that any particular piece of furniture belong to them. Best if you could take a photo of each furniture and include them as appendix in the agreement.
8)Your tenant leaves property behind when they leave.
This is more relevant to commercial property renting as most offices/shop lots are usually empty/bare. Though you may think it is good idea to renovate or partition into several rooms for the tenant to use, but the fact that this is not advisable as your renovation layout may not suitable for the tenant’s business operation. In this case, most tenant will tend to renovate on their own. However, the problem is when they leaves, those renovation such as partition still intact as they are. In that case, you have two options. Either you ask them to remove them and return the property as they 『move-in-condition』 before they leave orif you think you can make use of anything left behind then this shouldn』t be any problem. The problem is when you cannot make use of anything left behind and it will incur additional removal cost. When it comes to return the property as 『move-in-condition』, again, it gets back to your tenancy agreement. You have to draft your tenancy agreement in such a way that when your tenant leaves, they have to return it exactly the same condition as when they moving in. Anything not remove is depending on discretion of the landlord. A mutual agreement is to be reached between the landlord and tenant. For instance, aircondition units sometimes the tenant will just leave them intact and the landlord will be happily to accept it.
~SOURCE : DANNY KO, RAPID PROPERTY CONNECT 2015