Commercial Tenancy Agreement (Malaysia)
COMMERCIAL TENANCY AGREEMENT
Contracts Act 1950 (Act 136) | National Land Code 1965 | Distress Act 1951 (Act 251) | Stamp Act 1949 (Act 378)
THIS COMMERCIAL TENANCY AGREEMENT is made on [Agreement Date]
BETWEEN:
(1) [Landlord Name] of [Landlord Address] (hereinafter referred to as the "Landlord"); AND
(2) [Tenant Name] of [Tenant Address], represented by [Tenant Signatory] (hereinafter referred to as the "Tenant").
1. PREMISES
1.1 The Landlord agrees to rent and the Tenant agrees to take on tenancy the following commercial premises:
Address: [Premises Address]
Type: [Premises Type]
Floor Area: [Floor Area]
Parking Bays: [Parking Bays]
(hereinafter referred to as "the Premises")
1.2 Permitted Use: The Premises shall be used solely for [Permitted Use] and for no other purpose without the Landlord's prior written consent.
2. TENANCY PERIOD
2.1 The tenancy shall commence on [Tenancy Start] and shall expire on [Tenancy End].
2.2 Rent-Free Period: [Rent-Free Period] (if applicable), during which the Tenant may carry out fitting-out works.
2.3 Option to Renew: [Renewal Option]. If yes, the Tenant must serve written notice of exercise not less than [Renewal Notice] before expiry. Upon renewal, rent shall be adjusted by [Rent Escalation].
3. RENT AND DEPOSITS
3.1 Monthly Rent: [Monthly Rent] per month, payable in advance on or before the [Rent Due Day]th day of each calendar month.
3.2 Security Deposit: [Security Deposit], held as security for performance of the Tenant's obligations. To be refunded within 30 days after delivery of vacant possession less proper deductions.
3.3 Utility Deposit: [Utility Deposit], to be applied against outstanding utilities upon termination.
4. TENANT'S OBLIGATIONS
4.1 The Tenant shall use the Premises solely for the Permitted Use and shall obtain all necessary business licences from the relevant local authority (Majlis Perbandaran / Majlis Bandaraya) under the Local Government Act 1976.
4.2 The Tenant shall service and maintain all air-conditioning units serving the Premises at least once every three months and shall keep the Premises in good repair.
4.3 Signage: [Signage Rights]. If permitted, the Tenant may erect a fascia board and signage subject to compliance with local authority by-laws and the Landlord's prior written approval of the design.
4.4 Assignment / Subletting: [Assignment Allowed]. The Tenant shall not assign this tenancy or sublet the Premises without the Landlord's prior written consent.
4.5 Reinstatement: At the end of the tenancy, the Tenant shall reinstate the Premises as follows: [Reinstatement Obligation]. The Tenant shall complete reinstatement before delivering vacant possession.
5. LANDLORD'S OBLIGATIONS
5.1 The Landlord shall maintain the structural elements, common areas, and building M&E systems of the building in which the Premises are located.
5.2 The Landlord shall not interfere with the Tenant's quiet enjoyment of the Premises during the tenancy.
6. TERMINATION
6.1 Either party may terminate this Agreement before expiry by giving [Notice Period] prior written notice.
6.2 The Tenant shall complete all reinstatement works and deliver vacant possession of the Premises to the Landlord in their original condition on or before the termination date.
6.3 If the Tenant fails to reinstate, the Landlord may carry out reinstatement works at the Tenant's expense and deduct the cost from the Security Deposit, suing for any balance.
7. DISTRESS AND STAMP DUTY
7.1 If rent is in arrears, the Landlord may apply to the Magistrates' Court for a Writ of Distress under Section 4 of the Distress Act 1951 to seize the Tenant's moveable goods on the Premises.
7.2 This Agreement shall be stamped under Schedule 1, Item 22 of the Stamp Act 1949 at LHDN. An unstamped agreement is inadmissible as evidence in court under Section 52 of the Stamp Act 1949.
8. GOVERNING LAW
8.1 This Agreement is governed by the laws of Malaysia and the jurisdiction of [Governing State]. Disputes shall be resolved in the courts of [Governing State] under the Subordinate Courts Act 1948.
Landlord
________________
Signature
Tenant
________________
Signature
Witness (Landlord)
________________
Signature
Witness (Tenant)
________________
Signature
What Is a Commercial Tenancy Agreement (Malaysia)?
A Commercial Tenancy Agreement in Malaysia governs the letting of property and fixes the rent, term, and maintenance duties of each party.
Commercial tenancy agreements differ materially from residential tenancies in several respects. Commercial tenants generally negotiate longer initial terms — typically two to three years with options to renew — and assume greater obligations for maintenance, air-conditioning servicing, and reinstatement of the premises to their original condition at the end of tenancy. Commercial landlords in Kuala Lumpur's Golden Triangle, Cyberjaya, and other business districts commonly include rent escalation clauses allowing the landlord to increase rent upon renewal at the prevailing market rate or by a fixed percentage.
The Distress Act 1951 applies to commercial tenancies and gives commercial landlords a more powerful enforcement tool than residential landlords: a Writ of Distress allows the landlord to seize the tenant's business equipment, stock, and assets located on the premises to satisfy rent arrears, without first obtaining a court judgment, subject to the procedure under Section 4 of the Distress Act 1951. Certain goods are exempt from distress under Section 9 of the Distress Act 1951, including goods belonging to third parties.
For commercial tenancies in strata office buildings — governed by the Strata Titles Act 1985 and the Strata Management Act 2013 — both landlord and tenant must comply with the building management rules imposed by the Management Corporation (MC) or Managing Agent. The Malaysian standard commercial lease market broadly follows the Royal Institution of Surveyors Malaysia (RISM) guidelines, though these are not legally binding.
The legal framework governing the Commercial Tenancy Agreement (Malaysia) in Malaysia draws on several key statutes and regulatory bodies. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Parties executing a Commercial Tenancy Agreement (Malaysia) in Malaysia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The National Land Code 1965 (Act 56) sets the foundational requirements.
When Do You Need a Commercial Tenancy Agreement (Malaysia)?
A commercial tenancy agreement is required in Malaysia whenever a business occupies commercial premises under a rental arrangement, regardless of the size or nature of the business.
A commercial tenancy agreement is needed when a Sdn Bhd company registered with the Companies Commission of Malaysia (SSM) or a sole proprietor registered under the Registration of Businesses Act 1956 rents an office unit for its operations. The company's registered address with SSM may be the tenanted office, requiring a valid tenancy agreement as proof of address for SSM filing purposes.
A commercial tenancy agreement is required when a retailer occupies a shop unit in a shopping mall, commercial podium, or shophouse. Mall landlords typically use their own standard-form lease documentation, but independent landlords renting shophouse units rely on a negotiated tenancy agreement.
A commercial tenancy agreement is needed when a logistics company, manufacturer, or e-commerce fulfilment operator rents warehouse or factory space in an industrial area such as Shah Alam, Klang, Subang, Johor Bahru, or Penang Free Industrial Zone. Industrial properties must be occupied in accordance with their approved land use under the relevant state's local plan (Rancangan Tempatan) and the Industrial Coordination Act 1975.
A commercial tenancy agreement is required when a restaurant or food and beverage operator rents premises in a food court, standalone shophouse, or commercial complex. The F&B operator must obtain a business licence (Lesen Perniagaan) from the relevant local authority (Majlis Perbandaran) and a food premises licence under the Food Act 1983, and the tenancy agreement should confirm the permitted use as food and beverage operations.
A commercial tenancy agreement is needed when a healthcare provider, clinic, or pharmacy rents premises to operate a business regulated by the Ministry of Health Malaysia (MOH) under the Private Healthcare Facilities and Services Act 1998 or the Sale of Drugs Act 1952.
What to Include in Your Commercial Tenancy Agreement (Malaysia)
A complete Malaysia commercial tenancy agreement must include the following essential elements.
Parties and identification: Full legal names, SSM registration numbers (for companies), NRIC or passport numbers (for individuals), registered addresses, and the authorised signatories with their designations. For corporate tenants, a certified board resolution authorising the signing of the tenancy agreement may be required.
Premises description: Full postal address, lot or parcel number, floor area in square feet or square metres, and a description of any common areas or facilities included (car park bays, loading bays, server rooms). For strata office parcels, the accessory parcel numbers under the Strata Titles Act 1985 should be stated.
Permitted use: A precise statement of the permitted business use of the premises. Restricting use to a specific activity (e.g., IT services office, warehouse for fast-moving consumer goods, retail clothing) prevents the tenant from conducting activities that might violate zoning laws, the NLC 1965 express conditions of title, or the strata building's house rules under the Strata Management Act 2013.
Rental terms: Monthly rent in RM, payment date, permitted payment methods, and provisions for late payment charges. Rent-free periods for fit-out (common in new commercial lettings), annual rent escalation rates, and rent review procedures upon renewal option exercise.
Deposits: Security deposit (typically two to three months' rent for commercial tenancies), utility deposit, and any fit-out or reinstatement bond required by the landlord as security against the cost of restoring the premises to its original condition.
Reinstatement obligation: The tenant's obligation to remove all fit-outs, partitions, fixtures, and signage installed during the tenancy and to restore the premises to their original condition — including plastering, painting, and replacing any structural elements — before surrendering vacant possession. Failure to reinstate triggers the landlord's right to carry out the works at the tenant's cost.
Assignment and subletting: Conditions under which the tenant may assign the tenancy or sublet the premises, including any requirement for the landlord's prior written consent and the conditions under which consent may not be unreasonably withheld.
Maintenance obligations: Allocation of maintenance responsibilities between landlord and tenant, including the tenant's obligation to service air-conditioning units, maintain false ceilings and raised floors, and keep the premises in good repair. The landlord's obligation to maintain the building's structural elements, common areas, and M&E systems.
Additional compliance elements for a Commercial Tenancy Agreement (Malaysia) used in Malaysia include: Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Forms-legal.com provides this template as a starting point for Malaysia-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Commercial Tenancy Agreement (Malaysia) (Malaysia) [Legal document template]. Forms Legal. https://forms-legal.com/malaysia/real-estate/leases/commercial-tenancy-agreement-malaysia
"Commercial Tenancy Agreement (Malaysia) (Malaysia)." Forms Legal, 2026, https://forms-legal.com/malaysia/real-estate/leases/commercial-tenancy-agreement-malaysia.
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year = {2026},
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note = {Free legal document template. Based on National Land Code 1965 (Act 56)}
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Frequently Asked Questions
During the fixed term of a commercial tenancy agreement in Malaysia, a landlord cannot unilaterally increase the rent unless the agreement contains an express rent escalation or rent review clause. Malaysia has no rent control legislation applicable to commercial properties — the Control of Rent Act 1966 was repealed in 2000 and never applied to commercial premises. If the tenancy agreement contains a rent escalation clause (e.g., 5% increase upon renewal), the landlord may apply the increase at renewal. Without such a clause, the rent for the fixed term is locked at the agreed amount. At lease expiry, if the parties negotiate renewal, the new rent is entirely market-driven. Commercial tenants should negotiate rent-free fit-out periods and rent caps on renewal in the initial agreement, as Malaysian courts will enforce unambiguous rent escalation clauses under the Contracts Act 1950.
A reinstatement obligation in a Malaysia commercial tenancy agreement requires the tenant to restore the leased premises to their original condition as at the commencement of the tenancy, at the tenant's cost, before surrendering vacant possession at the end of the lease. Reinstatement typically involves removing all fit-out works, partitions, false ceilings, raised flooring, signage, and installed equipment, and making good any damage caused — including filling holes, repainting walls, and replacing floor finishes. If the tenant fails to reinstate, the landlord may deduct the cost from the security deposit and sue for any balance. Malaysian courts, including the High Court of Malaya, have consistently upheld reinstatement clauses in commercial leases as valid liquidated damages provisions under the Contracts Act 1950, as long as the obligation is clearly defined and the cost claim is a genuine pre-estimate of the landlord's loss.
Yes, a commercial tenancy agreement in Malaysia must be stamped under the Stamp Act 1949 (Act 378). An unstamped commercial lease is inadmissible as evidence in court proceedings under Section 52 of the Stamp Act 1949. Commercial tenancy stamp duty is calculated under Schedule 1, Item 22 of the Stamp Act 1949, based on the annual rent: RM 1 per RM 250 (or part thereof) of annual rent for the first year if the tenancy does not exceed one year; higher progressive rates for longer terms. For commercial leases, the stamp duty is typically borne by the tenant by agreement, though the legal obligation to stamp falls on all parties to the instrument. Commercial leases can be stamped at any LHDN branch or through the LHDN e-Stamping portal. Under Malaysia law, National Land Code 1965 (Act 56), parties should seek independent legal advice from a qualified lawyer to confirm compliance with all applicable requirements. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). Forms-legal.com provides this template as a starting point for Malaysia-compliant documentation.
A commercial landlord in Malaysia has several remedies for unpaid rent. Under the Distress Act 1951, the landlord may apply to the Magistrates' Court for a Writ of Distress to seize the tenant's moveable goods on the premises (equipment, stock, furniture) to satisfy arrears without first obtaining a court judgment. This is a distinctive and powerful remedy available to Malaysian commercial landlords. Alternatively, the landlord may sue for unpaid rent in the Magistrates' Court (claims up to RM 100,000), Sessions Court (RM 100,000 to RM 1 million), or High Court (above RM 1 million) under the Subordinate Courts Act 1948. The landlord may also forfeit the tenancy for non-payment of rent (if the agreement contains a forfeiture clause) and re-enter the premises — but only through a court order, not self-help. The security deposit may be applied to outstanding rent.
Whether a commercial tenant in Malaysia may sublet depends entirely on the terms of the tenancy agreement. Most commercial tenancy agreements in Malaysia contain an express prohibition on subletting without the landlord's prior written consent. Where such a clause exists, subletting without consent constitutes a breach of contract under the Contracts Act 1950 and may trigger the landlord's right to forfeit the tenancy. If the tenancy agreement is silent on subletting, common law principles apply — in the absence of prohibition, a tenant may sublet. However, for strata properties under the Strata Titles Act 1985, the Management Corporation's house rules may impose additional restrictions on subletting commercial parcels. The landlord's consent to sublet should be documented in a Deed of Consent or endorsement on the tenancy agreement to create a clear record.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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