Tenancy Renewal Letter (Malaysia)

A Tenancy Renewal Letter in Malaysia sets out the rental terms, deposit, duration, and obligations agreed between landlord and tenant.

Under Malaysian property law, the right to renew a tenancy does not arise automatically — it must be expressly provided for in the original tenancy agreement through a renewal clause or option to renew. A typical renewal clause in Malaysian tenancy agreements states that the tenant may renew the tenancy for a further term of one or two years by giving written notice to the landlord at least one to three months before expiry, at a revised rental agreed between the parties or subject to a fixed percentage escalation (commonly 5–10% per renewal term). Without such a clause, the landlord is free to refuse renewal at the end of the term under general principles of the Contracts Act 1950 (Act 136).

The Contracts Act 1950 (Act 136) governs the formation of the renewed tenancy — the renewal letter constitutes an offer under Section 2(a) of the Act, and the landlord's written acceptance constitutes acceptance under Section 2(b), completing the contract. If the parties do not formalise the renewal and the tenant continues in occupation after lease expiry with the landlord continuing to accept rent, a periodic tenancy (tenancy from month to month) arises under the Civil Law Act 1956 (Act 67). Section 28 of the Civil Law Act 1956 provides that such a periodic tenancy may be terminated by either party giving one month's written notice expiring on a rental payment date.

For commercial properties in Malaysia, renewal negotiations typically involve rental adjustments reflecting prevailing market rates. Knight Frank Malaysia, Savills Malaysia, and CBRE|WTW publish regular market reports on Grade A office rents in KL Sentral, Bangsar South, TRX (Tun Razak Exchange), KLCC, and Petaling Jaya's commercial corridors which landlords use as reference benchmarks. The Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEA) regulates real estate agents involved in tenancy renewals under the Valuers, Appraisers, Estate Agents and Property Managers Act 1981. The renewed tenancy agreement must be separately stamped under the Stamp Act 1949 (Act 378) within 30 days of execution — the original stamp certificate does not carry over to the renewed period. LHDN's e-Stamping portal allows online payment of stamp duty for tenancy renewals. For Sarawak properties, the renewed tenancy must comply with the Sarawak Land Code (Cap. 81), and for Sabah properties, the Sabah Land Ordinance (Cap. 68) applies. Where the renewed tenancy is for a commercial property in a strata building, any amendments to permitted use or alterations must also be approved by the Management Corporation (MC) or Joint Management Body (JMB) under the Strata Management Act 2013 (Act 757).

A Tenancy Renewal Letter (Malaysia) is needed when the current tenancy term is approaching expiry and either party wishes to continue the tenancy relationship. In Malaysia, the standard practice is to issue the renewal notice at least 2–3 months before the lease expiry date — this gives both parties sufficient time to negotiate the new rental rate, execute the renewal addendum or new tenancy agreement, and arrange for LHDN stamping under the Stamp Act 1949 (Act 378) before the new term commences.

The renewal letter is needed in the following common scenarios: a residential tenant in Kuala Lumpur, Petaling Jaya, Shah Alam, Penang, or Johor Bahru who wishes to stay on after the initial one or two-year tenancy; a commercial tenant in a KL Sentral or Bangsar South office building who wishes to exercise the option to renew under the lease before the option window closes; a retail tenant in a shopping mall or shophouse who wishes to continue operating at the same location; and a landlord who wishes to propose a rental adjustment for the renewed term based on current market rates published by CBRE|WTW or Knight Frank Malaysia.

For commercial tenancies in Malaysia governed by detailed lease agreements, the renewal letter must strictly comply with the option clause requirements — if the clause requires notice to be given by registered post (Pos Malaysia) at least 3 months before expiry, a late or improperly served notice may invalidate the option entirely under the Contracts Act 1950 (Act 136). Courts in Malaysia have held that time is of the essence for option exercise clauses in commercial leases.

The renewal letter is also essential to prevent the default outcome of a precarious month-to-month tenancy. If the tenant remains in occupation after lease expiry without a formal renewal, a periodic tenancy arises under the Civil Law Act 1956 (Act 67) — terminable on one month's notice with no security of tenure. Executing a formal Tenancy Renewal Letter and a renewed tenancy agreement, stamped by LHDN, protects both parties and creates an enforceable record for the Malaysian civil courts.

A well-drafted Malaysian Tenancy Renewal Letter should include the following key elements. Forms-legal.com provides this tenancy renewal letter template for landlords and tenants throughout Malaysia.

**Letterhead and Date.** The sender's full legal name, NRIC or SSM company registration number under the Companies Act 2016 (Act 777) for corporate parties, address, and the date of the letter. The letter should be addressed to the other party by full legal name at the address specified in the original tenancy agreement.

**Reference to Original Tenancy.** A clear reference to the original tenancy agreement — date of agreement, parties, property address, and LHDN stamp certificate number under the Stamp Act 1949 (Act 378) — so there is no ambiguity about which tenancy is being renewed. For commercial leases, the title reference under the National Land Code 1965 (Act 56) should also be included.

**Notice of Renewal Intention.** A clear statement that the sender wishes to renew the tenancy upon expiry of the current term on the stated expiry date. If the renewal is being exercised under an option clause in the original agreement, the relevant clause number must be cited — failure to comply strictly with the option clause requirements may invalidate the renewal notice under the Contracts Act 1950 (Act 136).

**Proposed New Term.** The proposed commencement date of the renewed tenancy (the day after expiry of the current term) and the duration of the renewed term (e.g., 1 year, 2 years). For commercial leases, the new term structure (e.g., 2+1 years with a break clause) should be specified.

**Proposed New Rental Rate.** The proposed monthly rental for the renewed term in Malaysian Ringgit (RM). For renewal clauses with a fixed escalation formula, the calculation must be shown (e.g., current rent RM 2,000 + 10% = renewed rent RM 2,200). For market-rate renewals in Kuala Lumpur, Petaling Jaya, Penang, or Johor Bahru, the proposed rate and the basis — comparable market transactions, CBRE|WTW, Knight Frank Malaysia, or Savills Malaysia market report data — should be referenced to support the proposal.

**Security Deposit Top-Up.** If the rental rate increases, the security deposit (typically 2 months' rent for residential; 3 months for commercial) must be topped up to reflect the new rental. The letter should state the exact top-up amount payable and the deadline for payment.

**Request for Confirmation.** A request that the other party confirm acceptance of the renewal terms in writing by a specified date (typically 14–30 days from the letter date), failing which the proposal lapses. For option clauses with strict timelines, the acceptance deadline must align with the option window to avoid inadvertent expiry.

**Stamp Duty Reminder.** A note that the renewed tenancy agreement or addendum must be stamped at LHDN under the Stamp Act 1949 (Act 378) within 30 days of execution in Malaysia. The ad valorem stamp duty is calculated on the annual rent of the renewed term: RM 1 per RM 250 for terms up to 1 year; RM 2 per RM 250 for 1–3 years; RM 4 per RM 250 for over 3 years. LHDN's e-Stamping portal permits online stamping for straightforward renewals.

**Service Method.** The renewal letter should be sent by registered post (Pos Malaysia) to the address in the original tenancy agreement, with the AR card retained as proof of delivery. For commercial tenancies with specific service provisions in the lease, those provisions must be followed precisely — the Sessions Court will apply the contractual service clause strictly.

**Signature.** The letter must be signed by the landlord or tenant (or their authorised representative — a solicitor from the Malaysian Bar under the Legal Profession Act 1976 (Act 166) or a BOVAEA-registered property manager). For corporate landlords or tenants, the designation of the authorised signatory and the company stamp are required.