I used to think it was quintessentially Malaysian to not respond with enthusiasm and substance when invited to give written feedback on regulatory or policy changes. I attributed this to a combination of apathy, reticence and power distance.
But that was before the Ministry of Housing and Local Government’s recent public consultation on a new law that will govern the rental of homes in Peninsular Malaysia.
People have plenty to say about the proposed Residential Tenancy Act (RTA). To see what a resounding collective ‘No way!’ looks like, skim through the comments on the government’s Unified Public Consultation portal.`
There is no word yet on what the ministry will do next but it is unlikely that the RTA journey ends here. Modelled on similarly named legislation in force in New South Wales, Australia, the proposed act is meant to fill a socioeconomic need. That rationale has not gone away.
It appears that Bank Negara Malaysia laid the foundation for the RTA. Through articles in its annual reports and quarterly bulletins published between 2016 and 2018, the central bank advocated the idea of rental as an alternative to home ownership.
The central bank advocated the idea of rental as an alternative to home ownership
Supply-demand mismatch
Discussing housing affordability, it pointed out that it was getting harder for Malaysians to be able to buy homes due to a supply-demand mismatch, the developers’ preference for selling higher-end products and house prices increasing faster than income growth.
It argued that part of the solution was to invigorate the rental market so that people would no longer consider renting as a last resort. To do that, there has to be a strong legal and institutional framework that supports a fair and equitable ecosystem for tenants and landlords. Bank Negara had in mind legislation in Australia and New Zealand that covered residential tenancy.
This recommendation did not go unheeded. The Budget 2018 speech in October 2017 included an announcement that there would be a Residential Tenancies Act to ‘protect landlords and tenants’. The National Housing Policy 2018-2025 says the preparatory study for the legislation began in early 2019.
Three years later, the housing and local government ministry is ready to engage with the public on the new law. It should be noted that the consultation that just ended was the forum phase, which was to identify and clarify issues that get the most attention among stakeholders. This is perhaps why no draft of the legislation has been provided so far.
Instead, the consultation document is the 110-page regulatory impact assessment that makes a case for the act, and discusses the work done so far, what the new law will do and how it will be implemented.
Part of the solution was to invigorate the rental market so that people would no longer consider renting as a last resort
There may still be the preliminary and final consultations to go through later, although the bill is scheduled to be tabled in Parliament in the third quarter of the year. Clearly, a lot more needs to happen soon to ensure wide acceptance of the RTA.
The act is designed to hammer out a structure for the housing tenancy market. It will be the statutory basis for a standard form tenancy agreement; a tribunal for landlord-tenant disputes; a new government unit to administer the act; offences and penalties; termination of tenancies; and repossession of rented premises.
Red tape concerns
However, the focus of the consultation feedback was very much on the proposed requirement that security deposits are to be held by the government until they are either refunded to tenants or passed to landlords to pay for repairs or unsettled utility bills. The commenters questioned the need for this, particularly because they worry that tenants and landlords alike will have to wrestle with red tape to receive the money.
Another recurring theme throughout the feedback is a fundamental one: why should the government have a say when a homeowner rents out their private property to somebody else? The commenters say it is unwise to interfere with market forces.
Trust issues
At the heart of these objections is a lack of trust in the authorities. Rules like those in the RTA are already enforced in other parts of the world. The act is meant to bring some good to the people and the economy.
The government has to do far better to make stakeholders understand this. It must also listen to the concerns and grievances, and properly address them. It is tough work, but is this not usually the case when a big change must be orchestrated to boost hope and opportunity within society?
