--- title: "Landlord Property Damage Claims & Deposit Deductions 2026" description: "Landlords may deduct a tenant deposit only for actual loss beyond fair wear and tear. Itemised steps, a worked RM example, evidence and what to do if disputed." datePublished: "2026-07-28" dateModified: "2026-07-28" canonical: "https://www.superhomes.my/resources/landlord-property-damage-deduction-malaysia" --- # Landlord Property Damage Claims & Deposit Deductions 2026 Yes, a landlord in Malaysia can deduct repair costs from a tenant's security deposit, but only for actual loss the tenant caused beyond fair wear and tear, only as the tenancy agreement allows, and only with evidence. The landlord should give the tenant an itemised list with photos and quotes or invoices, refund the balance within the period the agreement sets, and claim any shortfall separately. Keeping the whole deposit for minor marks is the most common reason landlords lose in court. Malaysia has no tenancy statute that caps deposits or sets a refund deadline: the proposed Residential Tenancy Act had not been passed or brought into force when we checked (source: KPKT statements on the Bill; checked 5 Oct 2026). So the rules come from the tenancy agreement and the Contracts Act 1950. This guide explains what you can deduct, how to prove it, a worked example, and what happens if the tenant disagrees. ## The Legal Basis: Compensation, Not a Penalty A security deposit is money held against the tenant's obligations: rent, utilities and returning the property in the agreed condition. When a tenant breaches the agreement, section 74 of the Contracts Act 1950 lets the landlord recover the loss that naturally arises from the breach. It does not allow remote or indirect losses. Section 75 matters too. Where a contract names a sum to be paid or forfeited on breach, the landlord can only recover reasonable compensation, not the full sum as a penalty. A clause saying "the deposit is forfeited in full for any damage" does not entitle a landlord to keep RM4,000 for a RM300 repair. The Federal Court's 2019 decision in Cubic Electronics v Mars Telecommunications sets the current test: a forfeiture is enforceable only if it protects a legitimate interest and is not out of all proportion to it. (Source: Contracts Act 1950 [Act 136], sections 74 and 75; Cubic Electronics Sdn Bhd v Mars Telecommunications Sdn Bhd (Federal Court, 2019); checked 5 Oct 2026.) In practice: deduct what the repair actually costs, show how you got the figure, and refund the rest. ## Fair Wear and Tear vs Tenant Damage | Item | Fair wear and tear (landlord bears) | Tenant damage (deductible) | | --- | --- | --- | | Walls and paint | Fading, light scuffs, small nail holes the agreement allowed | Large drill holes without consent, crayon, smoke staining | | Floors | Dulling in walkways, minor scratches on laminate | Cracked tiles, burn marks, deep gouges, water damage from neglect | | Plumbing | Aged washers, corroded old pipes | Blocked toilet from wipes or sanitary items, broken tap handles | | Furniture | Sofa fabric softening, mattress sagging after years | Torn upholstery, broken bed frames, pet damage | | Appliances | Fridge seal ageing, normal aircon wear | Cracked TV, missing remotes, unserviced aircon if the agreement made servicing the tenant's job | | Cleaning | Light dust after a normal move-out | Heavy grease, rubbish left behind, mould from no ventilation | Age matters. A five-year-old curtain that is torn is not worth the price of a new one. A fair deduction reflects what the item was worth, not the cost of an upgrade. For aircon servicing, see [tenant aircon maintenance rules](/resources/tenant-aircon-maintenance-servicing-malaysia). For leaks, see [who pays for a burst pipe or water leak](/resources/landlord-tenant-water-leak-pipe-repair-malaysia). ## Worked Example: An Itemised Deduction A landlord in [Petaling Jaya](/area/selangor/petaling-jaya) let a furnished two-bedroom condo at RM2,200 a month for two years, with a RM4,400 security deposit and RM1,100 utility deposit (RM5,500 held). At handover: | Item | Evidence | Claimed | Fair? | | --- | --- | --- | --- | | Final electricity and water bills | TNB and water bills | RM310 | Yes | | Six drill holes, patch and repaint one wall | Move-in vs move-out photos, quote | RM450 | Yes | | Cracked kitchen tile (one) | Photo, invoice | RM180 | Yes | | Torn sofa cover (sofa 5 years old) | Photo, quote for new sofa RM2,800 | RM2,800 | No: replace the cover, about RM450 | | Repaint whole unit | Quote | RM2,400 | No: normal repainting after two years is wear and tear | | Professional cleaning | Photos of grease and rubbish | RM300 | Yes, if the agreement requires a clean handover | | **Fair deductions** | | **RM1,690** | | | **Refund to tenant** | RM5,500 - RM1,690 | **RM3,810** | | A landlord who kept the full RM5,500 would likely lose in a small claims hearing, and might owe the tenant the difference plus costs. ## Step-by-Step Deduction Procedure ### 1. Record the condition at move-in Attach an inventory and dated photos or video to the tenancy agreement, signed by both sides. Without a move-in record, every dispute becomes your word against the tenant's. ### 2. Inspect jointly at handover Walk the unit with the tenant on key return day, take dated photos of the same spots, and note meter readings. Ask the tenant to sign the handover note; if they refuse, record that. ### 3. Get real costs Get one or two written quotes or use actual invoices. Round numbers like "RM1,000 for damage" without a breakdown are hard to defend. ### 4. Send an itemised statement Send the tenant a written statement listing each deduction, the evidence and the cost, with the refund amount and payment date. Most agreements set a refund period (14 to 30 days is common); follow yours. If the agreement is silent, act within a reasonable time and say when. ### 5. Refund the balance promptly Pay the undisputed balance on time even if one item is still in argument. Withholding everything to gain leverage makes you look unreasonable. ### 6. Claim any shortfall separately If damage exceeds the deposit, send a letter of demand for the balance. An individual landlord can claim up to RM5,000 through the small claims procedure without a lawyer; see our [small claims guide](/resources/landlord-tenant-dispute-small-claims-court-malaysia). ## Common Mistakes That Cost Landlords the Case **Keeping the deposit "pending" repairs that never happen.** If you have not repaired or quoted the item, you cannot show a loss. A magistrate will ask what the damage actually cost. **Charging new-for-old.** Billing the tenant for a brand-new mattress to replace a six-year-old one gives you a better asset at the tenant's expense. Apply a depreciation discount or charge for repair instead of replacement. **Mixing in unrelated claims.** Rent for the months after a tenant left properly, agent's fees for re-letting, or upgrades you planned anyway are not damage. If the tenant left early in breach, that is a separate claim for loss of rent, limited to what you could not reasonably avoid by re-letting. **No move-in record.** Without dated photos or a signed inventory, a tenant can say the crack was already there and you cannot prove otherwise. **Silence.** Not replying to the tenant's refund request for weeks makes any later deduction look like an afterthought. Reply in writing, with dates. ## Utility Deposits Are Separate Many agreements take a utility deposit (often half a month to one month's rent) on top of the security deposit. It exists to cover final electricity, water, gas and internet bills, especially when the accounts stay in the landlord's name. Settle the final bills first, deduct only the amounts actually billed for the tenancy period, and show the bills. Using the utility deposit to fund repairs is acceptable only if the agreement allows the deposits to be applied to any breach; otherwise, take repair costs from the security deposit. For how the accounts should be held, see [utility bill transfer between landlord and tenant](/resources/utility-bill-transfer-landlord-tenant-malaysia). ## What Tenants Can Do Before Moving Out Tenants can reduce deductions by repairing small items themselves (patching nail holes, replacing a broken bulb or tap washer), cleaning thoroughly, and servicing the aircon if the agreement requires it, keeping the receipt. Take a dated video of every room on the day you return the keys, send it to the landlord, and ask for the itemised statement in writing. If the landlord's figures look inflated, ask for the quote or invoice behind each line before agreeing. ## Clauses That Prevent Disputes - A clear definition of the condition the unit must be returned in, "fair wear and tear excepted". - A list of tenant repairs (for example, items under RM200) and landlord repairs (structural, concealed pipes, major appliances). - An aircon servicing clause, if you want the tenant to service it. - A refund deadline and the method for itemised deductions. - A rule against using the deposit as the last month's rent, unless both agree in writing. The [tenancy agreement guide](/resources/tenancy-agreement-malaysia) and [rental deposit guide](/resources/rental-deposit-malaysia) cover these in more detail. If you are listing a unit, our [rental listings](/rent) show what similar units in your area ask. ## FAQs ### Q: Can a landlord keep the whole deposit for minor damage? No. Under section 75 of the Contracts Act 1950, a landlord can only recover reasonable compensation for the actual loss. Keeping the whole deposit for a small repair is likely to be treated as a penalty, and the tenant can claim the excess back. ### Q: How long does a landlord have to return the deposit in Malaysia? There is no statutory deadline because there is no Residential Tenancy Act in force yet. The tenancy agreement sets the period, commonly 14 to 30 days after handover. If it is silent, the landlord must refund within a reasonable time. ### Q: Can a landlord deduct cleaning fees? Yes, if the agreement requires the unit to be returned clean and the tenant left it dirty beyond normal move-out dust. Keep photos and the cleaner's invoice. ### Q: Can a landlord deduct for repainting? Only for damage beyond normal use, such as drill holes, stains or unauthorised colour changes. Routine repainting after a normal tenancy is wear and tear and is the landlord's cost. ### Q: What if the damage costs more than the deposit? Deduct the deposit, then claim the balance from the tenant with a letter of demand and, if needed, a court claim. Individual landlords can use the small claims procedure for amounts up to RM5,000. ### Q: Can a tenant use the deposit as the last month's rent? Only if the landlord agrees in writing. Most agreements say the deposit cannot be used as rent, because the landlord would have nothing left to cover damage or bills. ### Q: Does the landlord need receipts to deduct? There is no fixed legal form, but without quotes, invoices and photos, the deduction is hard to defend if the tenant goes to court. ### Q: What can a tenant do if the deposit is wrongly withheld? Ask for an itemised statement in writing, then send a letter of demand. If the landlord still refuses, an individual tenant can claim up to RM5,000 through the small claims procedure in the Magistrates' Court. --- This guide is general information, not legal advice.