What is the difference between a tenancy and a lease in Malaysia?
Agreements below three years are generally referred to as tenancies.
Agreements exceeding three years may be structured as leases and can be registered on title.
In practice, most corporate office agreements in Klang Valley, including 3+3 year terms, are executed as tenancy agreements and are typically not registered.
What is the standard office tenancy term in Klang Valley?
Common market structures include:
- 3 years with an option to renew for 3 years
- 2 years with an option to renew for 2 years
A 3-year term is widely adopted in the commercial office leasing market.
When does the office tenancy commence?
The commencement date is stated in the Letter of Offer and tenancy agreement.
It may be:
- Upon vacant possession
- On a fixed agreed date
- After a renovation period
Rental commencement and renovation access may differ depending on agreed terms.
What payments are required when securing an office tenancy?
Upon acceptance of the Letter of Offer:
- One month rental earnest deposit
Upon signing the tenancy agreement:
- Security deposit equivalent to 3 months’ rental
- Utilities deposit equivalent to ½ to 1 month rental
- Stamp duty on the tenancy agreement
Deposit structure may vary by building.
What is included in the monthly office rental?
Monthly rental typically covers the demised office space only.
It does not usually include:
- Utilities within the premises
- Internet and telecommunications
- Car park rental
After-hours air-conditioning
What additional costs should be expected beyond rental?
Common additional costs include:
- Service charge
- Utilities consumption
- Car park charges
- After-hours air-conditioning usage
- Fit-out deposits or approval fees
Total occupancy cost consists of rental plus these components.
Who prepares the office tenancy agreement?
The landlord’s appointed solicitor typically prepares the tenancy agreement using the building’s standard format.
Who bears the legal fees and stamp duty?
Each party generally bears its own legal fees.
The tenant is responsible for stamp duty on the tenancy agreement in Malaysia.
How is stamp duty calculated in Malaysia?
Can an office tenancy agreement be terminated early?
An office tenancy agreement is legally binding for the full agreed term unless early termination provisions are included.
Without such provisions, both parties remain contractually bound until expiry.
What documents are required to sign an office tenancy agreement?
For companies incorporated under the Companies Act 2016, commonly required documents include:
- Section 14 – Superform
- Section 15 – Notice of Registration
- Section 17 – Constitution, if adopted
- Section 58 – Notification of Appointment of Directors
- Section 58 & 236(2) – Notification of Appointment of Company Secretary
- Latest SSM Company Profile
- Board Resolution authorising the tenancy
- Director’s identification documents
Additional documents may be requested by the landlord.
Can service charges be revised during the tenancy term?
Service charges cover building operational costs such as:
- Security
- Cleaning of common areas
- Lift and mechanical maintenance
- Common utilities
If structured as variable charges, revisions may occur based on actual operating costs.
Is subletting or assignment allowed?
Subletting or assignment requires prior written consent from the landlord.
Approval is subject to landlord policies and the proposed occupant’s profile.
How are car park bays allocated?
Car park allocation is typically based on:
- Leased floor area
- Building allocation ratio
Additional bays are subject to availability and separate charges.
Is reinstatement required when the tenancy expires?
Unless otherwise agreed, tenants are required to reinstate the premises to its original condition upon expiry or termination.
A joint inspection is typically conducted before handover.