GEORGE TOWN, May 14 – Penang State Executive Council Member, YB Jagdeep Singh Deo, recently announced a ban on STR in Penang which sparked off hot discussion on the topic. Muda Tanjong is of the view that in STR, the issue is about the law on property management and the kind of condominiums used for STR. In the framework of law on property management, Muda Tanjong would like to recommend the following SOP for enforcement against STR under strata management:

  1. JMC/MC passes a resolution to add into By-Laws if STR is not permitted and the procedure to identify STR’s such as advertisement at various STR platforms and receipts if available;
  2. Upon identification of the unit involved, to file a case with the Strata Management Tribunal based on breach of By-laws and to exhibit evidences;
  3. Upon receiving the award from the Strata Management Tribunal, to serve on the defaulting party requesting for compliance under the award;
  4. If none compliance, to send a copy of the duly endorsed Form 1 and the award to the COB for the local council’s enforcement.

Muda Tanjong is of the view that if one buys a residential condominium, they cannot operate STR as if it is commercial unless special approval is obtained from the Ministry of Tourism, Arts and Culture (MOTAC). Under Regulation 8(9) of the Third Schedule of Strata Management (Maintenance and Management) Regulations 2015, if the building is residential, the owners cannot use it otherwise .

Muda Tanjong agrees that there should be a discussion between the Penang State Government and Airbnb. Since 2018, the Penang Local Council has provided special guidelines for the construction and operation of service apartments for STR. Airbnb should assist by only allowing service apartments or such buildings designated for STR to be used for that purpose.

This does not mean all service apartments can operate STR. The Federal Court case, Innab Salils & Ors Vs Verve Suites Mont Kiara Management Corporation (2020)10CLJ285 ruled that a management corporation (MC) managing a commercial service suites built upon a land held under the category of “building” and express condition of ” commercial building”, may pass By-laws by special resolution with not less than 75% valid votes to prohibit the owners of the commercial suites from commercial usage like STR.

There needs to be clear guidelines on the segregated use of different buildings because of:

  1. Safety issues – Since 2018, Penang Local Council has provided special guidelines for the construction and operation of service apartments for STR that comply with the Fire and Rescue Department of Malaysia (BOMBA) regulations. It is important to protect the safety of the visitors.
  2. Health issues – In terms of safety and health, many STR’s operators in residential condominiums are not ready to enforce endemic standards of procedure such as checking the MySejahtera risk status where applicable. Besides that, during the pandemic, many people booked STR units to stay for quarantine purposes as they cannot do so at home because of certain reasons. This further puts the residents at risk.
  3. Cost issues – When taking cost management into account, holiday seekers occupying STR’s units will create more rubbish, make more noise, break by-laws and spoil more common property. If a service apartment is designated to operate STR, the parcel owners would all agree to foot a higher service charge. In a residential condominium, most of residential owners would end up subsidizing the units operating STR.

The forming of JMB and MC have propelled most of the residents to take part in protecting their interest especially in restraining the operation of STR in residential condominiums by passing by-laws. Even then, JMC/MC can impose a nominal fine of RM200.00 and only if the management has got foolproof evidence that a particular unit is operating STR.

Whether a parcel is operating STR or on a long-term renting, the abovementioned Federal Court case set down the tests as exclusive possession, intention of parties whether to rent as STR or long-term basis, the nature and quality of the occupancy. Muda Tanjong requests that the enforcement of the short-term rental should be handed over to the Strata Management Tribunal for the Tribunal to ventilate whether a unit falls within the category.

As to landed residential units, the duties would be solely on the local council to find the evidence before enforcement can be done. Muda Tanjong hopes the above would spare condominium owners the agony of living among visitors unwelcomed by them.