Will the RTA be an exercise in futility?

The government’s assurance that it would not rush into introducing the proposed Residential Tenancy Act (RTA) is wise, given the growing public disquiet. 

In addition to the non-governmental agencies familiar with the property industry such as real estate agents, valuers, property managers, consultants and auctioneers, the National House Buyers Association too has frowned upon the proposed RTA in its current form. 

While the move to provide legislated protection to both landlords and tenants is a progressive and noble one, the what and how of it need to be clear and convincing lest it winds up being an exercise in futility. 

Mooted last August by the Ministry of Housing and Local Government, the RTA has been prompted by desire to ‘erase racial discrimination’, said to have been raised by some quarters.

While the general assumption is that landlords can be fussy about whom they lease their property to, the reverse also rings true. In fact, the latter is more so these days as tenants are often spoilt for choice with the abundant supply of vacant homes. 

As for the question of race or the so-called right of a property owner in a prospective landlord-tenant relationship, it is another subject altogether which I will not get into. 

When the proposed RTA was finally unveiled for a month-long online public consultation and feedback (which ended on Feb 28), its thrust floored those with insights into the process of and issues in property leasing.

Under the proposed RTA, the government would step in to be the custodian of the two-month rental and one-month utility security deposit, which are currently held by the landlord as it is typically provided for in a tenancy contract between a willing landlord and a willing tenant. 

The proposed enactment states that the security deposit would be kept by the yet-to-be-named agency for the purpose of addressing any potential landlord-tenant conflicts before the funds are returned. In the event of any disputes, the matter would then be forwarded to a tribunal for a decision. 

What is the rationale behind this suggested move? 

We are looking at a potential new set of rules that promise to be nothing short of being unnecessarily costly, in terms of ringgit and sen as well as time. 

As it stands, there are existing contractual instruments that govern the tenancy market in a transparent manner. Are these insufficient and therefore require tightening? If not, why attempt to reinvent the wheel and possibly create unnecessary confusion in the process? 

If there is a need for a tribunal to expedite rental disputes, why not dump right in then? Why the need for the government to hold on to the security deposits? 

Cost considerations aside, it is a fallacy to think that the interests of tenants or landlords are protected and best served with the security deposits lodged with the government for safe keeping. 

Rather, what would be a milestone for the Malaysian rental market is the collation of and easily accessibility to up-to-date rental data. Such market insight would not only help landlords and tenants make informed decisions but also, with the transparency, aid developers in navigating potential overbuilding. 

To be fair, our government is not ignorant. The process of collecting rental data is already ongoing. Unfortunately, the data is not robust, and it was not even when the market was. 

Let us understand why this is the care. 

The date collected upon submission of the rental agreement to the government for stamp duty payment. So, if the agreement is not submitted for stamping, or if there is no agreement to start with, the data will not be captured. 

Will the proposed RTA then “flush” out these silent offenders? Is this the real deal behind RTA? 

What the rental market needs urgently is a dynamic database of rogue tenants and landlords, one that is designed not to discredit any party but rather, raise a red flag for the unsuspecting. 

Personal data protection is a challenge but when there is a will, there is a way. 

The trauma and misery caused by rogue tenants are real. I am sure there are also tenants with horror stories about their landlords. 

A directory of credible landlords and tenants will surely go a long way towards building a sustainable and dynamic rental market in Malaysia.

Au Foong Yee is editor emeritus at The Edge.

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