Short-term rental operators in Penang are bracing for higher costs after the state enforced new by-laws that require all private accommodation premises to obtain licences from local authorities, with annual fees starting at RM1,000 per unit.
Under the Private Homestay (Penang Local Authorities) By-Law 2026, which took effect on 1 August, operators must pay an RM50 application fee, an annual licence fee of RM1,000 for premises with up to three rooms, plus RM200 for each additional room capped at two extra rooms, as The Star reported. A separate annual TIP fee of RM1,800 per unit will also be imposed.
State Local Government Committee chairman Jason H’ng Mooi Lye announced the framework at a press conference at Komtar on 21 August, noting that Penang is the first state in Malaysia to implement such specific by-laws for short-term rentals, Malay Mail reported.
“Now, there is a clear legal basis for both local authorities to issue licences and take action against those who do not comply,” H’ng said.
The new regulations follow a surge in complaints. Between 2020 and March 2026, the Penang Island City Council (MBPP) received 364 complaints related to public nuisance and safety concerns from illegal private lodging operations, while the Seberang Perai City Council (MBSP) recorded 24 complaints during the same period.
Operators have until 1 November to submit licence applications before enforcement begins, giving the industry a two-month grace period to adjust. Those who flout the by-laws face fines of up to RM2,000, imprisonment of up to one year, or both.
The by-laws prohibit TIP operations in premises owned by the government or statutory bodies, healthcare or childcare centres, workers’ hostels, private educational institutions, low-cost and low-medium-cost housing, controlled-price homes and People’s Housing Projects.
MBPP has also introduced its own Planning Guidelines for Private Homestay, approved by the state planning committee on 3 August, which prohibit TIP operations in all types of stratified residential properties and several designated residential areas including Jesselton Heights, Pearl Hill, Lebuh Bukit Jambul, Taman Sungai Ara and Minden Heights.
For commercial properties, types that may be considered include serviced apartments, small office home offices, shops, shophouses and shop offices. Operators must submit an application for planning permission to change the building’s use to MBPP for consideration.
The Malaysian Budget and Business Hotel Association (MyBHA) has backed the by-laws, calling for dedicated enforcement squads and collaboration with the Malaysian Communications and Multimedia Commission to remove online advertisements for unlicensed short-term rentals.
“Unlicensed operators cannot be allowed to continue accepting bookings and reaping profits, while licensed accommodation providers are required to comply with every legal requirement,” MyBHA president Dr Sri Ganesh Michiel said in a statement.
