Commission Structure of a Property Agent for Rental in Malaysia

According to property experts, Malaysia’s residential rental market is projected to witness increased demand as more individuals choose to rent rather than buy a house due to stagnating property prices and a grim market outlook. 

Most potential purchasers would be waiting and seeing and the market is not likely to recover until the middle of 2022. Without being able to commit to a buy, folks in need of housing have no choice but to rent, thus the residential rental market will improve. 

In addition, some developers are providing customers with the opportunity to rent with a purchase option. Given this scenario, property agents who are involved in rental transactions would need to be aware of the commission structure that they would be entitled to.

The Basics of a Rental Commision for Property Agents in Malaysia

Property agents are essential in assisting a property owner with the large chore of locating, obtaining, and handling the paperwork for a property, therefore it is only reasonable that they get compensated appropriately for their efforts. 

Unfortunately, because many property seekers have tried to avoid paying a fair price and some property agents have been less than honest in their payment calculations the official government body, BOVAEA in Malaysia has established a rule on the fees payable.

The highest charge property owners are required to pay if they hire a property agent to find a tenant will be determined by the length of the tenancy period.

  • Up to 3 years: 1.25 months of gross rental
  • Exceeding 3 years up to 4 years: 1.50 months of gross rental
  • Exceeding 4 years up to 5 years: 1.75 months of gross rental
  • Exceeding 5 years without an option for renewal: 1.75 months of gross rental
  • Exceeding 5 years with an option for renewal: 1.75 months of gross rental including 0.25 months of gross rental for every additional year

The minimum charge is 1 month of gross rental, which may most likely be reduced with the agent as long as the total payment does not exceed the set amounts. The charge can, however, be determined on a pro-rata basis for rental of less than one year.

Read more about sales commission for a property agent in Malaysia.

How the Commission is Divided Among the Parties Involved

property agents in malaysia working together to earn a rental commission

As property agents are essential in the property rental process, it is important that all those who work hard to make the transaction successful are duly rewarded. The property agent’s commission is usually divided amongst the parties involved in a property transaction.

The Property Agent Manages Both Property Owner and Tenant

In this scenario, the property agent is responsible for managing the property owner which includes advertising the property, drawing up contracts, and taking care of deposits and other payments. In addition, they will also be handling the tenant such as arranging viewings.

As property agents are responsible for both the property owner and tenant, it is only fair that they receive a full rental commission. Typically, their commission would be higher than if they were managing just one party.

The Property Agent Manages a Property Owner Only

If the property agent is only managing the property owner, then their commission would be lower as it would be limited to advertising the property and taking care of deposit and other payments.

Hence the commission received will be split with the other property agent who manages the tenant. The most common commission split is 50/50, in which both property agents earn equal amounts of money.

The Property Agent Manages a Tenant Only

If the property agent is only managing the tenant, then their commission would be lower too as it would be limited to finding a property. The property agent will receive the commission from the property agency hired by the property owner.

It is important to remember that property agents typically receive a commission based on the rent that is collected each month. Therefore, it is in everyone’s best interest to ensure that the property is rented as soon as possible.

What Services a Good Property Agent Should Offer Property Owners and Tenants

a property agent in malaysia working to earn a rental commission

When renting property, there are several services that a good property agent should offer to property owners and tenants. Below are some of the key services property agents should offer property owners and tenants when renting a property.

Calculate a Reasonable Rental Fee

  • Conduct a thorough investigation of the property and compare it to nearby similar rents, market circumstances, and historical yields. 
  • Make ideas for upgrades and additions that would increase the property’s attractiveness and allow for a higher rental rate.

Make the Property Available for Rent

  • Make a full report on the property, including high-resolution images that highlight its greatest features. 
  • Use a range of acceptable resources and communication channels to promote the property as broadly as feasible.

Tenant Selection and Screening

  • Background and reference checks, personal interviews, income tests, tenant default databases, and rental history checking and verification are all used to screen potential tenants.
  • Using social media, a property owner can see if the property agent is going above and beyond for a property owner.

Asist the Tenants With the Move-in Process

  • Ascertain if the property is ready to rent (oversee interior cleaning, garden tidy-ups, enhancing curbside appeal etc.) 
  • Make a tenancy agreement (in accordance with legislation and including items such as rent payment terms, frequency of inspections, renewal options etc.) 
  • Establish a move-in date with the tenant and the property owner. 
  • Prepare a property condition report, which the tenant must accept and sign. 
  • Collect the deposits as well as other payments that are due in advance.

Legal Issues

  • Keep current with local, state, and federal tenancy laws (from both the standpoint of the tenant and the property owner). 
  • Comply with all applicable legal requirements, including those pertaining to the property’s health and safety. 
  • Handle legal issues and processes, such as evictions and breaches of contract, in accordance with the letter of the law.

How to Be a Good, Reliable, and Qualified Property Agent in Malaysia

Finally, before becoming a property agent in Malaysia, research the sector and determine whether it is the best fit for you. Many individuals are drawn to the field because of the benefits, but it is the experts who can overcome the drawbacks that have genuine staying power. 

Are you looking for strategies to achieve success’s brightest stars? Do you have a strong desire to advance your career and want to work as a property agent? 

Do not overthink things and it is time to reclaim it with IQI Elite Legacy. Create your own success by working with us as a property agent and experience the numerous unlimited possibilities by taking advantage of the chance RIGHT NOW!


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