Should You Rent Out the Whole Unit or By Room? A Guide for Malaysian Landlords

Many Malaysian landlords love renting to students and young working adults. Demand is strong, units get snapped up quickly, and shared rentals can be very profitable.

But there’s one decision that quietly shapes everything that follows:

Do you rent out the entire unit to a group, or do you rent room-by-room to individual tenants?

This choice affects:

• Who should sign the tenancy agreement
• Who is legally responsible when rent is late
• How you handle damage, utilities, and deposit refunds
• How much admin work you take on as a landlord

This guide walks you through both models so you can choose the structure that fits your unit, your risk appetite, and your time.

1. Two common ways to rent a shared unit

Before we talk about signatures and liability, let’s be very clear about the two models.

1. Whole-unit tenancy (single agreement)
   • You rent the entire property to a group (e.g. four students, a family, three colleagues).
   • There is one tenancy agreement covering the whole unit.
   • Inside that agreement, you might:
     • Name just one person as the tenant (the “main tenant”), or
     • Name several people jointly as tenants.
2. Room-by-room tenancy (multiple agreements)
   • You rent each room separately.
   • Each tenant signs their own tenancy agreement with you.
   • You decide how to handle common areas (kitchen, living room, bathrooms) and utilities.

On paper it sounds simple. In real life, the consequences can be very different when something goes wrong.

2. Who should sign the tenancy agreement?

This is where many problems start. The wrong signing structure can leave you exposed, or create misunderstandings between housemates.

Whole-unit model

You have two main options:

• Only one main tenant signs
  • You treat that person as your sole tenant.
  • They collect money from their housemates and pay you in one lump sum.
  • You communicate and enforce terms through this one person.
  • The other housemates are basically “invisible” in your contract.
• All adult tenants sign as joint tenants
  • Every adult living there is named as a tenant.
  • They all sign the agreement, and share responsibility.
  • You can contact any of them regarding rent, damages and breaches.
  • Admin work is slightly heavier (more signatures, more updates).

Room-by-room model

• Each tenant signs their own agreement for their room.
• Every tenant is your direct contractual partner.
• You do not rely on a “leader” tenant to collect money.
• You may include standard house rules that apply to all room tenants (for common areas, quiet hours, visitors, etc.).

From a landlord’s perspective, the key question is:
“Do I want one main point-of-contact, or do I want each person to be directly responsible to me?”

3. Who is liable for rent and damage?

Let’s look at what happens when money or property damage is involved – because this is where the real risk lies.

Whole-unit, one main tenant model:

• The main tenant is legally responsible to you for:
  • The full rent each month
  • Damages to the property (beyond fair wear and tear)
• If housemates refuse to pay their share, that is between them and the main tenant.
• If something breaks and nobody admits fault, you deal with the main tenant.
• If the main tenant disappears, you have no direct contract with the others, even if they’re still happily staying inside.

Whole-unit, joint tenants model:

• All named tenants are jointly responsible.
• You can:
  • Claim full rent from any one of them, or
  • Claim costs for damage from the group.
• Internally, they can sort out who pays what, but from your side, they are treated as a group.

Room-by-room model:

• Each tenant is liable only under their own agreement.
• If Tenant A in Room 1 stops paying rent, you can take action against Tenant A only. The other tenants are not liable for their rent.
• For damage inside a specific room, you claim from that room’s tenant.
• For damage in common areas, it depends on what your agreement and house rules say:
  • Some landlords split the cost among all tenants.
  • Others only charge the person who clearly caused the damage.
  • If you don’t state this clearly, disputes are almost guaranteed.

Clarity is everything. Whatever model you choose, your tenancy agreement must make it obvious who is liable for what.

4. How should you handle deposits?

Deposits are usually the last thing everyone argues about, so it’s worth planning properly at the start.

Whole-unit tenancy

• You typically collect:
  • 2 months’ security deposit (based on total monthly rent)
  • 0.5–1 month utilities deposit
• The deposit is tied to the named tenant(s) on the agreement.
• If only one main tenant is named:
  • You refund the deposit to that person at the end.
  • How they divide it among housemates is not your problem – but it can cause drama for them.
• If all tenants are named jointly:
  • You may refund to one account with everyone’s written agreement, or all of them together.
  • Again, it helps to be very clear in the agreement.

Room-by-room tenancy

• Each tenant pays deposit based on their room rent:
  • Security deposit (e.g. 2 months of their own room rent)
  • Utilities deposit (shared formula, or a fixed amount per tenant)
• Advantages:
  • When one tenant leaves, you only handle that one deposit.
  • You don’t need to get permission from everyone else.
• But you must clearly explain:
  • How utilities are calculated and allocated.
  • In what situations deposit can be deducted for common area issues.

Good deposit handling prevents accusations of “unfair” deductions later.

5. Utilities, cleaning and common areas

Many shared-tenancy disputes in Malaysia are not about rent – they’re about bills and cleanliness.

Whole-unit rental:

• Most landlords let tenants handle all utilities:
  • TNB, water, Indah Water, Wi-Fi, sometimes management access cards.
• Your agreement should state:
  • Who is responsible for opening and closing accounts
  • When final bills must be provided at handover
  • That all outstanding utilities remain the tenants’ responsibility
• Cleaning and common areas are usually the tenants’ job, but you can:
  • Set basic expectations (no illegal activities, no excessive mess, no damage to fixtures).
  • Reserve the right to charge for extraordinary cleaning or repairs.

Room-by-room rental:

Here, you have more choices – and more chances for arguments if you’re not clear.

You need to decide:

• Are utilities included in the rent?
  • If yes, will you set a fair usage cap?
• Or will they be shared among all tenants?
  • How will you calculate and collect each person’s share?
• Or do you have sub-meters per room? (Less common, but neat if available.)

For cleaning:

• Will you pay for a cleaner and build the cost into the rent?
• Or will tenants take turns (which is cheaper, but harder to enforce)?

In the room-by-room model, house rules become almost as important as the tenancy agreement itself. Things like guests, noise, smoking, rubbish, cooking smells – if you don’t set boundaries, you will spend a lot of time mediating conflicts.

6. When someone moves out mid-tenancy

This is a very common scenario in shared rentals and something you should plan for.

Whole-unit model:

• If a housemate who is not on the agreement leaves:
  • Legally, nothing changes between you and the main tenant.
  • The main tenant is still responsible for full rent.
• If one of the named tenants leaves:
  • The agreement does not magically update itself.
  • The safest approach is to:
    • Record the change in writing (an addendum/variation).
    • Update who is staying and who is leaving.
    • Adjust deposit contributions among tenants (you may or may not be involved in this, but at minimum you should have a clear record of who your official tenants are).

Room-by-room model:

• When a room tenant leaves, you simply:
  • Do a proper inspection.
  • Calculate outstanding utilities/shares (if applicable).
  • Deduct fairly (if necessary) and refund the balance.
  • Then you advertise and sign a new agreement with the next tenant.

From an administrative perspective, room-by-room is more work, but also more modular. Whole-unit is simpler, but when something changes, it can be messy without proper documentation.

7. Which model should you choose as a landlord?

There is no one-size-fits-all answer. It depends on your property and your style as a landlord.

Whole-unit tenancy is usually better if:

• You prefer low admin and fewer people to manage.
• Your unit suits families, couples or stable groups of friends.
• You don’t want to be dragged into internal housemate politics.
• You have a full-time job and want your rental to be as “hands-off” as possible.

Room-by-room tenancy may suit you if:

• Your property is near universities, hospitals, industrial parks or city centre offices.
• You want to maximise rental income, potentially earning more than a single whole-unit rent.
• You are willing to spend more time managing tenants, enforcing rules and handling move-ins/move-outs.
• You treat this like a side business and are comfortable being a bit more “hands-on”.

A simple rule of thumb:
If you value your time and peace of mind more than squeezing out every extra ringgit, whole-unit rental is usually the safer starting point.

8. Where a good tenancy agreement fits into all this

No matter which model you choose, everything eventually comes back to one thing:
What does your tenancy agreement say?

A good agreement should:

• Clearly identify who the tenant(s) are
• Explain who is responsible for rent, utilities and damages
• Set expectations for use of the property and common areas
• Explain what happens when someone leaves early, or when the tenancy ends
• Support you if you ever need to negotiate, enforce terms, or make a claim

That’s exactly why we created our DIYA Pro-Landlord tenancy packs – bilingual (English + BM), editable, and structured to protect you as a landlord while staying fair to tenants.

Once you’re clear whether you want to rent out your unit as a whole or room-by-room, having a solid, role-specific agreement means the “heavy lifting” is done on paper. You can focus on finding good tenants and managing your property with much less stress.