A great article on Penang Malaysia.
The Malaysia Institute of Estate Agents (MIEA) has launched the MIEA Landlord Insurance policy which will help landlords gain independence against the risk of runaway tenants, rent arrears together with potential damages to their asset or property when faced with bad tenants.
“As property agents, there is not much agents can do to help landlords with errant tenants except to pre-qualify them with the resources available to us. Today, MIEA is proud to say that agents can provide a second level of protection for their clients through this policy,“ said MIEA president Chan Ai Cheng in a statement yesterday.
The MIEA landlord insurance coverage will include:
- Reimbursement of loss of rental income due to tenant runaway.
- Legal expenses for letter of demand.
- Pay for amount incurred for losses or damages to contents due to malicious acts of your tenant.
The policy also cover additional benefits such as:
- Reimbursement of cleaning services charges incurred when the contents of the premises are destroyed or damaged by tenants;
- Reimbursement of costs incurred for repairing or replacing doors, locks, access card and Keys following the loss or damage caused by tenants;
- Reimbursement of amount incurred for the replacement of glasses (including shower door and windows) due to damage caused by tenants;
- Reimbursement of amount incurred for services such as plumbing, drainage, air-conditioning and toilet malfunction due to damage caused by tenants; and
- Reimbursement of losses due to theft or burglary committed by tenants.
Chan further explained that this policy was designed and developed to provide the minimum coverage with a minimal annual premium of RM280 per unit (less than RM24 per month).
“We want the real estate profession to grow and be at par with other countries. Our motivation of introducing this policy is to protect the public and to provide an environment for agents to be competitive in enhancing their services, which will set them apart from others. This will augur well for the profession and for the Malaysian property market. Both landlords and agents can also sleep better with this additional protection which will step in should untoward losses occur,” said Chan.
MIEA’s insurance partner Howden Insurance Brokers has designed this policy with the mandate from MIEA.
Meanwhile, MIEA is also concerned at the new trends in the property market. In most of the developing and developed countries, the enforcement on those who breach the law and carry out estate agency practice illegally or under the guise of doing a different trade is highly regulated.
To take two examples, a non-real estate firm is set up as a “consultants” usually to market projects for developers and collect fees for introducing buyers which by law is not allowed (Section 22C ACT 242). Secondly, tech firms or new start-ups are now part of a larger community of those who are carrying out real estate transactions and operating without registering themselves with the Board of Valuers, Appraisers, Estate Agents and property managers (Bovaep). It is important to note that all who wish to practise any form of estate agency must be registered with the Bovaep, the regulators of the profession.
MIEA CEO & past president K. Soma Sundram highlighted that these tech companies were told that they are breaking the law, they guise as insurance brokers to bypass the law thus avoiding enforcement by the authorities. Their modus operandi is to attract tenants by not collecting deposits from them and ask landlords to take up an insurance scheme to protect them against tenant.
“The premiums they collect for this policy are far higher than the actual cost of the premiums to be paid. For example, they collect one month rental and after deducting the premiums they use the balance as their fees. This is clearly a strategy to bypass the Valuers, Appraisers, Estate Agents and Property Managers Act which only allows registered agents to collect and hold deposits and collect fees for service rendered in a real estate transaction.”
It is also illegal to collect any monies and deposit such monies in a company’s current account and not in a clients account as required by law. This goes against the very grain of public policy. This hurts the industry indirectly in that the landlords pay a lot more than the fees payable to agents.
“MIEA requests that the Finance Minister and Bovaep as regulators make a serious effort in managing this concern and to look at the ‘lacuna’ that exists within ACT 242 on matters of illegal brokers.”
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