Tenant Not Paying Rent in Malaysia: What Can a Landlord Do?

Rental arrears are one of the most common problems faced by landlords.

A tenant may initially be late for a few days, then fall one or two months behind, before eventually stopping payment altogether. When this happens, landlords may wonder whether they can immediately terminate the tenancy, use the security deposit, seize the tenant’s belongings or change the locks.

In Malaysia, the appropriate action will depend on the tenancy agreement and the circumstances of the default.

1. Check the Tenancy Agreement

The first step is to review the tenancy agreement.

The agreement will usually specify the following non-exhaustive information: –

• the amount of monthly rent;
• when the rent must be paid;
• whether there is a grace period;
• what constitutes a default;
• whether late payment interest is payable;
• the circumstances in which the tenancy may be terminated; and
• how the security deposit may be applied.

A failure to pay rent will usually amount to a breach of the tenancy agreement.

However, the landlord should still follow the termination provisions contained in the agreement before treating the tenancy as terminated.

2. Issue a Formal Demand for the Outstanding Rent

Where the tenant has failed to pay rent, the landlord may issue a formal demand requiring payment of the outstanding amount.

The demand should clearly state:

• the property concerned;
• the amount outstanding;
• the rental periods involved;
• any other sums properly due under the tenancy agreement; and
• the deadline for payment.

The landlord should also keep proper records of the arrears.

Relevant documents may include:

• the tenancy agreement;
• rental payment records;
• bank statements;
• invoices;
• WhatsApp messages;
• emails; and
• previous reminders sent to the tenant.

These documents may become important if legal proceedings are subsequently commenced.

3. Can the Landlord Use the Security Deposit?

Depending on the tenancy agreement, the landlord may be entitled to apply the security deposit towards sums owed by the tenant.

This may include:

• outstanding rental;
• outstanding utilities;
• damage to the property beyond fair wear and tear; or
• other amounts payable under the tenancy agreement.

However, tenants should not assume that the security deposit automatically replaces their obligation to pay rent during the final months of the tenancy.

Similarly, if the amount owed exceeds the deposit held, the landlord may still pursue the tenant for the balance.

For example, if the tenant owes RM10,000 in rental arrears but the landlord holds only RM6,000 as a security deposit, there may still be a remaining sum recoverable from the tenant.

4. Can a Landlord Seize the Tenant’s Belongings?

A landlord should not simply enter the premises and remove or sell the tenant’s belongings.

Instead, one remedy that may be available is a warrant of distress under the Distress Act 1951.

Distress proceedings are intended principally to assist a landlord in recovering unpaid rent.

Under the statutory procedure, the landlord applies to court for a warrant of distress.

If granted, a court bailiff may seize movable property found at the rented premises which is legally liable to seizure.

The seized property may subsequently be sold, with the proceeds applied towards the outstanding rental, subject to the applicable legal procedure.

Importantly, the seizure is carried out through the legal process and not personally by the landlord.

5. How Much Rental Can Be Recovered Through Distress Proceedings?

Under the Distress Act 1951, a warrant of distress may generally be sought for rent due for a period not exceeding 12 completed months immediately preceding the application.

Accordingly, a landlord who is facing substantial rental arrears should consider obtaining legal advice early rather than allowing the arrears to continue accumulating indefinitely.

6. Does a Warrant of Distress Evict the Tenant?

No.

This is an important distinction.

A warrant of distress is primarily concerned with recovering rental arrears.

It does not necessarily give the landlord possession of the property.

If the landlord also wishes to terminate the tenancy and recover vacant possession, separate or additional legal steps may be required.

In some cases, the landlord may need to consider both:

• recovery of unpaid rental; and
• recovery of vacant possession.

The appropriate strategy will depend on the amount owed, whether the tenant remains in occupation and the terms of the tenancy agreement.

7. Can the Landlord Sue the Tenant for Rental Arrears?

Yes.

Depending on the circumstances, a landlord may commence legal proceedings to recover sums owed under the tenancy agreement.

The landlord may seek payment of:

• outstanding rental;
• outstanding utilities;
• other contractual sums;
• interest, where applicable; and
• legal costs, subject to the court’s order.

Where the tenancy has also been terminated and the tenant refuses to leave, the landlord may additionally consider a claim for vacant possession.

8. What If the Tenant Has Disappeared?

Sometimes the tenant stops paying rent, stops responding to calls and appears to have abandoned the property.

Landlords should nevertheless be cautious before simply breaking into the premises or changing the locks.

A property that appears empty is not necessarily legally abandoned.

Therefore, it is important that you consult a lawyer before taking any further action.

9. What Should a Landlord Do When Rent Is Not Paid?

A landlord dealing with rental arrears should generally consider the following:

1. Review the tenancy agreement.
2. Calculate the amount outstanding.
3. Keep proper records and correspondence.
4. Issue an appropriate demand for payment.
5. Consider whether the tenancy should be terminated.
6. Consider whether distress proceedings or a civil claim for recovery of the arrears would be appropriate.
7. Avoid personally seizing the tenant’s belongings or taking other self-help measures without legal advice.

Conclusion

A tenant’s failure to pay rent does not mean that the landlord is without remedies.

Depending on the circumstances, the landlord may be able to recover the arrears through legal proceedings, apply for a warrant of distress, terminate the tenancy or pursue other sums due under the tenancy agreement.

However, the appropriate remedy will depend on the tenancy agreement, the amount outstanding and whether the tenant remains in occupation.

Landlords should also distinguish between recovering unpaid rental and recovering possession of the property, as these may require different legal procedures.

This article provides general information on Malaysian law and does not constitute legal advice. The appropriate legal steps will depend on the terms of the tenancy agreement and the facts of each case.

Read more:

Tenant Refuses to Vacate in Malaysia: What Can a Landlord Do?

What Happens to the Existing Tenancy When a Rented Property Is Sold in Malaysia?

Buying or Selling a Tenanted / Rented Property: Here’s What You Need To Know