Penang has introduced Malaysia’s first dedicated by-laws for short-term rentals, requiring all operators to obtain licences from city councils or face fines and potential jail time. The Penang Private Short-term Accommodation By-Laws 2026 took effect on 1 August, with enforcement set to begin on 1 November after a two-month grace period.
State local government committee chairman H’ng Mooi Lye announced the regulations at a press conference at Komtar on 20 August, Malay Mail reported. The by-laws give the Penang Island City Council (MBPP) and Seberang Perai City Council (MBSP) authority to issue licences and act against operators who fail to comply.
Previously, local authorities had no legal framework to regulate the growing number of unlicensed properties listed on platforms such as Airbnb. Between 2020 and March 2026, MBPP received 364 complaints about nuisance and safety issues linked to illegal short-term rentals, while MBSP recorded 24, according to The Star.
Under the new rules, operators must apply for licences before enforcement begins on 1 November. Non-compliance carries a fine of up to RM2,000, imprisonment of up to one year, or both. The by-laws also set out prohibited properties and designated no-go zones where short-term rentals are forbidden.
Government premises, healthcare and childcare centres, workers’ hostels, private education institutions, and low-cost housing are all off-limits. On Penang Island, all strata residential properties are barred from operating as short-term rentals unless approved by their management corporations, Malay Mail noted. No-go zones include Jesselton Heights, Pearl Hill, Lebuh Bukit Jambul, Taman Sungai Ara, and Minden Heights.
Commercial properties such as serviced apartments, small office home offices, and shophouses may operate, subject to management rules. Detached and terrace houses may also be considered, provided operators obtain planning permission from MBPP to convert the building’s use.
Operators face an administrative fee of RM50 per application, an annual licence fee starting at RM1,000 for up to three rooms with an additional RM200 per extra room capped at two, and an annual TIP fee of RM1,800 per unit.
The state granted a two-month grace period to allow the industry to adjust. H’ng said the by-laws gave local authorities powers to inspect premises, investigate suspected offences, and close premises where necessary.
The regulations mark Penang as the first state in Malaysia to implement dedicated by-laws for private short-term accommodation, filling a gap that left councils unable to act against non-compliant operators for years.
