LegislationNews

Penang announces rental crackdown with immediate effect

Malaysia: The Penang State Government has announced that it is cracking down on short-term rentals on the island with immediate effect, three months after introducing a partial ban on rental operations.

Earlier this year, the government ruled that all private residential properties will be banned from listing on booking platforms like Airbnb, following ongoing discussions on the matter of potential nationwide regulations in Malaysia over several years.

The new rules will require short-term rental hosts to register with the Malaysian government and to obtain short-term rental licences, as well as complying with safety and quality standards, including providing emergency contact information and maintaining relevant insurance coverage.

The rules in Malaysia, which will not apply to extended-stay properties and serviced apartments [if they receive approval from 75 per cent of other residents in the building], were looking likely to be brought in on 1 March 2024. Now, however, they are set to be enforced with immediate effect, according to The West Australian.

As a result, Penang becomes the first state in Malaysia – and the first tourist hotspot in South East Asia – to implement regulations to such a drastic extent. The government said that the decision had been made largely due to the anti-social behaviour of tourists on the island.

Jagdeep Singh Deo, chairman of the State Housing Committee, is quoted as telling local media: “With such provisions, I hope that the days of illegal accommodation will be put to rest.”

The new regulations also state that each rental unit must be registered with Penang Island City Council [MBPP] can only be rented out for a maximum of three days a week. Those flouting the rules will receive a fan of 200 ringgit [around $65].

Airbnb, which currently lists more than 1000 properties in Penang, said that the new regulations would “heavily restrict the ability of Malaysians to share their home in strata buildings, and reduce the variety of affordable accommodation options for domestic and international travellers”.

Mich Goh, head of public policy for Southeast Asia, India, Hong Kong and Taiwan at Airbnb, urged the government in a May press briefing in Kuala Lumpur to apply a “three strikes law” that puts hosts on an exclusion register and forbids them from hosting again if they have reports of an act of noise or nuisance against them three times. She added that the law was already being successfully implemented in California in the United States and New South Wales in Australia.

An Oxford Economics report revealed that income from hosting on Airbnb contributed 3.98 billion [around $857 million] ringgit to Malaysia’s gross domestic product [GDP] and supported 52,100 local jobs in 2019, the year before the Covid-19 pandemic was declared.

Penang has emerged as an increasingly sought-after destination for tourists who are keen to make the most of a 90-day free tourist visa in Malaysia. And yet, this has also left the island with a large supply of rental units that can remain empty in down periods of the year.