Malaysia’s Short-Term Residential Accommodation [STRA] Guideline Summary

A restriction on the number of operation days (akanight cap“) of short-term property rentals in Malaysia is one of the highlighted items proposed in the draft of the recent Short-Term Residential Accommodation (STRA) guideline. Would a night cap of 90 to 180 days per year be relevant in the regulation of this industry?

 WHY DO WE NEED A GUIDELINE FOR STRA?

Looking back over the years, the STRA industry has shown significant growth, opening up opportunities to the economic prospects of the country. While STRA offers economic productivity, it has raised discussions and concerns on how the industry should be regulated.

“The guideline aims to enhance productivity, economic growth, innovation and competitiveness in this space without compromising regulatory objectives such as ensuring safety, security, health, public good, and welfare,”

said the director-general of MPC, Datuk Abdul Latif Abu Seman.

Benefits of the short-term rental guideline

Benefits of the short-term rental guideline [Image credit: MPC]

If you are still unsure whether your rented property falls under STRA, refer to the image below.

What is STRA?

What is STRA? [Image credit: MPC]

THE KEY COMPONENTS OF THE GUIDELINE

The main objectives of the guideline would be to address the main concerns of STRA which are:

  1. Land zoning
  2. Public nuisance
  3. Safety & security
  4. Tax collection
  5. Industry concern

Speaking on the key components in the guideline, Datuk Abdul Latif Abu Seman said, “The draft guideline has six components, which covers the licensing of hosts and agents, licensing of platforms, number of days that the STRA can operate, fire safety requirement, managing public nuisance, and taxation.”

As part of the new guideline, short-term rental hosts and/or agents will need to obtain a license to operate their business. For those with strata properties (high-rise properties which are typically gated & guarded), it is essential to note that a consent letter from the Joint Management Body (JMB) is needed to operate a short-term rental business. Additionally, they would need to comply with the rules set by the JMB.

HOW TO REGISTER FOR LICENSING?

Step 1: Check for Eligibility

a. Host Eligibility
  • Malaysian citizen or permanent resident in Malaysia.
b. Agent Eligibility
  • For individual, Malaysian citizen or permanent resident in Malaysia.
  • For company, must be duly incorporated in Malaysia.
 c. Accommodation Eligibility
  • Must possess a Certificate of Completion and Compliance (CCC).
  • Permitted categories of land use and application.
  • Must not be a government subsidised development (PPR, PRIMA, PPAM, Selangorku, etc.)

 Step 2: Registration with Companies Commission of Malaysia (SSM)

  • Go to SSM website http://www.ssm.com.my to understand the guideline for registration with SSM
  • Pay the applicable fees (i.e. processing fee, name reservation fee, incorporation fee, etc.)

Step 3: Comply with rules by JMB/MC (for strata property only)

The JMB/MC is empowered to make bylaws for regulating the control, management, administration, use and enjoyment of the property.

Step 4: Application for License with Local Authority 

There are 4 types of licences which fall under the residential or commercial category respectively. The operational license may be valid for one (1) year, depending on the Local Authority. Hosts/Agents are required to renew the license by applying for the renewal of an operational license.

Type 1: Hosted rental (Residential)

  • The accommodation shall be occupied by the Host or Agent
  • Only part of the accommodation is offered for rental

Type 2: Un-hosted rental (Residential)

  • The accommodation shall not be occupied by the Host or Agent
  • Entire accommodation is offered for rental

Type 3: Hybrid hosted and un-hosted rental (Residential)

  • The Host or Agent does not occupy the accommodation continuously throughout the year.

Type 4: Commercial

  • Accommodation is categorized as commercial buildings such as SoHo, SoFo, SoVo, Serviced Apartments and converted residential buildings carrying commercial title.

Step 5: Stay Compliant

Stay compliant to current laws such as those related to taxes, nuisance control, safety, and security. Breach of laws as stipulated by the Government of Malaysia may result in revocation of license and deregistration.

The detailed process of the application for the licensing for non-strata and strata buildings is illustrated through the images below.

6 Steps to Obtain Host/Agent License

6 Steps to Obtain Host/Agent License

6 Steps to Obtain Host/Agent License [Image credit: MPC]

PROPOSED REQUIREMENTS FOR STRA IN MALAYSIA

The night cap on short-term rental was a topic that garnered much attention after it was revealed as one of the criteria for STRA. The night cap is determined by the type of rental, which are:

Type 1 – Hosted rental

  • No night cap

Type 2 – Un-hosted rental

  • Maximum of ninety (90) to one hundred eighty (180) days over a twelve (12) month period on all platforms accumulated, per accommodation.

Type 3 – Hybrid hosted and un-hosted rental 

  • No night cap for hosted
  • Maximum of ninety (90) to one hundred eighty (180) days over a twelve (12) month period on all platforms accumulated, per accommodation.

Type 4 – Commercial 

  • No night cap

While a night cap may seem to be a potential solution, it is not the only solution. What are your personal thoughts? Apart from the night cap, other proposed requirements for STRA were:

Malaysia STRA Requirements

Malaysia STRA Requirements

Malaysia STRA Requirements

Malaysia STRA Requirements

Malaysia STRA Requirements

Malaysia STRA Requirements
[Image credit: MPC]

WHAT’S NEXT MOVING FORWARD?

Your voice matters! Everyone deserves to be heard! You are greatly encouraged to provide your feedback on the proposed guideline at http://bit.do/mpc-stra-regulation.

The closing date for the submission of feedback is Nov 30, 2019. Download the guideline here.

If you are interested to know more about the regulation of short stay, join us at the FREE sessions in our upcoming October talks!