Subletting Agreement (Malaysia)

A Subletting Agreement in Malaysia fixes the respective duties and entitlements of the parties to the arrangement.

Subletting in Malaysia is governed by the Contracts Act 1950 (Act 136), which requires the head tenant to have the landlord's prior written consent before subletting — either as an express permission clause in the original tenancy agreement or through a separate written consent letter. Section 74 of the Contracts Act 1950 governs the enforceability of covenants in contracts, and a subletting clause in the head tenancy that prohibits subletting without consent creates a contractual obligation: breach by the head tenant without obtaining consent can lead to forfeiture of the head tenancy by the landlord and eviction proceedings in the Sessions Court under the Specific Relief Act 1950 (Act 137).

The National Land Code 1965 (Act 56) does not directly regulate subletting of residential premises, but for registered leases (tenancies exceeding three years that are registered on the land title), subletting may be treated as a sub-dealing under NLC provisions requiring the Registrar's approval. Section 213 of the National Land Code 1965 sets out restrictions on dealings with land that may apply to registered long-term leases. The Stamp Act 1949 (Act 378) requires the subletting agreement to be stamped with the Inland Revenue Board of Malaysia (LHDN) — the same ad valorem duty rates apply as for a primary tenancy agreement, calculated based on the annual subletting rent.

For strata residential and commercial properties governed by the Strata Management Act 2013 (Act 757), subletting must comply not only with the head tenancy's covenants but also with the bylaws of the Management Corporation (MC) or Joint Management Body (JMB) of the strata development. Several Kuala Lumpur, Petaling Jaya, and Penang condominium buildings have bylaws restricting or prohibiting short-term subletting arrangements, particularly Airbnb-style rentals. The Strata Management Tribunal established under Part VI of the Strata Management Act 2013 handles disputes between residents and management bodies.

In practice, subletting is common in Malaysia for several scenarios: students subletting rooms in rented houses near universities such as Universiti Malaya (UM), Universiti Putra Malaysia (UPM), Universiti Teknologi MARA (UiTM), and Universiti Kebangsaan Malaysia (UKM); expatriates in Kuala Lumpur subletting serviced apartments in Mont Kiara, KLCC, or Bangsar; and tenants who relocate before lease expiry subletting the entire unit rather than paying early termination penalties. The subletting agreement must not grant the subtenant rights greater than those the head tenant holds under the head tenancy.

A Subletting Agreement (Malaysia) is needed whenever a tenant who holds a valid tenancy agreement wishes to rent out the premises (or part of it) to another person during the subsisting tenancy term. The most common situations requiring a subletting agreement in Malaysia include: a tenant who has been transferred to another city or country for work and wishes to sublet the unit rather than terminate the head tenancy early and pay the penalty under the Contracts Act 1950 (Act 136); housemate arrangements where the head tenant sublets individual rooms to other occupants in a house rented near universities or in worker accommodation areas; and commercial tenants subletting excess office or retail space to smaller businesses in Kuala Lumpur, Petaling Jaya, Johor Bahru, or Penang.

Before executing the subletting agreement, the head tenant must verify three things: first, whether the head tenancy agreement contains a subletting clause — most Malaysian tenancy agreements include either an outright prohibition or a 'not to sublet without landlord's prior written consent' clause enforceable under Section 74 of the Contracts Act 1950; second, whether the landlord has provided written consent in a form that clearly identifies the subtenant and the subletting period; and third, whether the property's land title or strata title rules (for condominiums and apartments governed by the Strata Titles Act 1985 (Act 318) and Strata Management Act 2013 (Act 757)) contain any additional restrictions on subletting. Management Corporations (MC) or Joint Management Bodies (JMB) of stratified developments sometimes have bylaws restricting short-term subletting, particularly for Airbnb-style arrangements that may require a tourism business licence from the Ministry of Tourism, Arts and Culture Malaysia (MOTAC).

The subletting agreement is equally necessary for commercial subletting — a tenant in a Kuala Lumpur Grade A office building such as Menara TM, KL Sentral, TRX, or KLCC subletting workstations or private offices to co-working users needs a formal subletting agreement to define the commercial terms, shared facilities obligations, and exit procedures. Commercial sub-leases for periods exceeding three years may require registration under the National Land Code 1965 (Act 56) to bind third parties.

The Stamp Act 1949 (Act 378) requires the subletting agreement to be stamped at LHDN within 30 days of execution in Malaysia. Failure to stamp renders the agreement inadmissible as evidence in Malaysian courts, which significantly weakens the head tenant's position if the subtenant defaults or causes damage.

A legally sound Malaysian Subletting Agreement must include the following key elements. Forms-legal.com provides this subletting agreement template as a starting point for head tenants and subtenants in Malaysia.

**Landlord's Consent.** Reference to the landlord's written consent to the subletting, either as a clause in the original head tenancy agreement or as a separate consent letter specifically authorising the named subtenant. Without this, the head tenant is in breach of the Contracts Act 1950 (Act 136) non-subletting covenant, and the landlord may forfeit the head tenancy and seek vacant possession in the Sessions Court under the Specific Relief Act 1950 (Act 137).

**Parties.** The full legal names, NRIC numbers, and addresses of the head tenant (sublandlord) and the subtenant. Where the head tenant is a company, the SSM (Companies Commission of Malaysia) registration number under the Companies Act 2016 (Act 777) must be included. For foreign subtenant individuals, the passport number and visa type should be noted.

**Property Description.** The address of the property, the specific portion being sublet (e.g., the entire unit, or Room 2 of a 4-bedroom house at a specified address in Kuala Lumpur, Selangor, Penang, or Johor), and the head tenancy reference — date, parties, and LHDN stamp certificate number under the Stamp Act 1949 (Act 378).

**Term and Rent.** The subletting term must not exceed the remaining unexpired term of the head tenancy. The monthly subletting rent in Malaysian Ringgit (RM), payment date, and payment method (online banking, bank transfer, or DuitNow). The subletting rent may be set at or above the head tenant's proportionate rent for the sublet portion.

**Security Deposit.** The subtenant's security deposit (typically one to two months' subletting rent) payable to the head tenant. Conditions for deduction — damage beyond fair wear and tear, outstanding utility bills — and the refund timeline (typically 14–30 days after vacant possession) must be clearly stated.

**Utilities and Bills.** How Tenaga Nasional Berhad (TNB) electricity, Air Selangor / Pengurusan Air Selangor (PAS) / Syarikat Air Johor (SAJ) / Penang Water Supply Corporation (PBAPP) water, Indah Water Konsortium (IWK) sewerage, and broadband (Unifi/TM, TIME dotCom, Maxis) are split or allocated. For room-only subletting, a fair apportionment formula based on number of occupants should be stated to prevent disputes.

**Subtenant's Obligations.** The subtenant must comply with the subletting agreement and the relevant provisions of the head tenancy agreement. The subtenant cannot further sublet without the head tenant's and original landlord's written consent. The subtenant must comply with any bylaws of the Management Corporation (MC) or Joint Management Body (JMB) under the Strata Management Act 2013 (Act 757) for strata properties.

**Termination.** Notice period for early termination by either party (typically 1–2 months), and automatic termination of the subletting if the head tenancy is terminated for any reason. The subtenant must vacate the premises within 14 days of head tenancy termination, even if the subletting term has not expired — failure to vacate entitles the head tenant to commence eviction proceedings.

**Stamp Duty.** The subletting agreement must be stamped at LHDN under the Stamp Act 1949 (Act 378) at the same ad valorem rates as a primary tenancy — RM 1 per RM 250 of annual rent for terms up to 1 year; RM 2 per RM 250 for 1–3 years. Stamping within 30 days of execution is required to maintain court admissibility. The head tenant is typically responsible for paying the stamp duty unless otherwise agreed.