Airbnb License & Rules in Malaysia: State-by-State Guide (2026)

Most Airbnb hosts in Malaysia operate illegally. They just don't know it yet. There is no single national law governing short-term rentals. Instead, regulations are scattered across state governments, local authorities, strata management bodies, and tax agencies — each with different rules, different enforcement, and different penalties. The host running three units in KLCC and the retiree renting a spare room in Ipoh face entirely different regulatory environments despite being on the same platform.

This fragmentation is not accidental. Tourism, housing, and local government are controlled by different levels of authority in Malaysia's federal system. And because Airbnb grew faster than regulation, most areas are still catching up. The result: a patchwork of rules that can change overnight when a local council decides to act.

This guide maps every layer of regulation that affects short-term rental operators in Malaysia — state by state, cost by cost, risk by risk.

The Regulatory Stack: Four Layers That Apply to You

Before looking at individual states, understand that every short-term rental operator in Malaysia faces four simultaneous regulatory layers:

1. State government rules — Some states require tourism licenses for short-term accommodation.
2. Local authority (PBT) rules — City and municipal councils set zoning, licensing, and registration requirements.
3. Strata management by-laws — Your condo's Management Corporation (MC) can ban or restrict short-term rentals regardless of what the law says.
4. Federal tax obligations — LHDN (Inland Revenue Board) and Royal Malaysian Customs (SST).

You must comply with ALL four layers. Getting a state license does not override your condo's MC by-laws. Paying your taxes does not excuse operating without a local council registration.

State-by-State Regulation Breakdown

The absence of regulation does not mean permission. In states without specific short-term rental laws, your condo's MC by-laws and local council zoning rules are the binding constraints. "No law against it" is not the same as "allowed."

Deep Dive: Penang Rules

Penang is the most regulated state for short-term rentals. The state government has taken an active stance because of resident complaints about noise, security, and the displacement of long-term tenants.

What you need:

• Registration with the local council (MPPP for island, MBSP for mainland)
• Annual license fee of RM250-500 depending on property type and location
• Compliance with fire safety requirements
• Building MC consent (written approval from your Management Corporation)
• Tourism tax registration

Penalties for non-compliance:

• Fines up to RM2,000 per offense under local council by-laws
• MC can impose fines and restrict access
• Repeat offenders may face legal action

Practical reality: Many operators in Penang still run without licenses. Enforcement is complaint-driven — meaning you are safe until a neighbor reports you. But once reported, the council acts. Several high-profile cases in George Town have resulted in operators being forced to shut down.

Deep Dive: KL (DBKL) Rules

Kuala Lumpur's city hall, DBKL, introduced guidelines for short-term rental operators. These are not yet enshrined in specific legislation but are enforced through existing building and business licensing powers.

DBKL requirements:

• Register your short-term rental property with DBKL
• Obtain written consent from your building's MC or JMB (Joint Management Body)
• Residential-zoned properties face restrictions — DBKL prefers short-term rentals in commercially-zoned or mixed-use buildings
• Operators must maintain a guest register
• Fire safety compliance required

The MC problem in KL: Even if DBKL allows it, most KL condominiums have passed by-laws restricting short-term stays. Before buying a unit for Airbnb, check:

1. The MC's house rules and by-laws
2. Whether there has been a resolution banning short-term rentals
3. Whether the building is classified as residential or serviced residence

Service residences and serviced apartments in KL generally allow short-term stays because they were approved for transient accommodation from the start. Standard residential condominiums are the ones with restrictions.

Deep Dive: Sarawak Rules

Sarawak operates under its own tourism legislation — the Sarawak Tourism Industry Act. This gives the state more direct control over accommodation operators.

Key requirements:

• All short-term accommodation providers must obtain a license from the Ministry of Tourism, Arts and Culture Sarawak
• The license covers homestays, bed-and-breakfasts, and Airbnb-style rentals
• Operators must meet specific facility standards
• Annual renewal required

Sarawak is arguably the most legally clear jurisdiction in Malaysia for short-term rentals. The law exists, the requirements are defined, and compliance is straightforward. The downside is the bureaucratic process — licensing can take several weeks.

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Strata By-Laws: The Rule That Overrides Everything

Even in states with no short-term rental regulation, your condominium's MC can ban Airbnb operations. Under the Strata Management Act 2013 (Act 757), the MC has broad powers to pass by-laws governing the use of common property and individual units. The Court of Appeal has ruled that MC house rules prohibiting short-term rentals are valid and enforceable, even in commercial buildings.

How MC by-laws restrict short-term rentals:

• Minimum stay requirements (e.g., no stays under 30 days)
• Outright bans on short-term rental platforms
• Requirements for guest registration and key management
• Restrictions on the number of guests per unit
• Noise and behavior rules with fines for violations

How to check before buying:

1. Request a copy of the MC's by-laws and house rules from the management office
2. Ask specifically about short-term rental policies
3. Check minutes from recent AGMs for any proposed by-law amendments
4. Talk to current owners about enforcement

Important legal point: A by-law passed by the MC with the required majority (usually a special resolution at an AGM or EGM, filed with the Commissioner of Buildings per Section 32 of the SMA 2013) is legally binding. MCs may impose fines of up to RM200 for breach of by-laws under Section 32(3)(i) of the SMA 2013. Ignoring it is a breach that can result in:

• Fines imposed by the MC
• Legal action in the Strata Management Tribunal
• Restrictions on access card issuance for guests
• In extreme cases, injunctions preventing you from operating

Tax Treatment: It's Business Income, Not Passive Rental

This is where most hosts get it wrong. Airbnb income is not treated the same as regular rental income under Malaysian tax law.

Regular long-term rental: Income under Section 4(d) of the Income Tax Act 1967 — rents, royalties, premiums. Taxed as part of total income at progressive rates for residents, 30% flat for non-residents.

Short-term rental (Airbnb-style): LHDN may classify this as business income under Section 4(a) rather than passive rental income under Section 4(d). The distinction matters because:

The determining factors for LHDN classification include:

• Frequency of rentals (daily/weekly vs annual lease)
• Whether you provide services (cleaning, check-in, breakfast)
• Whether you employ staff
• Scale of operations (one unit vs multiple)
• Whether you actively market the property

If you are running one unit casually, LHDN may accept it as rental income. If you are running multiple units with cleaning staff and active marketing, it is almost certainly business income. For a full breakdown of deductions and filing requirements, see the rental income tax guide.

SST Registration Threshold

If your gross short-term rental income exceeds RM500,000 per year, you must register for Service Tax (SST) under the Service Tax Act 2018. This applies to accommodation services as classified under Group A of the Service Tax Regulations.

At RM500K in annual revenue, you are running roughly 7-10 units. Most individual hosts fall below this threshold. But if you scale up, SST registration becomes mandatory, and you must charge 6% service tax on your nightly rates.

Penalties for not registering: Fines up to RM30,000 and/or imprisonment up to 2 years. LHDN has been increasingly cross-referencing platform data with tax records.

Tourism Tax

Under the Tourism Tax Act 2017, operators of accommodation premises must collect tourism tax of RM10 per room per night from foreign guests (Malaysians and permanent residents are exempt). This applies to:

• Hotels
• Serviced apartments
• Homestays
• Any premises providing short-term accommodation

Most individual Airbnb hosts do not collect or remit tourism tax. This is technically non-compliance. Since 1 January 2023, Digital Platform Service Providers (DPSPs) are liable to collect and remit TTx for bookings made through their platforms where payment flows through the DPSP. Check whether your platform handles this automatically.

Insurance: The Gap Nobody Talks About

Standard fire insurance (MRTA/MLTA) and household insurance policies do not cover short-term rental operations. If a guest is injured in your property or causes damage to neighboring units, your insurance likely will not pay out.

What you need:

• Commercial liability insurance covering short-term rental operations
• Public liability coverage of at least RM1 million
• Contents insurance covering theft and damage by guests

What Airbnb provides:

• Airbnb's Host Protection Insurance covers up to USD 1 million in liability — but it is secondary coverage (your own insurance pays first), and it has exclusions
• Airbnb's Host Damage Protection covers up to USD 3 million in property damage — but claims are notoriously difficult to process, and many hosts report delays and partial payments

Cost of proper coverage: Budget RM1,500-3,000/year for commercial short-term rental insurance. This is a cost that long-term rental landlords do not face.

If you are operating a short-term rental without commercial liability insurance, you are one guest injury away from a lawsuit with no coverage. Standard residential policies explicitly exclude commercial accommodation use.

Practical Compliance Checklist

Before listing your property on Airbnb, work through this checklist:

Step 1: Check your building's MC by-laws

• Request written confirmation that short-term rentals are permitted
• If no by-law exists, confirm at the next AGM that no ban is being proposed

Step 2: Check your state and local council requirements

• Penang: Register and obtain license
• KL: Register with DBKL, obtain MC consent
• Sarawak: Obtain tourism license
• Other states: Check local council for any pending guidelines

Step 3: Check your property title

• Residential title may face restrictions
• Commercial or mixed-use title is generally safer
• Service residence classification is ideal for short-term rental

Step 4: Set up proper tax compliance

• Register with LHDN if not already registered
• Determine if income is Section 4(a) or 4(d)
• Register for SST if revenue exceeds RM500K
• Register for tourism tax collection

Step 5: Get proper insurance

• Obtain commercial liability insurance
• Ensure contents coverage includes guest damage
• Review Airbnb's Host Protection Insurance terms

Step 6: Maintain records

• Guest register (name, IC/passport, dates of stay)
• Income and expense records for tax filing
• Maintenance and inspection records
• Correspondence with MC and local council

The Cost of Non-Compliance

Should You Still Do It?

Short-term rentals in Malaysia can be highly profitable. In prime locations — Bukit Bintang, George Town, Kota Kinabalu — well-managed Airbnbs can yield 7-10% gross compared to 3-5% for long-term rentals. For a detailed yield comparison, see Airbnb vs long-term rental. But the regulatory risk is real and increasing.

The safest approach:

1. Buy in a service residence or commercially-zoned building that explicitly permits short-term stays
2. Comply with all applicable licensing requirements
3. Declare your income properly
4. Get commercial insurance
5. Budget for compliance costs (RM3,000-6,000/year depending on state)

If you decide the risks outweigh the rewards and prefer a conventional lease, the tenancy agreement guide for landlords covers how to structure a proper long-term rental agreement.

The regulation trend is clear: more rules are coming, not fewer. Operators who build compliance into their business model from day one will outlast those who rely on enforcement gaps.

Sources

• Strata Management Act 2013 (Act 757)
• Court of Appeal Ruling on Short-Term Rental By-Laws
• LHDN — Income Tax Act 1967 (Sections 4a and 4d)
• Royal Malaysian Customs — Tourism Tax (TTx)
• Royal Malaysian Customs — Service Tax Act 2018 & Accommodation Guide
• MOTAC — Tourism Industry Act 1992 (amendments pending)

Related reading:

• Airbnb vs Long-Term Rental: Which Yields More?
• Rental Income Tax Malaysia: How to Declare & Deductions
• Rental Income Tax Calculator