In Malaysia, the common legal terms for renting property are Tenancy (short-term) and Lease (long-term).
Although both involve renting, they differ greatly in legal protection, duration, registration, and rights & obligations.
Rental Period
| Type | Rental Period |
| ๐ Tenancy | Usually less than 3 years (e.g., monthly, yearly, or weekly rental) |
| ๐ Lease | Usually more than 3 years, up to 99 years or longer |
โ๏ธ Applicable Legal Provisions
โข Tenancy
๐ Under Section 223 of the National Land Code 1965 (NLC), a tenancy can be created orally or in writing.
โข Lease
๐ Under Section 221 of the NLC: must be in writing and registered.
๐ Section 225: Once registered, it has full legal effect and proprietary rights protection.
๐ Form Requirements
| Type | Form Requirements |
| ๐ Tenancy | Can be created orally or in writing |
| ๐ Lease | Must be in writing and registered (if more than 3 years) |
๐๏ธ Registration Requirement
โข โ Tenancy (Short-term): Generally, does not require registration.
โข โ Lease (Long-term): Usually must be registered with the land office, especially if more than 3 years.
๐ Legal Status
| Type | Legal Nature |
| ๐ Tenancy | Considered a Contractual License, with weaker legal protection but more flexibility |
| ๐ Lease | Considered a Proprietary Interest, with stronger legal protection and more stability |
โ Termination
โข Tenancy: Can generally be terminated according to contract terms (e.g., 1-month prior notice).
โข Lease: Must be terminated according to contract terms or legal procedures, and breach may involve compensation.
๐ฐ Loan & Security
โข ๐ Tenancy: Cannot be used as collateral for a loan.
โข ๐ Lease: Can be used as collateral for loans, useful for business financing or development projects.
๐งพ Stamp Duty & Tax
โข Tenancy: Stamp duty is relatively low.
โข Lease: Stamp duty and other tax costs are higher depending on term and rent.
๐ข Common Uses
| Type | Common Uses |
| ๐ Tenancy | Housing, apartments, offices, retail shops, Airbnb short-term rentals, etc. |
| ๐ Lease | Factories, land development, long-term malls, large commercial land |
๐ก Example for Clarity
โข Tenancy Example: You renew a 1-year residential contract each year with your landlord, stating โ1-month notice to terminate,โ which is flexible and simple.
โข Lease Example: A developer leases land for 99 years to an industrial company to build a factory, or a major retail brand signs a registered 5- or 10-year lease in a mall for stronger property rights.
โ ๐ Summary: Tenancy โ Lease
When renting or signing a contract, always confirm the term and registration requirements to protect your rights and avoid legal risks.
๐ Tip: If unsure about term, registration, or legal risks, consult a professional lawyer to avoid future disputes.
