Where to rent in the Klang Valley and how to go about your tenancy the new age way!
KUALA LUMPUR: If you do not own your own home, you are probably renting one from someone else. Having been a tenant ourselves we understand the challenges faced by every tenant in Malaysia. Before I moved to my own house 15 years ago, I have moved a total of 20 times over the past 13 years before I bought my own apartment. One of the challenges include anticipating rental increases after renting the same property from a landlord for a few years and in my opinion this is inevitable. So, the options we are faced with is to either bear with the increases and if it becomes unbearable, move to a new place. But where?
One of the ways of researching highly searched rental locations are to read articles written by property listing portals such as PropertyGuru, iProperty, PropSocial and the likes. These property listing portals deal with big data from search result history of users browsing their websites to search for their dream home, be it for sale or for rent advertised by property agents and negotiators. Some portals and websites also have properties for sale by owners (FSBOs)
The Top 10 Most Searched Areas for Rent in Malaysia in 2020
According to an article in iProperty.com.my (https://bit.ly/3MD8Rnd) by author Rebecca Hani Romeli, the Top 10 most searched areas for rent in Malaysia in 2020 are (in descending order):
10. Bukit Jalil (search percentage 7.8%)
9. KLCC (search percentage 8.1%)
8. Subang Jaya (search percentage 8.3%)
7. Ara Damansara (search percentage 8.5%)
6. Bangsar (search percentage 8.5%)
5. Ampang (KL) (search percentage 9.0%)
4. Mont Kiara (search percentage 11.8%)
3. Petaling Jaya (search percentage 11.8%)
2. Cyberjaya (search percentage 12.2%)
1. Cheras (KL) (search percentage 14.1%)
The article states the top 10 most searched areas to rent in Malaysia but we feel a more suitable title would be the top 10 most searched areas to rent in the Klang Valley as 10 out of 10 areas in the list are in the Klang Valley. We guess the high concentration of searches in these areas are because these are where most of the jobs and businesses are and because tenants don’t own the properties they wish to live in temporarily, there is greater flexibility for them to choose to live nearer to where they work instead of having to travel 50km a day to and from work if you had bought your dream home somewhere far FAR away like in Semenyih or Seremban!
Of course, searched locations may not be the one they eventually rent at because rental prices in some areas are ridiculously high beyond the expectation and affordability of tenants searching for a place to stay. Property portals are unable to record such rental transactions because they are only a property listing portal and the rental transaction is usually conducted offline after the tenant has contacted the property agent for a viewing, paid the security and utilities deposit as well as the advanced rental, execute the tenancy agreement and get the keys and move in the actual property.
Certain Properties Command Higher Than Average Rentals
Three out of ten of the areas listed in the iProperty article are relatively high end and commands higher than average rentals, they are Bangsar, KLCC, Ampang (KL) and Mont Kiara but that is not saying that other areas are cheap to rent. Locations such as Bukit Jalil, Ara Damansara, Subang Jaya and some parts of Petaling Jaya are seeing increases in rental asking prices in recent years due to healthy rental demand for these areas partially due to the improvement in public transport, the development of newer and nicer high rise residential buildings as well as its proximity to amenities such as international schools, colleges and universities, shopping malls, hospitals and ever growing commercial developments in those areas. These are the pull factors for tenants looking to rent in those areas.
However, the sad reality is, when demand increases, rental prices increase as well. This would go on and on until a certain area becomes inaccessible to the ordinary citizens and only the more well-off ones are able to rent properties there, or in the case of Mont Kiara and Bangsar, only expatriates and corporate executives, professionals and those corporations renting for their top management staff.
Another reason why asking rental prices for new properties even in second choice locations are sky high is because of the high acquisition costs of some new high rise residential properties with all sorts of high-end facilities and close to amenities. We’ve seen an 800+ square feet 3-bedroom 2 bathroom newly completed serviced residence in PJ sell for RM800k. That’s about RM1k per square feet. A 90% loan at 3% for 35 years would set you back RM3.1k per month in instalment payments. How much would you need to rent out that property in order to pay your mortgage every month?
Checks on iProperty reveals that the particular property we were talking about rents for between RM1800 to RM2600 a month. As the owner, that’s RM500 to RM1300 a month extra which you need to fork out to settle your home loan after your tenant has paid you rent. This is not including around RM300 more per month you need to pay in maintenance fees. Well, that’s the landlord’s pain which they must bear for the next 35 years of home ownership.
What is your pain as a tenant?
What then IS your pain as a tenant? Is it paying 3.5 months every time you move into a new home? So, say the rental is RM1800 per month, the upfront cost is RM6,300 (RM1800 x 3 + RM900) that’s akin to purchasing a brand-new high end gaming laptop in cash! The 2.5 months deposit or RM4500 is held by the landlord for 1 year (or whatever duration you plan to stay in their property) and is returned to you when the tenancy ends IF you did not damage anything inside the property or owe the landlord any utilities bills. That’s quite a sum of money to be entrusted to someone for a long time without knowing how much money you would be getting back at the end of it all.
But we guess it’s a fair trade-off. The landlord entrusts you with their brand spanking new RM800k property to stay in for 1 year or more and you entrust him or her with your RM4500 security deposit both assuming that they would get back what is rightfully theirs at the end of the agreement period.
What if… there were no more rental deposits? That was the idea that we BlueDuck had in mind when we co-developed the zero-deposit rental insurance product with Liberty Insurance Malaysia way back when we were incorporated in 2018. Liberty Insurance Berhad, formerly known as Uni.Asia General Insurance Berhad was launched in 2015.
BlueDuck & Liberty Insurance? Who Are They?
Liberty Insurance has 5 regional offices and 25 branches in Malaysia and 638 personnel, and its distribution network also includes 10 mini branches at Puspakom, POS Malaysia’s approximately 700 outlets, 4 franchise holders, 119 dealers, and a 1,800 strong agency force. The company is a MYEG Insurance Partner and a bancassurance partner of UOB Bank and Bank Simpanan Nasional.
On the other hand, BlueDuck, incorporated in 2018 is a fast-growing fintech company and a licensed insurance agency in Malaysia transacting on Zero Deposit Insurance recognized by MDEC, MAGiC and a few renown venture capitalists and in early 2022 won the first place in Alpha Start-ups at MyFintechWeek 2022 an event organized by Bank Negara Malaysia together with 1337 Ventures and supported by MDEC.
The Zero Deposit Solution
A zero-deposit solution which is widely gaining popularity in Malaysia as well as in other parts of the world like the US, UK and many countries in Europe including Switzerland and Germany. Here the tenants purchase a zero-deposit insurance policy to replace the traditional security deposit usually paid before moving into a rental property. Here if the tenant defaults on rental payments, utility bills and causes malicious damages to the landlord’s property, the zero-deposit insurance pays out for the losses suffered by the landlord up to the limit of the sum assured stipulated in the insurance policy.
Although this does not eliminate the risk of tenants running away, owing thousands in unpaid utility bills and damaging property beyond repair or betterment, it gives landlords a certain degree of assurance and peace of mind knowing that if such unlucky incidents were to happen, they would know that they would get fair and adequate compensation equivalent to the risk they are taking renting out their property to a tenant they barely know.
If you are a prospective tenant looking for your next place to rent and call home, or if you’re a landlord who have just gotten your keys to your brand-new condo and want to rent it out as fast as possible or even if you’re a property agent who would like to offer your clients a new age solution, do check the zero deposit insurance packages we have on offer for whole residential units (house, apartments, condos) to individual rooms and now EVEN commercial units like shop lots and office spaces. Hit us up at https://www.blueduck.my/ we are pretty sure you won’t be disappointed.
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