Legal Perspective of Homestay Concept in Malaysia: Hidden Facts or

Truth Revealed?

Wong Hua Siong

Faculty of Law, Multimedia University, Melaka, Malaysia.

Keywords: Homestay, Malaysia, Protection, Recommendations.

Abstract: Homestay became one of the famous form of openness lodging and accommodation whereby visitors can rest

at the houses in a local city and where the places that has completed and fully furnished. Instead of leaving

the house vacant without occupation, nowadays most of the house owners will rent their house or rooms in

the house to the visitors for short term. This concept can be called as ‘homestay’ concept in which it provides

one of the platform to allow the house owners to rent their homes, rooms or apartments to their customer

visitors. Furthermore, this concept enable the house owners to generate income from this platform. Without

realising by the home owners, this action may lead to violation of laws and to endanger the safety of

customers. The consumer organisations in Malaysia have complained about the lack of protection for

customers in homestay. As such, adequate legal protection should be implemented to protect all the customers

and home owners. The writer will study the provisions in the National Land Code 1965, Street, Drainage and

Building Act 1974 and the Town and Country Planning Act 1976 in order to identify the legality of the concept

of homestay in Malaysia. Various methods will be adopted by the writer for this paper including study of

documentary, historical archives, public record in order to arrive at the findings on the legal issues of homestay

concept in Malaysia with aim to safeguard better legal environment of homestay concept in Malaysia. At the

end of the discussion, organisations in Malaysia may refer to the recommendations as stated for better

protection for home owners and consumers in Malaysia. Howsoever, at the end of the day, the real question

that needs to be addressed is whether the homestay concept in Malaysia is legal or not.

1 INTRODUCTION

Generally, a homestay program refers to the

experience of tourists or visitors living together with

a selected host family while interacting and

experiencing the day to day life of the family,

including their cultural lifestyle (Kalsom& Nor

Ashikin, 2005; Amran, 2006; Phonwiset et al., 2008;

Muhammad Farid, 2009; Ministry of Tourism and

Culture Malaysia, 2011). The hosts and the visitors

will interact with each other in routine activities of the

community in exchange of the knowledge, culture

and experience. The program can also serve as a basic

guide in managing natural resources and enhance the

distribution of income to the local population thereby

reducing the outflow of economic benefits (Jabil

Mapjabil, 2015).

Due to overwhelming demand from the society,

some of the owners of the houses have started to

modify their houses into the concept of ‘homestay’.

Homestay became one of the famous form of

openness lodging and accommodation whereby

visitors can rest at the houses in a local city and where

the places that have completed and fully furnished.

Instead of leaving the house vacant without

occupation, nowadays most of the house owners will

rent their house or rooms in the house to the visitors

for short term. This concept has been known

commonly by public as ‘homestay’ concept in which

it provides one of the platform to allow the house

owners to rent their homes, rooms or apartments to

their customer visitors. Furthermore, this concept

enables the house owners to generate side income

from this platform. Without realising by the home

owners, this action may lead to violation of laws and

endanger the safety of customer visitors, namely who

shall bear the responsibility if there are any accidents

happened during the period of stay by the customer

visitors. The consumer organisations in Malaysia

have complained about the lack of protection for

customer visitors in homestay. As such, adequate

legal protection should be implemented to protect all

202

Siong, W.

Legal Perspective of Homestay Concept in Malaysia: Hidden Facts or Truth Revealed?.

DOI: 10.5220/0010053202020207

In Proceedings of the International Law Conference (iN-LAC 2018) - Law, Technology and the Imperative of Change in the 21st Century, pages 202-207

ISBN: 978-989-758-482-4

the customer visitors and home owners. The writer

will study the provisions in the National Land Code

1965, Street, Drainage and Building Act 1974 and the

Town and Country Planning Act 1976 and other

relevant legislations in order to identify the legality of

the concept of homestay in Malaysia.

However, this study centres around the analysis of

legal issues of on homestay operations as general in

Klang valley area. In particular, the ambit of the study

is those homestays generally operating without

registration with the Malaysian Ministry of Tourism

and Culture (MOTAC), regulated and monitored by

relevant agencies. There will be no legal issues with

the home owners who run the homestay operations

registered with MOTAC, regulated and monitored by

relevant agencies.

2 LITERATURE REVIEW

Homestay programme is a community-based

programme where the hosts and the visitors will

interact with each other in routine activities of the

community on day-to-day basis in exchange of the

knowledge, culture and experience. (Thapaliya et.al,

2012). Wipada (2007) further elaborated that

homestay is one of the type of lodging where tourist

stay with the homeowners with the intention to learn

culture and lifestyle from the homeowner who is

willing to share their culture and experience of the

day-to-day life of the community. Moreover,

homestays gain their popularity as they enable

visitors to experience life as it is lived day to day in

the host country. These types of accommodations

have the good potential to promote cultural exchange

by sharing life and family experiences (Richardson,

2004).

Homestay is a type of product in accommodation

sector which has appeared to address the issue of

sustainable tourism development. Likewise it is also

considered as a part of eco-tourism and village

tourism which aims to build the local communities'

capacity by consuming local resource wisely and

helps to protect the environment. Thus it is

acknowledged by practitioners as a tool of sustainable

development in tourism industry. The concept of

sustainable tourism development "consist with the

tenets of sustainable development" (Stabler&

Goodall 1996, 170).

In Malaysia, most of the rural communities and

village residents started to operate homestay

accommodation. However, this trend has also been

extended to the communities and residents who reside

in city nowadays. According to Ministry of Tourism

and Culture (MOTAC, 2014), a homestay programme

will give tourists the opportunity to stay with a chosen

family, interact and experience the daily life of their

homestay family and learn the culture and lifestyle of

the rural community in Malaysia including but not

limited to cultural and economic activities.

Ex-MenteriBesar of Negeri Sembilan, Datuk Seri

Mohamad Hasan has also raised his concern of using

the word of homestay. According to him, “the parties

concern can use the word ‘homestay’ when they have

obtained the permit from the respective ministry and

to comply with all the requirements including the

involvement of the residents in the day-to-day local

community activities which will develop the tourism

of the said location.”Otherwise, all activities of

homestay without permit are considered illegal and

action will be taken against the home owners.

Table 1 below highlighted that total homestay

based on the various cluster which have been

registered with MOTAC.

Table 1: Status of Registration of Homestay According to

Cluster as at 31 March 2018

No. Items Total

1. Total Cluster Homestay 209

2. Total Hosts/Owners/Houses 4,025

3. Total Rooms 5,650

Source: http://www.motac.gov.my/en/, MOTAC 2018.

In any event, the above figures show the total

homestay owners and houses which have been

registered with MOTAC and it has not included for

those who run the homestay business and/or

programme without registration from MOTAC.

3 RESEARCH METHODOLOGY

In Malaysia, we do not readily available statistic

representing specific data of unregistered homestay

owners and customers. Hence, we explore the issues

in hand by employing a qualitative method of data

collection via face-to-face interviews with the

unregistered homestay owners and customers. This

paper deployed two data gathering methods, primary

and secondary data. For the primary data,

unstructured interview session was carried out on

homestay operators in Klang valley area to identify

factors relating to homestay quality and success,

infrastructure support, as well as issues and problems

relating to homestay’s customers in general in Klang

valley area. As such, focus group discussion were

Legal Perspective of Homestay Concept in Malaysia: Hidden Facts or Truth Revealed?

203

held over a few sessions, in Klang valley area during

data collection period. Owners and customers were

interviewed to confirm and validate the findings of

both content analysis and the transcribed or narration

of focus group discussion. Focus group discussion

were undertaken from January, 2018 until May 2018

at homestay locations as well as at the offices of the

relevant agencies. In total, this research collected 40

interviews with homestay owners of their opinion for

running this ‘unregistered’ business.

4 ANALYSIS AND DISCUSSION

From the feedback collected from these 40

interviewers, almost 97.5% of them are not aware that

the unregistered operation of homestay is violating

the current law provisions. From the study of the

provisions of the law in Malaysia, although this

business will benefit the home owners in which they

are able to generate the income, however, without

realising by the home owners, this action may lead to

violation of laws and endanger the safety of customer

visitors, namely who shall bear the responsibility if

there are any accidents happened during the period of

stay by the customer visitors. In the grant of title of a

property, for example the houses or apartment, the

category of usage for these buildings has been clearly

stated in the grant of title, namely for residential only.

Based on results of study, we find that few

conspicuous problems, including few legal liabilities

of these house owners to run the business of short stay

accommodation.

4.1 Under National Land Code 1965

and Property Law

The issue arises when the home owners are running

their residential building for the purpose of

commercial, i.e. homestay, it is obviously the home

owners have violated the express conditions as stated

in the grant of title of a property. As a result, the home

owners may be fined under section 127 (1A)(b) of

National Land Code 1965 which reads as follows:

“Upon failure by the proprietor to show cause to

the satisfaction of the Land Administrator, the Land

Administrator may make an order for the payment of

a fine of not less than five hundred ringgit, and in the

case of a continuing breach, a further fine of not less

than one hundred ringgit for each day during which

the breach continues.”

As a result, the home owners not only will be

fined under section 127(1A) of the National Land

Code 1965 but they may face the consequence that

their land and/or property will be forfeited by the

Land Administration pursuant to section 129(1) of the

National Land Code 1965 which reads as follows:

“The Land Administrator shall take action under

this section wherever any alienated land is liable

under section 127 to forfeiture for breach of condition

and …”

Furthermore, each building which have been built

on the land and according to the category of the

building are required to obey the requirements set by

the local council under the Street, Drainage and

Building Act 1974. Prior to issuance of Certificate of

Fitness for Occupation (‘CFO’) and/or Certificate of

Completion and Compliance (‘CCC’), a building is

required to follow the building guidelines set by the

local council. Thus, by modifying the residential

houses into business premises, i.e. homestay, the

home owners should obtain the approval from the

local council under the section 74 of the Street,

Drainage and Building Act 1974 failing which the

action will be taken pursuant to section 72 and 73 of

the same Act. Upon conviction, the home owners will

be fined and the said homestay property will be

demolished.

4.2 Tortuous Liabilities

House owners who run the unregistered homestay

business in residential area may cause the public

nuisance to other residents in the same area. The law

of nuisance is concerned with the protection of the

environment. Initially public nuisance is an act or

omission which materially affects the reasonable

comfort and convenience of life of a class of Her

Majesty’s subjects as decided in the case of AG v PYA

Quarries (1957) 2 QB 169. However, the scope of

the class of Her Majesty’s subjects have been

extended to all the public citizen as well. Section 8 (1)

Government Proceedings Act 1965 provides that the

Attorney General can sue in respect of public

nuisance. An individual can take a civil action for

public nuisance if he can prove that he has suffered

some particular or direct damage, greater than that

suffered by the public. This means, some damage

over and above the ordinary inconvenience suffered

by the public at large.

Provided always that the house owners provide

sufficient car park lots to the customers, otherwise the

visitors may face the parking problem. The act of

visitors who simply park the cars will cause the

obstruction to the road and caused inconvenience to

other residents who stay nearby. This action in fact is

in violation of Section 86 of Street, Drainage and

Building Act 1974and also the subsidiary legislations

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under the Town and Country Planning Act 1976.The

house owners must also be sensitive to the

surrounding area of the said accommodation. The

house owners must also be sensitive with the

surrounding neighbourhood and the needs of the

neighbours so as not to create nuisance and trespass.

Further thereto, the house owner must ensure that

the tourist do no bring in illegal substance or use the

accommodations as a place to operate illegal

activities.

With regard to the safety of the home occupants

and building, the physical house may not be protected

under any insurance since the home owners have

modify the category usage of the house from

residential to commercial. It is clearly the home

owners are in breach of the terms and conditions in

their premium policy insurance and the insurance

company will not compensate any compensation if

something happens to the respective house. As such,

it is suggested that those home owners who use their

house to run the homestay business are required to

obtain the relevant permit to run the business. The

home owners have to follow the building

specification guidelines set by the local council. The

home owners need to apply to the relevant land

authority to change the category usage of their

premises from residential to commercial usage so that

it will not violent any provision in NLC 1965.

Once the permit has been issued to the respective

home owners, they must follow the regulations set by

the local council so that they will not cause any

nuisance to the public and neighbours. Failing which

the local council can terminate and revoke their

permit immediately.

The suggestions above are not intended to bring

any inconvenience to any home owners but to ensure

that those who run this business will follow all the

regulations and rules and for the best protection to the

homestay customers.

Under the Homestay Programme the homestay

operators are encouraged to obtain insurance

coverage from any registered insurance company to

ensure safety of the tourist and over the liabilities of

the homestay operators. Poor maintenance by the

house owners with regard to the structure of the

accommodation, i.e. electrical wiring and other

utilities and amenities. As such, under the Homestay

Programme, the homestays will undergo a house

inspection conducted by the Ministry of Tourism

together with representatives from the Department of

Health; the Tourism Malaysia; the Village

Development and Security Committee (JKKK); and

the Malaysia Homestay Association once in every

three years.The National Institute of Occupational

Safety and Health (NIOSH) require the house owner

to ensure the safety of the tourist and the occupiers of

the homestay.

4.3 Advertising

In Malaysia, there are two main Code and Act,

namely the Malaysian Code of Advertising Practice

(‘the Code’) and Trade Description Act 2011 (‘the

Act’) regulate the issue of advertising for product and

services. The purpose of the Act is to promote good

trade practices by prohibiting false trade descriptions

and false or misleading statements, conduct and

practices in relation to the supply of goods and

services to the customers and end users. It also aims

to provide for matters connected therewith or

incidental thereto.The principles in the Code describe

the good essence of advertising amongst others as:

(i) All advertisement should be legal, decent,

honest and truthful; and

(ii) Should be prepared with a sense of

responsibility to consumer and tosociety.

It means whatever advertisements which have the

elements of false descriptions or misleading

information are prohibition. For example, “when you

buy the house, you will guarantee to obtain 8% per

annum of the return.”

Thus, since the Ministry of Tourism and Culture

Malaysia has put a certain branding on the term

homestay as per advertised in their website, the house

owners using the same term for the purpose of

advertising rental of their other houses for a short stay

would amount to inaccurate, unethical and misleading

or offensive which is against the Code and the Act.

The house owner who offer a short stay

accommodation must ensure that the property they

advertised for rental, are as claimed in the

advertisement. Any misleading facts and statement

may render the house owner to defend themselves

against allegation of misleading advertising under the

above Code and Act.

The accommodation advertised by house owners

who are not registered under the Homestay

Programme is not homestay as advertised by the

Ministry of Tourism and Culture. That itself; is a

misrepresentation and the house owner could be

found guilty for failure to provide the services

pursuant to the Homestay Programme. It can be

concluded that if a house owner would like to

maintain the status of the property for category of

residential usage, they should use the term ‘rent’ and

not ‘homestay’ when they advertise the

advertisement.

Legal Perspective of Homestay Concept in Malaysia: Hidden Facts or Truth Revealed?

205

For those home owners who wish to run the

homestays operation without registered with

MOTAC and/or any other relevant agencies, we can

conclude that they are actually running the periodical

tenancy. In such event, the rights and interest for both

tenant and landlord will be protected under the law of

tenancies, i.e. in the tenancy agreement or oral

agreement.

From the results presented above, it can be

concluded that if a house owner would like to

maintain the status of the property for category of

residential usage, they should use the term ‘rent’ and

not ‘homestay’ when they advertise the

advertisement. It shall be deemed as ‘renting’ the

room or house to the occupants or tenants. This

scenario will be in line with sections 213 and 223 of

the National Land Code of the concept of tenancies

exempt from registration as what has been decided in

the case of Tan Kiaw v Gan ChyeKhoon [1983] 2

MLJ 109 FC that there is no definition of "tenancy"

in section 5 but "tenancy exempt from registration"

has the meaning assigned thereto by sub-section (1)

of section 213. Pursuant to section 223(2) of the

National Land Code, tenancies can be done orally or

in writing form. Various type of tenancies can be

found in current practice including but not limited to

fixed and periodical tenancy, tenancy at will, tenancy

at sufferance, tenancy with ‘estoppel’ and tenancy

coupled with equity.

4.4 Recommendations

4.4.1 Licensing

The premises or accommodation and the house

owners must be licensed. Since the license is being

issued by the local authorities, proper records will be

maintained and the house owners would be required

to fulfil a certain requirement to obtain the license as

well as to renew the license. This may be a huge task

to the local authority.

4.4.2 Supervision or Monitoring Body

A body comprising of a member of the local

authority, elected members of the unregistered house

owners, an officer from the Department of Health and

an officer from the Malaysia Royal Police Force

should be formed to supervise and monitor the

operations of these accommodations.

This body would also serve as the Complaint

Bureau, avenue for tourist to lodge complaints

wherein the complaints will be discussed and decided

by the members of this body promptly before

deciding and/or advising on the next best action to be

taken against the house owners. The body would have

to have its standard operating procedure to ensure fast

and efficient action without much delay.

4.4.3 Conduct Workshop on

Entrepreneurships so That the House

Owner Knows What to Do, and to

Minimise Legal Risks

In addition to providing training and certification to

registered homestay coordinators under the Ministry

of Tourism and Culture for the purpose of managing

and /or overseeing management of homestays within

their area, the Institute of Rural Area, Ministry of

Regional and Rural Development also provides

training and certifications for registered homestay

operators. Perhaps something similar can be

established and provided for house owners too.

4.4.4 Maintenance of Premises

The periodical checks and preventive maintenance

are to be conducted on the premises and surroundings

to ensure the safety of the building and premises. This

should also be made as one of the requirement for

renewal of license wherein the same should be

submitted to the license approving body.

5 CONCLUSION

It is also submitted that the actual concept of

homestay should be emphasized to public in order

dispersed to prevent misunderstanding among the

public and various stakeholders. Guidelines issued by

the Ministry of Tourism and Culture (MOTAC) must

be followed and updated to ensure that the homestay

program remains competitive and to legalise this

industry in the future. Government tries to

systematize homestay programme through

registration so it can provide support for the

respective community and to ensure that interest for

the home owners and the customers are well

protected.

By promoting homestay programme by the

government, both country and community can

address the unemployment and poverty problems by

creating job opportunities and saves traditional

practices, cultures, environments. The homestay

programme also creates the social unity and harmony

in the community and builds leadership skills,

management skills and community people capacity

on various areas, namely the skills to run and manage

iN-LAC 2018 - International Law Conference 2018

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the business and social networking skills when they

deal with the customers. It can be the one of the

important tools for sustainable tourism development

in Malaysia.

ACKNOWLEDGEMENTS

This study was carried out under the Mini Funds

awarded by the Multimedia University, Melaka,

Malaysia. The author acknowledges the Multimedia

University, Melaka for their support.

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