GEORGE TOWN: Short-term rental operators in Penang will now pay lower annual licence fees under newly approved amendments to the state’s local authority by-laws.
State Local Government Committee Chairman Jason H'ng Mooi Lye announced on Friday (Oct 23) that the annual licence fee for a Private Lodging (Tempat Penginapan Persendirian or TIP) unit with up to three rooms has been reduced from RM1,000 to RM500 to ease financial burdens on operators.
"Operators will pay RM500 annually for each TIP unit, with an additional RM200 per year for each extra room. A maximum of two additional rooms is permitted under this fee arrangement," H'ng told a press conference at Komtar on Friday (Oct 23).
The fee reduction is among four key amendments to the Private Short-term Accommodation (Local Authorities of Penang) By-laws 2026, which took effect on Aug 1. The changes also cover the maximum number of permitted rooms, the definition of private lodging, and the overall fee framework.
Under the revised rules, the maximum number of rooms allowed at each private lodging premises has been doubled from five to 10, subject to conditions set by local authorities. H'ng noted that the increase gives eligible operators greater flexibility to manage larger properties while staying within the regulatory framework.
The state has also replaced the previous flat annual rate of RM1,800 per unit with a tiered fee structure based on operational scale. Under the new breakdown, single-room premises will pay RM400 annually, two-room units will pay RM600, three-room properties will pay RM800, and four-room lodgings will pay RM1,000. Operators managing premises with five to 10 rooms will continue to pay the maximum RM1,800 annual rate. The change ensures that smaller operations with one to four rooms benefit from substantially lower fees.
Additionally, an updated definition of "private lodging" has been introduced to clarify the distinction between TIP premises and traditional hotels based on their nature, actual use, and mode of operation. H'ng explained that this measure prevents commercial hotel operators from reclassifying or rebranding their businesses as private lodgings to exploit flexible TIP provisions and bypass hotel licensing standards.
The revisions follow extensive feedback and proposals collected from operators, industry associations, and non-governmental organisations after the initial by-laws were introduced.
The Penang State Executive Council approved and confirmed the amendments on Oct 19, and the changes are currently undergoing the official gazettement process. A grace period is in effect until Jan 1 to allow all affected parties sufficient time to prepare and adapt.
H'ng cautioned that non-compliant operators face severe penalties, including compounds of up to RM1,000, imprisonment for up to one year, and the potential seizure of their premises by local authorities. He urged all operators to remain fully compliant with active licensing rules.
