Who covers renovation or defect repairs on a newly bought commercial unit?
The split turns on who caused it. Developer defects — structural cracks, roof leaks, plumbing failures from the original build — are the owner-landlord's problem to pursue with the developer. Tenant fit-out is the tenant's cost. The tenancy agreement governs everything in between; no Malaysian statute mandates the split for commercial units.
When a landlord buys a newly completed commercial unit and immediately lets it out, two separate liability questions land in the same tenancy: developer defects (the owner pursues the developer under the sale-and-purchase agreement) and tenant fit-out (partitions, electrical, signage — the tenant's own spend, subject to the landlord's written approval). Unlike residential housing, no consumer-protection statute governs commercial defect claims — the SPA and tenancy agreement govern everything.
What counts as a developer defect — and who pursues it?
A developer defect is a failure in the unit as originally delivered: structural, waterproofing, plumbing, or electrical defects arising from the build, not from subsequent use. Only the buyer — the landlord — can pursue the developer for rectification. The tenant's remedy for a defective unit runs against the landlord through the tenancy agreement.
For commercial property, the defect-liability period is set in the SPA between developer and buyer. If the landlord hands over a unit unfit for the agreed permitted use — a shopfront with a collapsed ceiling or persistent roof leak — the tenant's recourse is against the landlord for breach of the tenancy agreement's quiet-enjoyment and fitness obligations, not directly against the developer.
For strata commercial properties, common-area defects — lifts, external walls, corridors, car parks — are the management body's responsibility under the Strata Management Act 2013. If the management body fails to act, a parcel owner can file a claim at the Strata Management Tribunal for disputes up to RM250,000.
Who pays for what: the repair and renovation split
Developer defects go to the landlord; tenant fit-out goes to the tenant; common-area strata defects go to the management body. Nothing in between is fixed by law — the tenancy agreement must allocate it explicitly, or disputes are decided by the courts on general contract principles.
| Work type | Who pays | Legal basis | What the TA should say |
|---|---|---|---|
| Developer defect (structural, waterproofing, plumbing from the build) | Landlord (pursues developer under SPA defect-liability period) | SPA between developer and owner; general contract law | TA should specify that landlord will rectify developer defects within a set timeframe; tenant's recourse if not rectified |
| Common-area strata defects (lifts, external facade, corridor) | Management body (JMB/MC) | Strata Management Act 2013 (SMA) — management body's duty to maintain common property | TA should acknowledge which parts are common property; neither landlord nor tenant is liable for MC's defaults |
| Structural repairs arising during tenancy (non-defect) | Landlord (convention) | TA clause; no statute mandates this split for commercial tenancies | Explicitly allocate in the TA: "Landlord maintains structure; tenant maintains fit-out and installed equipment" |
| Tenant fit-out (partitions, electrical fit-out, signage, décor) | Tenant | TA fit-out clause; landlord's written consent required for structural changes | Specify: permitted vs prohibited works; reinstatement obligation at end of tenancy |
| Routine maintenance of installed equipment (aircon, lighting, plumbing fittings tenant installed) | Tenant | Convention; equipment installed by tenant stays tenant's responsibility | List installed equipment in the handover inventory |
| Reinstatement to original shell at end of tenancy | Tenant (unless TA waives it) | TA reinstatement clause | State clearly whether reinstatement is required and to what standard |
Convention-based allocation. No Malaysian statute mandates this split for commercial tenancies — the tenancy agreement governs.
What the tenancy agreement must cover
The tenancy agreement is the only document that binds the landlord and tenant on repairs and renovation. For a newly bought commercial unit, it needs to address developer defects explicitly — most standard templates do not, because they assume the unit has been in use.
At minimum, a commercial TA for a newly completed unit should include:
- Defect-rectification undertaking: the landlord confirms the unit is fit for the agreed permitted use and commits to rectifying any developer defect reported within the defect-liability period, within a specified timeframe.
- Permitted-works clause: what fit-out the tenant may do, whether structural changes require separate written approval, and who pays for reinstatement at the end of the tenancy.
- Common-property carve-out: acknowledge that common areas (lifts, corridors, car parks) are the management body's responsibility — neither landlord nor tenant can be forced to pay for the MC's failure to maintain.
- Handover condition schedule: a photographic and written record of the unit as handed over. This is the baseline that determines whether damage at move-out was a developer defect, fair wear-and-tear, or tenant-caused.
Without a handover condition schedule, disputes at move-out about who caused what are very difficult to resolve — absent condition records, not disagreements about law, are the root cause of most repair disputes.
Dispute path if the landlord does not fix a developer defect
Malaysia has no dedicated tenancy tribunal for commercial or residential rental disputes. If a landlord refuses to fix a developer defect that makes the unit unfit for its agreed use, the tenant's route is written notice, then the civil courts — or the Strata Management Tribunal for common-property defects.
If a landlord refuses to rectify a developer defect that makes the unit unfit for the agreed use, the tenant's options are:
- Negotiate and document in writing: send a formal written notice identifying the defect, the impact on the permitted use, and the requested rectification timeline. Written notice preserves the tenant's right to escalate.
- Withhold rent only on legal advice: rent withholding is legally risky without proper legal advice — it may expose the tenant to a claim for arrears even if the landlord is in breach.
- Civil court: commercial tenancy disputes go to the ordinary civil courts. Claims up to RM5,000 use the Magistrates' small-claims procedure (no lawyer needed); claims from RM5,000 to RM100,000 go to the Magistrates' Court; RM100,000 to RM1,000,000 to the Sessions Court; above that to the High Court. The Sessions Court also has unlimited jurisdiction for landlord-and-tenant actions.
- Strata Management Tribunal: where the defect is in the common property (not the parcel unit), and the dispute is with the management body, a claim can be filed at the Strata Management Tribunal for amounts up to RM250,000.
For help finding a commercial property or understanding what the rental market looks like, browse properties for rent or read the full commercial landlord guide.
FAQ
Can a tenant claim against the developer directly for defects in a rented commercial unit?
No — only the owner (the landlord who bought the unit) holds the defect-rectification rights under the sale-and-purchase agreement. The tenant's recourse for a defective unit is against the landlord through the tenancy agreement, not against the developer. The tenant should ensure the TA includes a landlord undertaking to rectify developer defects.
Who is responsible for renovations and fit-out in a newly completed commercial unit?
The tenant typically pays for and owns the fit-out — partitions, signage, electrical installations, and décor — subject to the landlord's written approval for structural changes. The TA should specify which works are permitted, whether reinstatement is required at the end of the tenancy, and who owns fixed installations on expiry.
Does the Strata Management Tribunal handle commercial defect disputes?
Only for common-property disputes in a strata development, and only up to RM250,000. The Strata Management Tribunal hears disputes about the management body's duties — unpaid maintenance charges, common-area failures, and by-law enforcement — not private landlord-tenant defect or renovation disputes inside a parcel unit.
What happens if the landlord fails to fix a developer defect and the unit becomes unusable?
The tenant has grounds to pursue the landlord for breach of the quiet-enjoyment and fitness obligations in the tenancy agreement. The tenant should serve a formal written notice, document the defect with photos, and seek legal advice before withholding rent or vacating — acting without advice can create its own legal exposure. Dispute resolution goes through the civil courts for commercial tenancies.
Is there a law that specifically covers repair duties in commercial tenancies in Malaysia?
No — there is no Malaysian statute that mandates how repair duties are split between a commercial landlord and tenant. All obligations derive from the tenancy agreement together with general contract-law principles. For residential tenancies, the position is the same: Malaysia has no Residential Tenancy Act in force as of 2026. For who pays for repairs in a residential rental or maintenance fee liability, see those guides.