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

GEORGE TOWN, Aug 20 — Penang has introduced a new regulatory framework to govern short-term rentals of private accommodations, including Airbnbs and homestays, effective August 1.

State local government and town and country planning committee chairman H’ng Mooi Lye announced that the Penang Private Short-term Accommodation By-Laws 2026 now require all TIP operators to obtain official licences from their respective city councils.

“The by-laws will give both the Penang Island City Council (MBPP) and Seberang Perai City Council (MBSP) the authority to license operators and act against those who fail to comply,” H’ng said during a press conference at Komtar today.

To allow the industry to adjust, the state has granted a two-month grace period. Operators must submit their applications before enforcement begins on November 1.

H’ng noted that Penang is the first state in Malaysia to implement such specific by-laws. Previously, local authorities lacked the legal teeth to take action against unlicensed operators.

“Now, there is a clear legal basis for both local authorities to issue licences and take action against those who do not comply,” he added.

The move follows a surge in complaints. Between 2020 and March this year, MBPP received 364 complaints regarding public nuisance and safety issues linked to illegal TIPs, while MBSP recorded 24.

Under the new by-laws, a TIP is defined as paid accommodation provided without a tenancy agreement for a period not exceeding six consecutive months.

Certain properties are strictly prohibited from operating as TIPs, including government or statutory body premises; healthcare or childcare centres; workers’ hostels and private education institutions; low-cost and low-medium-cost housing, controlled-price homes; and People’s Housing Projects.

In the MBPP jurisdiction, all strata residential properties are barred from TIP operations, though this remains subject to the house rules of the respective management corporations.

While service apartments, SOHO units, and shophouses may operate as TIPs, they must still adhere to management rules. Landed properties, such as detached or terrace houses, may be considered provided the operator obtains planning permission to convert the building’s use.

Additionally, the state has designated “no-go” zones where TIPs are forbidden, including Jesselton Heights, Pearl Hill, Lebuh Bukit Jambul, Taman Sungai Ara, and Minden Heights.

Operators must pay an administrative fee of RM50 per application, with annual licence fees starting at RM1,000 for premises with up to three rooms. An additional RM200 is charged for each extra room, capped at two. Operators will also be subject to an annual TIP fee of RM1,800 per unit.

Those who defy the regulations face a fine of up to RM2,000, a jail term of up to one year, or both.