Is Residential Tenancy Act the answer to combat racial discrimination?

By Chang Kim Loong

Housing and Local Government Minister Zuraida Kamaruddin recently proposed to introduce a Residential Tenancy Act (RTA), which among others aims to address issues of racial discrimination in the property market, would be tabled in Parliament early next year

Is RTA the answer to combat racism? The National House Buyers Association (HBA) dissents that the primary aim of the proposed RTA, if ever to be legislated, is to combat racism. 

Unfortunately, racism and racists practices are prevalent not only in the tenancy market but in other areas of life and society in general. An example would be the ‘bumiputra discounts’ in housing and intake in government recruitment. 

The following are inferred in the context of tenancy market: Direct racial discrimination takes place if someone treats you less favourably than they should treat, or would treat another person because of race; for example, a landlord or council rents accommodation to a chosen person of certain ethnicity.

Indirect racial discrimination takes place when a landlord or council introduces a rule or policy that discriminates against people from other racial group, without being able to show that the rule or policy is justified eg. introduce preference and quotas.

Perhaps, a more holistic approach is needed. Instead of using the RTA to combat racism, educating potential landlords and tenants on their shared roles and responsibilities may be the way forward. 

The problem may not only lie with discrimination of a particular ethnicity, more of a perception that certain ethnicities make less desirable tenants and hence charging of higher rental. 

This kind of perception would also be perpetuated due to lack of understanding or education in different cultures. 

Balancing between the landlords’ aspiration with tenants’ need 

HBA hopes the RTA, if ever it is to be made law: will protect the legitimate interest of landlords against errant tenants and protect the tenant against irresponsible landlords. 

From our observation, landlords have problems evicting recalcitrant tenants who continue to stay on a property but refuse to pay rent or those who do not maintain the property or damage the fixtures and fittings, leaving the property in a ‘war zone’ condition. 

Many landlords could resonate with these kinds of experiences. At the other end of the spectrum, there are landlords who raise rent arbitrarily and refuse to rectify repairs their properties which may be in a dilapidated condition or refund the tenants’ security and rental deposit although the tenant has already vacated the property and reinstated the property to a satisfactory condition or find excuses to deduct non-existent damage to lessen refunds to tenant.

Currently, enforcement by both landlord and tenant would need to institute legal actions through the courts of law to recover payment or enforce their rights under a tenancy arrangement which can be costly. 

The rental in arrears owing by tenant or deposits owing by landlord sought to be recovered may be less that the legal fees incurred if the tenant or landlord disputes such claims. 

A recent phenomenon has arisen where the property owner participates in short homestay programs such as AirBnB and the guests flout management rules and incur the wrath of the residents within the development. 

Should this kind of short stay arrangement also come under the RTA? What about the rights of the resident association in a guarded and gated community and those of management bodies (JMB, MC and SubMC) for stratified properties, who are sometimes inadvertently involved in tenancy disputes? 

On reading the Minister’s information on RTA, HBA is concerned with the intended scope of this RTA as it also aims to cover matters such as ‘rent control’ for housing areas (including low cost projects) and perceived racist practices when tenants try to rent properties. 

With regards to both these areas, HBA views that the RTA should not include both these intended scope. 

Rental is always based on the free market

 Rental is a private commercial arrangement between a willing tenant and a willing landlord and the government should not interfere in such arrangements.

The government would be sending a very wrong message to the investing public by trying to interfere in such private rental arrangements. If the government is going to interfere with rental for residential housing, there will be calls for the government to also interfere in rental for commercial properties. 

The government will then be forced to cap rentals for even shopping malls, food courts, restaurants and office buildings and this will definitely drive away all local and foreign investors. 

It was reported that one of the reasons that the government wanted to cap rental was to exert some control for low cost housing projects, which are meant for owner occupation and not allowed to be rented out. 

To say that the government is allowing rental of low cost properties, especially to foreigners is a betrayal of the purpose that such low cost properties were built in the first place. It was to provide a roof for the poor and these properties should not be used as a tool for property speculation. 

HBA has called for stricter enforcement of existing rules preventing the rental of low and medium cost properties.

Owners must have the right to choose their tenant

Every house owner must have the right to choose who they want to rent the said property. Different owners will have different criteria based on their past experiences and individual preference and whilst HBA does not support using race as a criteria, the fact remains that the landlord should not be compelled to rent to a tenant that the landlord does not wish to.

It is the prerogative of the landlord to choose their tenant. Choosing or ‘profiling’ is a methodical risk management practice based on quantifying qualitative attributes of tenants. 

One can’t possibly rent to a potential tenant who is problematic from the onset? The proposed RTA cannot take away the indefeasible rights of title of property owners which includes the right to dispose and lease / rent the property to anyone of their own choosing. 

Standardise terms and conditions in tenancy agreement 

HBA calls for the minister to ensure that the rights of tenants and landlords are protected in the following key areas under the proposed RTA:

Right to occupy the said property during the term of the Tenancy Agreement so long as the tenant continues to pay rent without failTenant must vacate the said property if the tenant has defaulted in his rental payments as provided for in the Tenancy Agreement
Right against the landlord to raise rent arbitrary during the tenancy period which is not provided for in the Tenancy AgreementLandlord can raise rental as provided for in the Tenancy Agreement and if tenant cannot afford the revised rate, tenant must vacate the property
Landlords to make do all major repairs of the property to ensure that the tenant dwells in a safe and secure environmentRight of landlord to deduct or withhold the rental or security deposit in event that the tenant has caused damage to the property
Right to a timely and full refund of all security and rental deposit after deducting for any repairs that may be necessary caused by the tenant during the tenancy periodRight of landlord to deduct or withhold the rental or security deposit in event that the tenant has outstanding utility bills such as water, electricity, sewage and telephone 

Perhaps, the RTA should incorporate the common terms and conditions already in use in most of the tenancy agreements in Malaysia with additions for better safeguarding of both the landlord and tenant. 

The RTA should strive to have standard terms and conditions for a tenancy agreement where the rights, duties and remedies are balanced between the landlord and tenant as well as the quantum of security deposits, tenure of tenancies and options thereof.

Set up a Tenancy Tribunal 

We suggest having a quasi-court in the form of a ‘Tenancy Tribunal’ for certain trivial disputes as an alternative dispute resolution instead of the current Courts. Not only is going to Court is expensive, it is also time-consuming. 

Does the Ministry have the manpower to enforce compliance? If there is seriousness in proceeding with the RTA, we suggest that close monitoring of landlords and tenants be carried out.

This can be done by a system to identify errant landlords and wayward tenants and make such information available to other landlords and potential tenants. Rating of landlords and tenants via a ‘black-listing’ /rating system/database to assist other landlords and potential tenants in their decision making before executing a tenancy agreement. Is the Ministry capable of undertaking the additional tasks? 

Datuk Chang Kim Loong is the Sec-Gen of the National House Buyers Association (HBA), a non-governmental and not-for-profit organisation.

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