Pushback on proposed law over rental security deposits

PETALING JAYA: Should the two-month security deposit for rental units be handed to a government agency for safekeeping?

If things go according to plan, this will indeed be the case with the proposed Residential Tenancies Act to be tabled in the Dewan Rakyat.

The Housing and Local Government Ministry is seeking feedback on the proposed legislation through the Malaysia Productivity Corporation to determine its feasibility.

In a document entitled Proposed Survey and Drafting of the Residential Tenancy Act, the ministry said that a Comptroller of Residential Tenancy would be authorised to manage the security deposits that would be parked under a neutral agency, to better address any conflict between landlords and tenants later.

It added that the security deposit was to be returned to the tenant once the tenancy agreement expired, provided there were no expenses that needed to be deducted.

In the event of a dispute, the matter will be referred to a tribunal.

National Housing Buyers Association (HBA) secretary-general Datuk Chang Kim Loong, however, said it was unnecessary for the deposit to be kept in a government account, saying it would prevent both the owner and tenant from accessing their money.

“If the owner needs funds to carry out repairs or settle unpaid bills, how long will the process take? What about the tenants, who usually use the deposit for another property – when will they get their money?

“The whole process to file the claim, the bureaucracy, then going to a tribunal, will take months and does not benefit owner or tenant.

“Knowing government agencies, it is never easy to get your money back,” he said when contacted.

Chang said the ministry was dabbling in something it was not equipped to handle, even saying the issue of 198 abandoned projects had not been resolved. He also said the ongoing survey had reached out to only 3,119 respondents.

“In a nutshell, the sample size is only reflective of 0.009% of the total population in the country.

“The survey is being conducted among 87% of a certain ethnic group within the Klang Valley only. Other cities, towns and capitals of various states in Malaysia are not involved.

“Hence, the validity of the survey and random sampling create doubts. Compounding the problem is that out of the 3,119 respondents, 2,015 or 65% of them are tenants, indicating that the survey may be skewed towards tenants’ interest,” he added.

However, Chang noted that the proposed Bill had several commendable clauses such as the establishment of a tribunal to mediate disputes, adding that the mitigation process in courts could be too costly.

The survey, which ends on Feb 28, has been distributed to stakeholders including the HBA, Real Estate and Housing Developers Association, management committees, joint management bodies, and resident associations, among others.