Rental Deposit: The 3 Types of Rental Deposits in Malaysia

by | i-Stories, Property Trend, Rental Trend

If you’re trying to rent a property in Malaysia, more often than not, you would be required to pay a specific amount of rental deposit. Undeniably, renting a property is a much simpler task than buying one. However, that doesn’t mean that you can take rental deposit for granted.

Welcome to rental deposit 101. Here, we’ll take a look at the 3 main types of rental deposits in Malaysia. But before that, let’s have an overview of rental deposit as a whole.

Rental Deposit

The main purpose of any deposit is to ensure the landlords are well-protected against any potential losses or damages when renting their property. While there is no maximum cap for setting up a deposit, the rental market and type of rental property will directly influence what is considered ‘reasonable’ to charge.

Earnest Deposit

First on our list is the earnest deposit. So, what exactly is an earnest deposit? Simply put, it serves as an upfront financial commitment and is paid when a person expresses their interest in a property but is unable to move in at the time specified.

Essentially, it means: “I really want this property, and here’s the money to prove it!”.

Keep in mind that although the term is also used as a form of rental deposit, an earnest deposit is typically used as a method to create a ‘lock-in’ deal to purchase a property in the secondary or sub-sale market. In primary markets, this type of deposit is usually known as ‘booking fee’.

Before paying, it’s a good idea to talk to the landlord about the terms and conditions, as the money may be returned or used as a security deposit. An earnest deposit is usually 2% of the property’s overall value.

Security Deposit

Security Deposit

A security deposit is designed to protect the property from harm and cover any damages done by the tenant. Its key function is to guarantee the performance of obligations stated in a tenancy agreement. In the event of minor damages such as a faulty door lock, owners can easily deduct the costs of repair from the security deposit.

Not only that, but this rental deposit is also intended to safeguard owners from renters who move out without prior notice. Security deposit provides owners with enough time to get back on their feet and find a new tenant.

Compared to an earnest deposit, a security deposit costs a lot more (usually the cost of 2 months’ rental). Having said that, a security deposit is generally refunded in full to tenants at the end of their tenancy agreement if there are no outstanding payments and/or damages to property. 

Utility Deposit

A utility deposit is a refundable payment usually collected when renters are asked to manage utility bill payments such as electricity and water by themselves.

When tenants fail to pay their utility bills, landlords can use this rental deposit to make payments.

If there are no outstanding utility bills, this deposit will be refunded in full at the end of the leasing term.

A Rental Platform for All

Thinking of renting out your property but don’t know how? Fret not! We have the right solution for you. As a reliable rental management company in Malaysia, Rumah-i is here to help landlords list their properties in a fast, secure and convenient manner.

Download Rumah-i’s Home Renting App on Google Play or the App Store and enjoy various perks designed to streamline renting process for landlords and tenants.


- Entitle ONE time rental collection service for free

- Rental collection service for free is limited to FIRST 1,000 properties which engage the service and is for pre-launch registered owners only.

- Tenancy agreement must be prepared by Rumah-i.