Penang Short-Term Rental By-Laws 2026: Licences Now Required for Airbnb-Style Stays
In brief: Since 1 August 2026, anyone running paid short-term accommodation in Penang, such as an Airbnb-style unit, must hold a licence from the local council. The state government gave operators a grace period until 1 November 2026 to apply, and enforcement action can follow after that. Penang is the first state with by-laws of this kind, and on the island they keep short-term stays out of residential strata buildings.
This article is general information about Malaysian property and local government law for the public.
What has changed?
The Undang-Undang Kecil Tempat Inap Persendirian (Pihak Berkuasa Tempatan Negeri Pulau Pinang) 2026, which reports translate as the Private Accommodation or Private Homestay By-Laws, came into force on 1 August 2026. The State Executive Council approved them on 10 June 2026. "TIP" (tempat inap persendirian) is the local term for private short-term accommodation: stays of up to six consecutive months without a tenancy relationship, whether run directly or through a platform.
Every operator must obtain a licence from the Penang Island City Council (MBPP) or the Seberang Perai City Council (MBSP), and comply with conditions on operations, cleanliness, safety, prohibited activities and nuisance. Council officers can inspect premises and order closures for breaches.
How much does a licence cost?
The reported charges are:
an administrative fee of RM50 per application;
an annual licence fee of RM1,000 for premises with up to three rooms, plus RM200 a year for each additional room (up to two more rooms); and
a separate TIP fee of RM1,800 per unit per year.
The minimum annual cost for a small unit is therefore RM2,800, plus the application fee. As reported, breaching the by-laws can lead to a fine of up to RM2,000, imprisonment of up to one year, or both.
Where are short-term rentals allowed?
Some premises are excluded entirely, including government and statutory body premises, healthcare and childcare centres, workers' hostels, private educational institutions, and low-cost, low-medium-cost and affordable housing, including People's Housing Project homes.
On Penang Island, residential strata properties such as condominiums and apartments cannot be used for TIP. The state's TIP guideline for strata schemes, in effect since 1 April 2023, permits only serviced apartments, SoHo, SoFo and SoVo units, suite offices and duplex offices on the island. Properties in the George Town World Heritage Site must also comply with its Special Area Plan.
On the mainland, the permitted list in the same guideline is wider and includes apartments, condominiums, townhouses and landed strata. In August 2026, MBSP's detailed requirements were reported to be under review.
What about my condominium's management?
In a strata development, the council licence is not the only hurdle. Under the 2023 guideline, an owner must first obtain the consent of the joint management body or management corporation through a special resolution supported by at least three-quarters of valid votes at a general meeting. In commercial-type buildings, registering the TIP with the management body is enough. The guideline also caps TIP use at 180 days a year unless the owners approve more, and limits each booking to three days in a week. It also says owners and operators should be Malaysian citizens registered with the Companies Commission of Malaysia.
What should owners and buyers do?
If you run a short-term rental, check that your property type and location qualify and that your licence application has been filed. If you are buying an investment unit, do not assume short-term letting will be allowed; check the zoning, the building's by-laws and the latest council rules first.
Frequently asked questions
Is Airbnb legal in Penang?
Short-term rentals are allowed in Penang only with a licence from MBPP or MBSP, and only in permitted property types and areas. On Penang Island, residential condominiums and apartments are not allowed.
How much does a short-term rental licence cost in Penang?
There is a RM50 application fee, a RM1,000 annual licence fee for up to three rooms (plus RM200 for each extra room), and a RM1,800 annual TIP fee per unit. That makes at least RM2,800 a year for a small unit.
Can my condo management stop me from running an Airbnb in Penang?
It can. On Penang Island, residential condominiums cannot be used for TIP at all. Elsewhere, the state's strata guideline generally requires a special resolution of the joint management body or management corporation backed by at least three-quarters of valid votes, and buildings can add conditions through additional by-laws.
Sources and further reading
Last updated: 18 October 2026.
This article is published by Khaw Ewe Seng & Co., Advocates & Solicitors (Penang) for general information about Malaysian law. It is not legal advice, and it does not create a solicitor–client relationship. For advice on a specific matter, please consult a qualified lawyer.
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