Legal & SPA · 6 min
Malaysian Tenancy Agreement Essentials: 2026 Stamp Duty Rules & Legal Safeguards
Understand the legal framework of Malaysian tenancy agreements in 2026. Learn about the e-Duti Setem system, updated stamp duty formulas, and how to protect yourself without a unified tenancy act.
Quick answers
Quick answer
A practical summary before reading the full article.
What is the quick take?
As of 2026, Malaysia still has no unified Residential Tenancy Act, meaning rental protection depends entirely on a well-drafted written agreement. The e-Duti Setem self-assessment system on MyTax is now active, and the Finance Act 2024 has removed the old RM2,400 stamp duty exemption. Calculating stamp duty based on annual rent is critical to avoid BNDS filing errors, with LHDN auditing returns retrospectively.
Lewis verdict
I tell all my clients: don't rely on a simple RM10 downloaded internet template. Because the Residential Tenancy Act is still in the draft stage at KPKT, we have to rely on a patchwork of laws like the Contracts Act 1950 and Specific Relief Act 1950. If you don't write down your deposit refund timeline—which market convention sets at 14 days—or your exact subletting rules, no standard statute will save you. Also, remember that since January 2026, the old STAMPS portal is gone. You must use MyTax e-Duti Setem under a self-assessment regime. Make sure you input your annual rent, not monthly rent, on Form BNDS. If you have an RM2,500 condo for 2 years, your annual rent is RM30,000, which gives exactly 120 bands of RM250. Multiply that by the RM3 rate for 1-to-3-year tenancies, and your duty is RM360. Add RM10 for the duplicate copy, and it is RM370. Do not get this wrong, because LHDN's penalty concession for errors on Form BNDS ends on 1 January 2027. After that, standard Stamp Act 1949 penalties apply strictly.
What should buyers do next?
Ensure all critical clauses (deposits, notice, subletting) are customized, use annual rental values for Form BNDS filing on MyTax, and settle payment within 30 days of signing.
Quick summary
Quick answer
A practical summary before reading the full article.
| Best for | Landlords, tenants, and real estate agents in Malaysia looking to draft legally compliant agreements and correctly calculate stamp duty under the 2026 e-Duti Setem system. |
|---|---|
| Risk level | Medium; legal exposure due to lack of a unified Residential Tenancy Act and retrospective tax audits by LHDN on self-assessment returns. |
| Lewis verdict | I tell all my clients: don't rely on a simple RM10 downloaded internet template. Because the Residential Tenancy Act is still in the draft stage at KPKT, we have to rely on a patchwork of laws like the Contracts Act 1950 and Specific Relief Act 1950. If you don't write down your deposit refund timeline—which market convention sets at 14 days—or your exact subletting rules, no standard statute will save you. Also, remember that since January 2026, the old STAMPS portal is gone. You must use MyTax e-Duti Setem under a self-assessment regime. Make sure you input your annual rent, not monthly rent, on Form BNDS. If you have an RM2,500 condo for 2 years, your annual rent is RM30,000, which gives exactly 120 bands of RM250. Multiply that by the RM3 rate for 1-to-3-year tenancies, and your duty is RM360. Add RM10 for the duplicate copy, and it is RM370. Do not get this wrong, because LHDN's penalty concession for errors on Form BNDS ends on 1 January 2027. After that, standard Stamp Act 1949 penalties apply strictly. |
| Buyer action | Ensure all critical clauses (deposits, notice, subletting) are customized, use annual rental values for Form BNDS filing on MyTax, and settle payment within 30 days of signing. |
The Legal Reality: No Unified Residential Tenancy Act in 2026
As of 2026, Malaysia still does not have a unified Residential Tenancy Act. The long-anticipated bill remains in draft form at the Ministry of Housing and Local Government (KPKT) while undergoing refinements with key stakeholders. Until it is officially tabled and gazetted, all landlord-tenant rights and remedies are governed by a patchwork of general laws: the Contracts Act 1950 (basic contract enforceability), the Specific Relief Act 1950 (governing possession rights and limiting self-help remedies), the Distress Act 1951 (for rent recovery), the Civil Law Act 1956 (governing holding-over damages), and the National Land Code 1965 (distinguishing short-term tenancies from registered long-term leases). Without a centralized tribunal or standardized rules, there are no statutory limits on rent increases or notice periods. Everything depends entirely on your written agreement.
Understanding Deposit Protections and the Rules on Forfeiture
The standard deposit structure in the Malaysian market consists of an Earnest Deposit (1 month's rent to secure the unit), a Security Deposit (2 months' rent for damage protection), and a Utility Deposit (half a month's rent). While this framework is not mandated by a single statute, it has become the standard market practice. Agreements should specify that deposits must be refunded within 14 days of returning vacant possession, subject to a joint inspection and settled utility bills. Landlords must understand that under Section 74 of the Contracts Act 1950, they cannot automatically forfeit a security deposit as a flat penalty. Any deductions must be justified with an itemized statement backed by evidence, such as inspection checklists, photos, and repair receipts. Unless the agreement explicitly permits it, tenants are also legally barred from offsetting their final month's rent against the security deposit.
The 2026 Stamp Duty Regime: MyTax and the Self-Assessment Transition
Since 1 January 2026, the Inland Revenue Board (LHDN) has completely decommissioned the old STAMPS portal. All tenancy stamping is now handled via the e-Duti Setem module inside the MyTax portal, marking Phase 1 of the Stamp Duty Self-Assessment System (SDSAS). Under this self-assessment model, submitting and paying for your stamp duty is automatically deemed an assessment; LHDN does not verify your calculations upfront. Instead, they rely on a retrospective audit framework, meaning incorrect submissions could face audits later. Filers must complete Form BNDS (using instrument code PDS 15) and enter the execution date, lease term, and monthly rental. A common, costly error is entering the monthly rent in fields where the annual rent is required, which corrupts the tax calculation. Payment must be cleared within 30 days of execution via ByrHasil, FPX, or online banking.
Calculating Duty Under the New Rules: Worked Examples
The Finance Act 2024 completely removed the historic RM2,400 annual-rent stamp duty exemption. Consequently, duty is now calculated on the full annual rental amount starting from the first ringgit. The formula is: Stamp Duty = ceiling(Annual Rent ÷ 250) × Rate. The rate per RM250 band is RM1 for tenancies of 1 year or less, RM3 for 1-3 years, RM5 for 3-5 years, and RM7 for tenancies exceeding 5 years. There is a minimum duty of RM10, and each duplicate copy submitted for stamping costs a flat RM10. Let's look at two worked examples. Example 1: A room renting at RM800/month for a 1-year term has an annual rent of RM9,600. Dividing RM9,600 by 250 yields 38.4, which rounds up to 39 bands. At the RM1 rate, the base duty is RM39, totaling RM49 with one duplicate. Example 2: A condo renting at RM2,500/month for a 2-year term has an annual rent of RM30,000. Dividing by 250 yields exactly 120 bands. At the 2-year rate of RM3, the base duty is RM360, totaling RM370 with one duplicate. Note that LHDN is granting a temporary concession with no penalties for good-faith BNDS filing errors during the 2026 calendar year, but this concession ends on 1 January 2027.
Buyer checklist
As of 2026, Malaysia still has no unified Residential Tenancy Act, meaning rental protection depends entirely on a well-drafted written agreement. The e-Duti Setem self-assessment system on MyTax is now active, and the Finance Act 2024 has removed the old RM2,400 stamp duty exemption. Calculating stamp duty based on annual rent is critical to avoid BNDS filing errors, with LHDN auditing returns retrospectively.
| 1 | Check whether the tenancy draft covers the standard 1-month earnest, 2-month security, and 0.5-month utility deposit structure. |
|---|---|
| 2 | Ensure the agreement mandates deposit refunds within 14 days of returning vacant possession. |
| 3 | Confirm that any deposit deductions are backed by receipts, photos, and itemized inspection checklists under Section 74 of the Contracts Act 1950. |
| 4 | Use the annual rental amount (not monthly rental) to calculate the e-Duti Setem on MyTax using Form BNDS. |
| 5 | Pay the calculated stamp duty within 30 days of execution to avoid statutory penalties under the Stamp Act 1949. |
Common questions
Can a landlord forfeit the security deposit if a tenant sublets the unit without permission?
Yes. Under Section 74 of the Contracts Act 1950, unauthorized subletting is a material civil breach that allows the landlord to terminate the tenancy, forfeit the deposit, and claim damages, provided the contract explicitly restricts subletting.
How is the stamp duty calculated if the lease duration is two years with a monthly rent of RM2,000?
Annual rent is RM24,000. Under the self-assessment rules, divide this by 250 to get 96 bands. Multiply by the 2-year rate (RM3) to get RM288. Stamping costs RM288 plus RM10 per duplicate copy, with a minimum of RM10.
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Check whether the tenancy draft covers the standard 1-month earnest, 2-month security, and 0.5-month utility deposit structure.
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Ensure the agreement mandates deposit refunds within 14 days of returning vacant possession.
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Confirm that any deposit deductions are backed by receipts, photos, and itemized inspection checklists under Section 74 of the Contracts Act 1950.
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Use the annual rental amount (not monthly rental) to calculate the e-Duti Setem on MyTax using Form BNDS.