Rental deposit refunds in Malaysia (2026): deductions, timing and how to claim

中文 · Bahasa Melayu · Bahasa Indonesia

By Jason Lim, REN 84424 · IQI Realty · Checked on 9 November 2026

This guide is for tenants and landlords in Johor Bahru and elsewhere in Malaysia, including people from Singapore, Indonesia, India and China. The short answer: no Malaysian law yet fixes how much deposit a landlord can take or how fast it must be returned, so the tenancy agreement decides. A landlord may deduct only what the agreement allows, usually unpaid rent, unpaid bills and damage beyond fair wear and tear, and should return the balance with an itemised list. If a refund is refused, the tenant can send a letter of demand and then claim in court, using the small claims procedure for up to RM5,000.

How rental deposits work in Malaysia

A rental deposit (deposit sewa) is the tenant’s money, held by the landlord as security and returned, less agreed deductions, when the unit is handed back. Most JB lets follow the national pattern:

Payment	Usual amount	What it covers	When it usually comes back
Security deposit	2 months’ rent	Unpaid rent, damage beyond fair wear and tear, other breaches of the agreement	After the tenancy ends and the unit is inspected
Utility deposit	About half a month’s rent (some landlords ask for one month)	Final electricity, water, sewerage and sometimes internet bills	Once the final bills are known and paid
Advance rent	1 month’s rent	The first month’s rent	Not refundable; it is rent
Access card and parking deposits	Set by the landlord or the building	Lost or damaged cards, remotes and stickers	When the cards are returned
Booking (earnest) deposit	Often about one month’s rent	Holds the unit before signing	Usually credited to the first payments once the agreement is signed

With no tenancy act in force, nothing requires interest on a deposit or a separate account; the agreement’s deduction list and refund date are what count. For the wider process, see my guide to renting in Johor Bahru as a foreigner.

The legal position in November 2026

On 4 August 2026 the deputy housing minister told the Dewan Negara that the Residential Tenancy Bill (Rang Undang-Undang Sewaan Kediaman) was still being finalised, with quicker, less costly dispute settlement among its aims (Bernama). I found no report of tabling by early November 2026, so treat it as a proposal.

In February 2022 The Star reported that an early consultation floated having the security deposit held by a neutral agency, with disputes going to a tribunal. That was an idea, not law, and the final bill text has not been published. For now, deposit disputes fall under:

• Contracts Act 1950 and your agreement. The deposit terms you signed are what can be enforced.
• Contracts Act 1950, section 75. Where a contract names a sum for breach, the innocent party recovers reasonable compensation up to that sum, without proving actual loss.
• Stamp Act 1949, section 52. An unstamped agreement cannot be used as evidence until the duty and any penalty are paid.
• Limitation Act 1953, section 6. Court claims founded on a contract generally must be brought within six years.

Stamp the agreement within 30 days of signing through LHDN’s e-Duti Setem on MyTax. Under LHDN’s guideline of 30 June 2026, duty is RM1 per RM250 of annual rent for a term of up to one year, so RM2,000 a month for a year costs RM96. This is general information, not legal advice; for a disputed deposit, speak to a Malaysian lawyer.

What a landlord can and cannot deduct

The key idea is fair wear and tear: the natural decline of a home through ordinary, careful use. A tenant pays for damage and neglect, not for age:

Usually deductible (if the agreement allows)	Usually not deductible
Unpaid rent and agreed late charges	Faded paint and curtains after years of sunlight
Final electricity, water and sewerage bills	Light scuffs, and small nail holes where the agreement allowed pictures
Broken furniture, appliances or fittings caused by misuse	An old water heater or aircon compressor that fails with normal use
Burns, stains, holes and pet damage beyond normal use	Normal wear on sofas, mattresses and flooring
Lost keys, access cards and remotes	Repainting the whole unit for the next tenant, unless the agreement says so
Professional cleaning, if the agreement requires the unit back in the same clean state	Repairs the landlord was already responsible for under the agreement

A fair deduction covers the reasonable cost of putting an item right, not a brand-new replacement for something already old.

“The deposit is not last month’s rent”

Most JB agreements say the security deposit cannot be used as rent for the final months. Stopping payment near the end and telling the landlord to keep the deposit is then a breach, and leaves nothing to cover any damage. Pay the final rent and claim the deposit back normally.

Leaving early

Many agreements forfeit the security deposit if the tenant ends before the fixed term. Whether the landlord can keep all of it depends on the clause and on section 75 of the Contracts Act 1950. An early-exit clause for tenants transferred abroad, after a minimum period and with notice, avoids most arguments. Ask a lawyer before relying on a forfeiture.

Move-out, step by step

Most disputes start at handover. These steps help both sides:

1. Give written notice on time, as the agreement requires.
2. Agree a handover time for a joint inspection with both sides or their agents.
3. Fix what you broke and service the aircon if required, keeping receipts.
4. Clean to the move-in standard and remove everything you brought.
5. Inspect against the inventory room by room, noting any disagreement in writing on the day.
6. Photograph the meters with the date showing.
7. Return and list every key, card and remote, signed by both sides.
8. Agree the refund date and account, and how the utility deposit is settled after final bills.

The move-in inventory is the foundation. My landlord guide to tenancy agreements in Johor Bahru covers what to list and which clauses help both sides.

How long a refund should take

No Malaysian law sets a refund deadline. Agreements typically give the landlord 14 to 30 days after handover to return the security deposit with a statement of deductions; that is a typical term, not a legal rule. The utility deposit can take longer because final bills arrive later; return it once they are paid, with copies.

An itemised refund might look like this (made-up figures):

Item	Amount	Evidence
Security deposit held (2 months at RM2,000)	RM4,000	Agreement and receipt
Utility deposit held	RM1,000	Agreement and receipt
Less: final electricity and water bills	−RM180	Copies of the final bills
Less: replacing a cracked glass table top	−RM250	Move-in and move-out photos, contractor’s quote
Less: one lost access card	−RM50	Management office charge
Balance to refund	RM4,520	Paid to the tenant’s nominated account by the agreed date

If the deposit is not returned: a tenant’s options

Start with the simplest step and keep everything in writing.

1. Ask in writing for the refund or a list of deductions with evidence.
2. Negotiate, accepting a fair deduction for anything you did damage.
3. Send a letter of demand. State the amount and a deadline, often 14 days, by email and registered post. You can write it yourself or use a lawyer.
4. File a claim on the route that fits the amount.

Route	Amount	Points to note
Small claims procedure (tuntutan kecil), Magistrates’ Court	Up to RM5,000	Order 93, Rules of Court 2012. For individuals; parties generally represent themselves; a magistrate decides and there is no appeal. Judgments can be enforced, for example by seizure and sale.
Ordinary civil claim	Above RM5,000, or with other claims	Magistrates’ Court or a higher court depending on the amount, usually with a lawyer. Contract claims generally within six years.
Tribunal for Consumer Claims (Tribunal Tuntutan Pengguna Malaysia, TTPM)	Up to RM50,000	RM5 filing fee, no lawyers at hearings, claims within three years. But the Consumer Protection Act 1999 does not apply to land or interests in land, so jurisdiction over a tenancy can be challenged.

Small claims: the usual route for a deposit

A two-month deposit on a mid-range JB rental is often under RM5,000. As Malay Mail explained in February 2025, a magistrate hears the case, the parties represent themselves and the decision is final. Bring the stamped agreement, both inventories, dated photos, deposit receipts and your letter of demand, and check forms and fees with the Johor Bahru Magistrates’ Court registry. The landlord may counterclaim, so be ready to answer each deduction.

What about the Consumer Claims Tribunal?

It is not settled. Section 2(2)(d) of the Consumer Protection Act 1999 excludes land and interests in land, and section 99 bars the tribunal from claims to recover them. Whether a residential tenancy counts as an interest in land for this purpose is arguable. Even so, KPDN’s published awards include house-rental deposit claims: in award TTPM-WP-(P)-46-2022, dated 29 November 2022, the tribunal ordered the return of security, utility and access card deposits, less unpaid utility bills, without discussing jurisdiction. The landlord can still contest jurisdiction, so ask the tribunal before filing.

The Strata Management Tribunal handles disputes between owners and building management, not landlord and tenant, and there is no tenancy tribunal until the bill becomes law.

For landlords: deductions that stand up

• Record start and end the same way: signed inventory, dated photos of every room and meter readings, ideally with the tenant present.
• Price fairly with a quote or invoice for each repair, allowing for age.
• Explain in writing. Refund the undisputed balance on time with an itemised statement; holding everything over a small point invites a claim.
• If the tenant owes more than the deposit, see my guide on a tenant not paying rent.
• Tax. Rent from a Malaysian property is taxable in Malaysia; if you keep a deposit in place of unpaid rent, ask LHDN or a tax adviser how to report it. See my rental income tax guide.

Leaks from above or flood damage are not tenant damage; they may be an insurance or management matter (see my home insurance guide).

Foreign tenants and owners abroad

• Tenants leaving Malaysia. Agree in writing the refund account, currency and who pays transfer charges, and leave an email for final bills.
• Court claims from abroad. Small claims expect parties to appear in person; ask the registry, or use a lawyer.
• Owners in Singapore, Indonesia, India or China. Have someone local for the inspection and refund. My guide to managing a JB property from overseas covers the options, and a power of attorney can help with bigger matters.
• Buying a home with a tenant in it. The deposits should pass to you at completion, since you will refund them. See buying a tenanted property in JB.

Before paying any deposit, confirm you are paying the owner or a registered agent; see my guide to property scams in Johor Bahru.

Where to rent or buy if this matters to you

Handovers are easier in well-run buildings with steady tenant demand, as in these areas:

• JB Sentral and Bukit Chagar: near the CIQ and the RTS Link station, popular with Singapore commuters.
• Mount Austin: families, schools and cafes, with condos and landed homes.
• Tebrau, Setia Indah and Molek: established neighbourhoods near malls.
• Iskandar Puteri: Medini, EduCity and the Second Link.
• Skudai, Tampoi and Kempas: around Universiti Teknologi Malaysia; see also my student housing guide.
• Permas Jaya and Senibong: east-side condos at moderate rents.

Compare them on my JB property map, and if you are letting out a home, see my guide to renting out property in Johor.

More Johor living guides: Landlord tenancy agreements in JB · Renting in JB as a foreigner · Tenant not paying rent · Moving in: utilities and internet in JB

Frequently asked questions

How much rental deposit is normal in Malaysia?

Usually two months’ rent as a security deposit and about half a month as a utility deposit, plus one month’s rent in advance. On RM2,000 a month that is about RM7,000 upfront. It is common practice, not a legal limit.

How long does a landlord have to return a deposit in Malaysia?

No law sets a deadline yet. Agreements typically give the landlord 14 to 30 days after handover to refund the security deposit with an itemised list of deductions. The utility deposit may wait for final bills. Check your agreement.

What can a landlord deduct from a rental deposit?

Only what the agreement allows, typically unpaid rent, final utility bills, damage beyond fair wear and tear, lost keys or cards, and cleaning if the agreement requires it. Each deduction should be backed by photos, receipts or quotes.

Can I use my deposit as the last month’s rent?

Not if your agreement says the deposit cannot be used as rent, which most Malaysian agreements do. Pay the final rent and claim the deposit back after the joint inspection.

What can I do if my landlord does not return my deposit?

Ask in writing for the refund or an itemised statement, then send a letter of demand with a deadline. If that fails, claim in the Magistrates’ Court; the small claims procedure covers amounts up to RM5,000 without a lawyer.

Can the Consumer Claims Tribunal hear a rental deposit claim?

It is not settled. The Consumer Protection Act 1999 excludes land and interests in land, but the tribunal has decided some house-rental deposit claims. The landlord can contest jurisdiction, so check with the tribunal first; the courts remain the dependable route.

Is there a Residential Tenancy Act in Malaysia in 2026?

Not yet. In August 2026 the housing ministry said the Residential Tenancy Bill was still being finalised, and no tabling had been reported by early November 2026. Deposits are governed by the tenancy agreement and contract law.

Need help with a JB rental handover?

Tell me whether you are the tenant or owner, the project and the handover date. For lets I handle, I help with the inventory, dated photos, meter readings and joint inspection so the deposit is settled on clear evidence. For a disputed refund or court claim, use a Malaysian lawyer. You can also book an appointment, or a Zoom consultation if you are abroad.

Sources: Malay Mail, on rental deposits for first-time renters, 12 July 2026; Bernama, “Residential Tenancy Bill being finalised to balance rights of tenants and landlords”, 4 August 2026; The Star, “Pushback on proposed law over rental security deposits”, 24 February 2022; Contracts Act 1950 (Act 136), section 75, Laws of Malaysia text, checked November 2026; Stamp Act 1949 (Act 378), section 52, Laws of Malaysia text, checked November 2026; Limitation Act 1953 (Act 254), section 6, Laws of Malaysia text, checked November 2026; LHDN, Garis Panduan Pengenaan Duti Setem, First Schedule, Stamp Act 1949, 30 June 2026; Malay Mail, on the small claims procedure (Order 93, Rules of Court 2012), 28 February 2025; SAYS, “Landlord refusing to return your rental deposit?”, 13 November 2025; KPDN, Tribunal for Consumer Claims, checked November 2026; Tribunal for Consumer Claims Malaysia, FAQ, updated 30 August 2024; Consumer Protection Act 1999 (Act 599), section 2, Laws of Malaysia text, checked November 2026; Consumer Protection Act 1999 (Act 599), section 99, Laws of Malaysia text, checked November 2026; KPDN repository, Tribunal for Consumer Claims award TTPM-WP-(P)-46-2022, 29 November 2022; LHDN, Who is taxable, accessed November 2026

Jason Lim, REN 84424, IQI Realty Sdn. Bhd. E (1) 1584/6. General information checked on 9 November 2026, not legal or financial advice. Laws, court rules and tribunal practice change; confirm with the court registry, the Tribunal for Consumer Claims, LHDN and a Malaysian lawyer before you act.