Penang imposed new licensing rules on short-term rental operators starting August 1 under the Private Short-term Accommodation By-laws 2026. Operators must now obtain licences from local councils within two months before enforcement begins on November 1 [1, 2].

The state’s two local councils, Penang Island City Council (MBPP) and Seberang Perai City Council (MBSP), have new authority to license operators, investigate complaints, enter properties, and close down premises that do not comply with the by-laws [1, 2, 3]. The maximum penalty for non-compliance is a fine of up to RM2,000, imprisonment for up to one year, or both [1].

The by-laws ban short-term rentals in government and statutory premises, healthcare and childcare centers, workers’ hostels, private educational institutions, various low-cost housing categories, and People’s Housing Projects [1, 2, 3]. Between 2020 and March 2026, authorities received 388 complaints about illegal short-term rentals across Penang, with 364 in MBPP’s jurisdiction and 24 in MBSP’s area [1, 2, 3].

In MBPP’s area, planning guidelines approved on August 3 restrict short-term rentals to general residential, general business, and limited business zones, with tighter rules in heritage areas [2, 3]. Operators must pay a RM50 administrative fee when applying for licences, with annual licence fees starting at RM1,000 for up to three rooms plus RM200 for each additional room (up to two rooms). Some unit types face fees as high as RM1,800 annually. Licence reminders incur a RM5 charge [3].

State council member H'ng Mooi Lye said, "We give two months as a grace period for operators to make their applications" [1]. She also noted, "Now, there is a clear legal basis for both local authorities to issue licences and take action against those who do not comply" [2].

Jason H’ng Mooi Lye added, "The by-law strengthens the regulatory and enforcement framework for short-term rental operations and ensures they are carried out in a more orderly, safe and controlled manner" [3].

The two-month grace period for operators to register licences ends October 31, with full enforcement set to begin November 1 [2].