The Malaysia Budget & Business Hotel Association (MyBHA) has welcomed and strongly supported Penang’s implementation of the Private Homestay (Penang Local Authorities) By-Law 2026, describing it as an important step towards protecting legitimate accommodation businesses, safeguarding residents and tourists, and ensuring greater fairness and business legality within the accommodation industry.
The by-law, which came into effect on 1 August 2026, requires short-term rental accommodation (STRA) operators to obtain licences from the relevant local authority and comply with requirements covering operations, cleanliness, safety, prohibited activities and nuisance control.
It also empowers local authorities to inspect and investigate premises, take enforcement action and close non-compliant operations.
MyBHA urges strict enforcement of Penang STRA law
MyBHA commended the Penang State Government, Penang Island City Council (MBPP), Seberang Perai City Council (MBSP) and State Local Government, Town and Country Planning Committee Chairman Jason H’ng Mooi Lye for taking decisive action on an issue that has affected Malaysia’s accommodation industry for years.
MyBHA National President Dr Sri Ganesh Michiel said Penang had demonstrated that effective action was possible with political will and a commitment to fairness and business legality.
“Penang has demonstrated that effective action is possible when there is political will and a genuine commitment towards ensuring fairness and business legality,” he said.
However, he stressed that the effectiveness of the new by-law would depend on enforcement.
“Unlicensed operators must not be allowed to continue accepting bookings and profiting while legitimate accommodation providers comply with every legal requirement,” he said.
Under the new framework, operators are required to pay a RM50 administrative application fee, an annual licence fee of RM1,000 for premises with up to three rooms, and RM200 annually for each additional room, subject to a maximum of two additional rooms.
An annual private accommodation fee of RM1,800 per unit also applies. Non-compliance may result in a fine of up to RM2,000, imprisonment of up to one year, or both.
Illegal STRA operations raise concerns for residential communities
MyBHA said the scale of complaints received by local authorities highlights the impact of uncontrolled short-term rental accommodation on residential communities.
MBPP received 364 complaints involving nuisance and safety concerns linked to illegal private accommodation operations between 2020 and March 2026, while MBSP received 24 complaints during the same period.
According to the association, these concerns include excessive noise, parking congestion, unauthorised access, overcrowding and increased maintenance costs.
MyBHA supports MBPP’s prohibition of short-term rental accommodation operations in all stratified residential properties within its administrative area.
It also noted that operations within the George Town World Heritage Site must comply with applicable heritage planning requirements, while MBSP will determine the relevant conditions within its jurisdiction.
“Residential properties must not be turned into unregulated hotels at the expense of the safety, privacy and well-being of local communities,” MyBHA said.
It added that a property intended for residential use does not automatically become a lawful accommodation business simply because it is advertised online.
MyBHA says licensed hotels face unfair competition
The association also highlighted the regulatory obligations faced by licensed hotels, which include local authority licensing, planning approvals, fire safety requirements, employment regulations, insurance, taxes and other statutory obligations.
Allowing unlicensed operators to compete without equivalent accountability, it said, creates an unfair operating environment, exposes guests to potential safety risks and may contribute to revenue leakage.
“We are not asking for protection from competition. We are demanding protection from unlawful and unhealthy competition,” MyBHA said. “Licensed businesses cannot continue carrying the cost of compliance while illegal operators are allowed to profit from avoiding it.”
The association is calling on MBPP and MBSP to establish dedicated enforcement teams, conduct regular inspections, investigate complaints promptly and take decisive action against repeat offenders.
It also called for joint enforcement operations involving relevant agencies, including local authorities, the Fire and Rescue Department, Royal Malaysian Police, Royal Malaysian Customs Department, Inland Revenue Board and other relevant bodies.
MCMC urged to tackle illegal online accommodation listings
MyBHA is also calling on the Malaysian Communications and Multimedia Commission (MCMC) to work with the Ministry of Tourism, Arts and Culture (MOTAC), Ministry of Housing and Local Government (KPKT), state governments, local authorities and online accommodation platforms to identify and remove listings associated with unlicensed short-term rental accommodation.
The association stressed that enforcement would remain incomplete if illegal operators could continue promoting their premises, accepting reservations and collecting payments through online platforms.
It proposed that accommodation platforms be required to verify the licensing status of every property before publishing or maintaining a listing.
All accommodation listings should also display a valid licence number that can be verified against an official database. Listings without the required licences or approvals should be removed promptly.
MyBHA further proposed blacklisting repeat offenders, while platforms that knowingly or repeatedly facilitate unlawful accommodation activities should face appropriate regulatory action.
A coordinated reporting mechanism could also allow local authorities to notify MCMC and relevant platforms when properties are found to be operating illegally, enabling the swift removal of associated listings.
“Illegal accommodation businesses cannot continue operating successfully without the online platforms that promote them. If a premises does not have a valid licence, its listing should not remain accessible to the public,” the association said.
Calls for a nationwide short-term rental framework
Beyond Penang, MyBHA is urging other state governments and local authorities to introduce similarly enforceable measures.
The association is also calling on the Federal Government, particularly MOTAC and KPKT, to establish a coordinated nationwide framework for short-term rental accommodation.
“This issue has been highlighted to the Federal Government repeatedly for years, yet meaningful nationwide action remains insufficient,” MyBHA said. “Enough meetings, enough studies and enough delays. The industry needs clear regulations, coordinated enforcement and firm action against illegal operators.”
According to MyBHA, a national legal framework should cover mandatory licensing, planning approval, fire safety, guest protection, tax compliance, online platform verification and coordinated enforcement involving federal, state and local authorities.
It also called for transparent reporting of enforcement outcomes, including the number of licence applications, premises inspected, illegal operators identified, online listings removed, premises closed and penalties imposed.
Sustainable tourism must benefit local communities
MyBHA said sustainable tourism should protect residents, support lawful businesses, safeguard visitors and ensure that tourism growth benefits local communities.
Dr Sri Ganesh said Penang had taken an important first step, but stressed that the success of the initiative would ultimately depend on enforcement rather than announcements.
“Illegal operators must be identified, unlawful premises must be closed, and MCMC must work with the relevant authorities to ensure illegal accommodation listings are removed from online platforms,” he said. “The law must apply equally to everyone: no licence, no listing, no booking, no operation.”
