While the legality of rent-to-rent, more commonly known as subletting, is arguable, it is still a common property investing strategy in the Malaysian real estate market.
You may be curious to know if there is a market for subletting in Malaysia. The answer is yes and the return of investment is handsome if the property condition is fine and the location is right! Some of the most popular subletting hotspots in Klang Valley are Setapak, Old Klang Road, and Petaling Jaya, which are the highly populated and mature areas surrounded by many amenities.
Why is subletting popular, then? The number one reason is the rent will be more affordable as compared to renting a whole place, especially in a well-developed area. The second reason is the flexibility that a normal tenancy could not offer. Here are the advantages of subletting:
1. Low move-in cost
Subletting is more budget-friendly than renting an entire property. In the majority of subletting cases, the subtenant doesn’t have to pay for the tenancy agreement and the monthly rent and utility bills deposits will be much lower too. Furthermore, most of the subletting units are partly or fully furnished hence subtenants can save on the move-in cost.
2. The flexibility to move in and out
Unlike renting a whole unit, the terms and conditions of renting a room are usually more relaxed, which allows subtenants to move in or out as long as they give an early notice, or assist to find the next subtenant.
3. Short-term rental
As most of the subletting do not sign a formal tenancy agreement, the standard term of renting of at least one year, for the person who is expecting to stay in an area for only a short period, sublet seems to be the better option as it is usually hard to find a short-term stay for a normal lease. While subletting does bring in a good return, as a landlord or a tenant, there are many things to consider before you decide to sublet the property, such as problematic subtenants and the maintenance of the house. Here are some of the important considerations to think through before you sublet your property:
- Extra wear and tear to the property
- Neighbours complaining about different people are coming and going from the property
- Be ready to pay on behalf of the subtenant if they do not pay rent on time.
- The parking issue within the residential compound
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