If you’re planning to turn your property into a homestay in Malaysia, getting the proper license is essential. It ensures legal operation, avoids fines, and builds trust with guests. This guide provides a clear, beginner-friendly overview of the homestay licensing process in Malaysia, including requirements, regulations, and best practices.

Understanding the Homestay Concept in Malaysia

What is a Homestay?

In Malaysia, a homestay typically refers to a short-term rental property that provides accommodation to travelers. These can be whole units, private rooms, or shared spaces in residential areas.

Why Licensing is Important

Operating a homestay without proper licensing can result in penalties, forced closures, or legal action by local councils. Licensing also ensures compliance with zoning, safety, and tax regulations.

Key Authorities Involved

Ministry of Tourism, Arts and Culture (MOTAC)

MOTAC is responsible for the official Homestay Programme, primarily targeting rural and cultural experiences. Properties under this program must meet cultural and community-based criteria.

Local Government Authorities (PBT)

Each local council (Pihak Berkuasa Tempatan) governs the licensing of private homestays or Airbnb-style rentals within its area. Examples include DBKL (Kuala Lumpur), MBJB (Johor Bahru), or MBMB (Melaka).

Other Relevant Bodies

Depending on your location and property type, you may also need to comply with:

Fire and Rescue Department (Bomba) for fire safety approval
Companies Commission of Malaysia (SSM) if operating under a business entity
Inland Revenue Board (LHDN) for income tax and tourism tax registration

Steps to Apply for a Homestay License

Step 1: Check Zoning and Council Guidelines

Confirm if short-term rental is allowed in your residential area. Some strata buildings or residential zones prohibit homestays. Always consult your local council’s official guidelines.

Step 2: Prepare Required Documents

Typical documents include:

Copy of property ownership or tenancy agreement
IC/passport of owner
Fire safety certification (if required)
Strata management or JMB approval (for condos/apartments)
Business registration certificate (SSM)
Floor plan and property photos

Step 3: Submit Application to Local Authority

Submit your documents to the local council or use their online submission portal if available. Each council may charge a licensing fee, and the process duration varies.

Step 4: Comply with Inspection and Conditions

An inspection may be conducted to ensure the property meets safety and operational standards. Some councils may impose conditions like maximum guest numbers, signage restrictions, or noise control rules.

Common Challenges and How to Overcome Them

Dealing with Strata Management

Strata buildings (e.g., condominiums) may ban or restrict homestays. To avoid disputes:

Get written permission from the JMB or MC
Maintain quiet hours and guest rules
Use clear communication with neighbors

Understanding Tax Obligations

Homestay income is taxable in Malaysia. Property owners must:

Declare rental income to LHDN
Register for Tourism Tax (TTx) if catering to foreign guests
Keep proper records for tax submissions

Best Practices for Licensed Homestay Operators

Operate Transparently

Always display your license (if required) and follow the terms. This builds trust with guests and avoids penalties.

Prioritize Safety

Install smoke detectors, fire extinguishers, and clear exit signs. Safety measures not only protect guests but also help in passing inspections.

Keep Updated with Local Laws

Regulations can vary between cities like Kuala Lumpur, Johor Bahru, or Penang. Stay informed via council websites or business associations.

Conclusion

Licensing your homestay in Malaysia is a crucial step toward running a legal, safe, and successful business. While the process may vary depending on location and property type, understanding the key requirements and staying compliant with local regulations will ensure smooth and profitable operations.

By following this beginner’s guide, you’ll be on the right path to launching a legitimate and thriving homestay business in Malaysia.

A Beginner’s Guide to Homestay Licensing in Malaysia