Penang is first state to enforce private homestay law
PRIVATE short-term rental operators in Penang will now need licences from local councils, as the state moves to bring the growing sector under tighter regulation. The Private Homestay (Penang Local Authorities) By-Law 2026 came into force on Aug 1, f...
Penang Island City Council (MBPP) and Seberang Perai City Council (MBSP) have introduced a new Private Homestay (Penang Local Authorities) By-Law 2026 to regulate private short-term rental operations. The by-law, effective as of August 1, 2026, mandates operators to obtain a licence and adhere to regulations concerning cleanliness, safety, and permissible activities.
Between 2020 and March of this year, Penang Island city council recorded 364 complaints over illegal short-term rentals, while Seberang Perai city council logged 24. The new rules aim to address public nuisance and safety concerns, ensuring operations are orderly, secure, and controlled.
Operators must pay RM50 for each licence application and an annual fee of RM1,000 for up to three rooms, with an additional RM200 for each extra room, capped at two. A separate annual fee of RM1,800 applies to each unit, with a RM5 charge for reminders over unpaid fees. Short-term rental operations are prohibited in government premises, healthcare facilities, childcare centers, workers' hostels, private educational institutions, and low-cost housing. They may only be carried out in residential and commercial areas.
MBPP has also introduced planning guidelines for Penang Island, allowing short-term rentals in general residential, business, and limited business zones, with exceptions in heritage areas and stratified residential properties within its jurisdiction. In Seberang Perai, short-term rentals will be permitted in residential and commercial areas, with MBSP reviewing its application and operation procedures.
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