In general, most businesses allow between 100 sf to 180 sf of office space to a person depending upon the overall headcount, culture of the company, e.g. open concept versus many enclosed offices, and the need for amenities like breakout rooms, pantry, library and storage. You can use our space calculator below to estimate the net area required.
- Letter Offer
On agreeing the terms the landlord will normally issue a Letter Offer which outlines the general terms and conditions upon which the agreement is based. Often this is accompanied with a copy of a draft standard tenancy agreement. The landlords usually give 5 to 10 working days for the tenant to sign the Letter Offer and return together with an initial earnest deposit of 1 month rental.
- Tenancy Agreement, Security Deposit, Utility Deposit and Reinstatement Deposit
Before the tenant signs the Letter Offer and pays the initial 1 month rental earnest deposit, the tenant should be happy with the terms of the offer and be reasonably comfortable with the draft tenancy agreement. This is because the earnest deposit is normally non-refundable.
Whilst it is not intended that all the terms and terminology of the tenancy agreement are finalized at this stage, the tenant should be satisfied there are no major obstacles in the tenancy agreement before signing the Letter Offer.
After signing the Letter Offer, the tenants are as usually given one month to finalize the drafting of the tenancy agreement. Many landlords in Malaysia will have their own standard tenancy agreement which they will not want to vary too much. Therefore major changes are unlikely and we always recommend all the tenants to use local lawyers familiar with landlord and tenant legislation in Malaysia.
- Taking Possession
Before taking possession the tenant must have signed the tenancy agreement and paid the remainder of the deposit monies, 1 month rental in advance and tenancy agreement preparation and stamping fees.
In general office rental is nearly always quoted at a gross rate per square feet per calendar month. This includes service charge, but excludes Goods and Service Tax (GST) which is currently 6% for Malaysia. There is no other hidden rental overhead. Rental is usually paid monthly in advance.
- Service Charge
This charge covers the landlords’ costs such as property tax, maintenance and management of common parts and air conditioning of the offices and common parts during normal office hours. The service charge is normally RM 1.00 per square feet subject to GST and it is usually included in the gross rental. The exact figure will be specified in the tenancy agreement but can change during the tenancy term.
- Tenancy Period
Normally 3 years but 2 year tenancy is also quite popular. More than 3 years lease is now difficult to negotiate because this is a rising market. A 5 year lease with a rent review is possible in many cases but the tenant is locked in even if they are unhappy with the market rate.
- Option to Renew
The tenancy renewal for 1 to 3 years should be no problem. Care should be taken in the drafting the revised rental clause in the option, which is sometimes worded "at a rate to be agreed" or "at market rate" with no provision to settle any disputes as to what is a fair rate.
- Legal Fees
The tenant is normally responsible for their own lawyer’s fees incurred in connection with the preparation of the tenancy agreement.
- Stamp Duty
The tenant is also responsible for the cost of the stamp duty fees payable on the tenancy agreement. As a guide, the stamp duty is calculated as follows in Malaysia:
Stamp Duty = [(Month Rental X 12) – RM 2400] / RM 250.
This amount is for 1 year tenancy. For 2 or 3 years tenancy, this amount is multiplied by 2
Electricity is usually supplied to the premises and the charges for consumption are paid by the tenant. The tenant is responsible for connection charges and opening an account with the relevant authorities.
The tenant is only responsible for internal repairs (excluding structural items). The repair and maintenance of the exterior and common parts are the landlord’s responsibility.
- Air Conditioning
It is normally provided by the landlords during normal office hours. Usually:
Weekdays: 8.00am to 6.00pm
Saturdays: 8.00am to 1.00pm
After office hours air conditioning can often be provided on an hourly basis on giving sufficient notice. Costs depend on the landlords.
Alternative is to install tenant’s own split unit provided the building allows external fittings.
- Car Parking
The number of lots allocated to each tenant is usually based on the space being rented. The average ratio is 1 lot per 1,000 sf. The cost varies from landlord to landlord, it is exclusive of GST and not included in the office rental. Additional spaces are sometimes offered on a quarterly basis, subject to availability.
All tenants are required to put the premises back into their original state (fair wear and tear excepted) at the termination of their tenancy. This normally takes a period of 3-4 weeks for the average unit.
- Rent Free / Fit-Out Period
This will depend upon the size of the premises and is normally one month. For larger space users 2 to 3 months is often possible. This is normally given outside the tenancy term.