Airbnb crackdown: Penang introduces new licensing laws for short-term rentals

George Town, on August 20th — Penang has rolled out a new regulatory regime for private short-term accommodations, including Airbnb rentals and homestays, effective as of August 1st. The Penang Private Short-term Accommodation By-Laws 2026 necessitate that all TIP operators secure official licenses from their local city councils.

H’ng Mooi Lye, chairman of Penang's local government and town and country planning committee, announced during a press conference at Komtar that the new by-laws empower both the Penang Island City Council and Seberang Perai City Council to license operators and penalize non-compliant entities. A two-month grace period has been provided for the industry to adapt.

Applications must be submitted by November 1st. Penang stands as Malaysia's pioneer in enacting such specific by-laws, previously lacking the legal authority to tackle unlicensed operators. The issue has been exacerbated by a rise in complaints; the MBPP fielded 364 grievances concerning public nuisance and safety concerns from illegal TIPs between 2020 and March 2024, while the MBSP documented 24.

A TIP is defined as paid accommodation provided without a tenancy agreement for a period of up to six consecutive months. Certain properties are explicitly barred from functioning as TIPs, including government and statutory body premises, healthcare and childcare centres, workers' hostels, private education institutions, low-cost and low-medium-cost housing, controlled-price homes, and People's Housing Projects.

In the MBPP area, all strata residential properties are also barred from TIP operations, although subject to the house rules of the respective management corporations. Service apartments, SOHO units, and shophouses may operate as TIPs but must still comply with management rules. Landed properties, like detached or terrace houses, may be considered TIPs if the operator obtains planning permission to alter the building's use.

Furthermore, the state has outlined "no-go" zones where TIPs are prohibited, including Jesselton Heights, Pearl Hill, Lebuh Bukit Jambul, Taman Sungai Ara, and Minden Heights. Operators must pay a RM50 administrative fee per application, with annual licence fees starting at RM1,000 for properties with up to three rooms. An extra RM200 is levied for each additional room, capped at two.

Annual TIP fees of RM1,800 per unit apply. Violations can result in fines of up to RM2,000, imprisonment for up to one year, or both.