This topic is really close to my heart. Personally, I know a number of close friends who have fallen victim to rental scams during the COVID-19 Pandemic because they were desperate in getting a new lease, and property tours were physically restricted.
These scams are not new in Malaysia and it often preys on you when you are desperate and least expecting to fall prey to such schemes. In fact, I personally almost fell prey to one particular rental scam that is common in Malaysia.
Yes, smart educated people like you do fall prey to such terrible schemes.
What prevented me from being swindled was research on the rental property and the fact that the agent representing the landlord was not actually registered with The Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEP) despite her claiming otherwise.
I hope this article pens out my thoughts and process so that it will be of value to you, who is looking for a home of your own, preventing you from falling prey to such scams.
Generally, the most common property scam in Malaysia is the upfront rental deposit scam. This particular scheme revolves around the victim being pressured to pay an upfront deposit to secure the apartment before the offer is taken up by another party that never existed in the first place.
Today, I will explore with you the common property scams, not only in Malaysia but also in neighbouring countries. Beyond that, we will talk about how to prevent ourselves from falling prey to these schemes and the actions to take if we, unfortunately, do fall victim to them.
3 Most Common Property Scams in Malaysia
Let’s begin with the one I almost fell prey to, the upfront payment scam.
1. Upfront payment scam
This particular scam is really effective when you are dealing with a deal “too good to be true”. Combined with the fear of missing out on a good deal, the con artist will capitalize on your emotions to get you to part way with your hard-earned cash.
The upfront payment rental scam usually involves a rental deal that is significantly below market rate and fake interests from other parties. The intention of the con artist is to create unreal demand and to scam the tenants of their deposit payment by capitalizing on their fear of missing out.
My story happened during the COVID-19 Pandemic when property tours were impossible and landlords were beginning to drop their rental rates in hopes of securing tenants. While I was already renting an apartment, my wife and I was upset with our landlord. He took no responsibility for any property maintenance issues such as leaky internal piping that led to peeling walls and mold infestation.
Long story short, we were desperate to move out and had to manoeuvre around the difficulties of a lockdown. In the midst of searching for a comfortable new home, we stumbled upon a listing for a 3-bedder going for RM1,500 per month. This was a significant discount against the range of RM 2,200 – RM 2,500 for a similar apartment in Seksyen 17, Petaling Jaya.
In our case, we were told that the place is currently up for grabs between a few parties, and the first to place the 2-month deposit will have the place. Combined with the fact that the place is unavailable for a tour and there is no video to share, things started to smell off and I started digging for information.
The things I researched were,
- The agent’s detail cannot be found on BOVAEP – I could not find his information on the official portal and the reason he quoted me is that his registration is outdated and expired.
In reality, if an agent’s registration is expired, the information will still be available on the portal indicating the said individual is a certified Real Estate Negotiator with an expired license. - The deposit transfer is to an unidentified individual – If you are renting a place through an agent, the deposit should be made to the agency or to the landlord whose name should be on the land title and lease agreement.
In my case, I was required to transfer my money to a person never mentioned prior to this and that is really suspicious.
Ultimately, I decided not to proceed with the deal and am glad I did not. While I do not know whether that particular listing was a scam but the stories I heard from my close friends had the same tune and signs.
2. Pay to view scam
Property tours are often, if not always, free for a prospective tenant or buyer. However, in today’s world of marketing where marketers are trying to create exclusivity and urgency, we do sometimes come across situations where token payment is required as proof of your commitment to the viewing.
This is where pay-to-view scams become reality for unsuspecting individuals.
Pay-to-view scams typically involve the victim transferring a payment as a deposit to the con artist in hopes of securing an opportunity to tour the property of interest. The offer is often backed with a property deal that is too good to be true and a mirage of overwhelming interest.
It is never a good idea to send money to someone you have never met in person for an apartment you have never seen. It is worse if it involves you sending a full year’s worth of rent or any other upfront fees.
If you are asked to transfer money even before any property tour is done, it is a sure sign of a scam.
A seller can only ask for the earnest deposit to be made when your offer to purchase his property is agreed to and signed. Assuming you have visited the place prior to making the offer, you would have saved yourself from heartache.
In the case of a rental property, landlords can only legally ask for the rent and utility deposit at the time of signing the lease.
3. The back door scam
If you do not know yet, there is a subsidised scheme by the Malaysian government to facilitate affordable housing for middle-income households in Malaysia, a program known as the PR1MA housing scheme.
Because it is a program meant to facilitate affordable housing, it involves a structural approach to filtering interested buyers who do not fulfil the eligibility criteria to ensure the benefits of this program reach the targeted demographic.
However, there will be greedy individuals who wish to find loopholes within the administration in order to benefit from the housing scheme despite not being eligible for it. This created the perfect environment for con artists to dupe their victims out of cash by claiming to be able to avoid those restrictions.
In 2015, Malaysia saw a number of high-profile individuals get scammed out of cash by con artists claiming to be representatives of the PR1MA scheme. These con artists claimed to have connections to the scheme and allegedly promised these investors the opportunity to buy said affordable housing through a back door system, collecting substantial deposits for these houses along with administrative fees.
As with all scams and human greed, the greedy investors are left on their own, the con artists vanished with the money, and no affordable housing was transacted.
Other Common Rental Scams in Malaysia
1. Bait and switch
An interesting scam that does happen in Malaysia is the bait-and-switch scam, albeit not often.
The bait and switch scam is when the landlord tries to get you to sign a lease for a property different from the one advertised. It could be a case where the lease details and keys provided do not tally with the apartment that is advertised.
If you are at the point of signing the lease and collecting the keys, you might want to make sure the details stated on the lease are correct. On top of that, you want to make sure the keys you collected work with all the doors in the apartment.
2. Hijacked advertisement
The listing is real, the pictures are real, and the place is indeed up for rent. The only thing fake is the contact information where the scammer will pose as a landlord to collect your personal information.
This personal information is then shared with their network and is used for other purposes – annoying telemarketing advertisements for insurance and loan.
3. Missing amenities
Some landlords will try to list a bunch of amenities they do not have in hopes to justify them pricing the unit higher. My previous landlord was one such person who did list his furniture as brand new.
Taking things in good faith, I did not focus too much on the furniture, trusting that the furniture are brand new. In reality, the sofa set was extremely dirty on the inside with a clean pillow set and it was infested with lice.
We did not enjoy the place and to make matters worst, the landlord refused to change the sofa or to clean the sofa of the lice infestation.
My advice is to avoid renting a place sight unseen at all costs. If you need to, please prepare yourself with adequate research work and a trusted person down on the ground.
How to Protect Yourself from Property Scams?
When it comes to scams, prevention is always better than cure because it saves us the hassle and pain involved to recover our lost money. In Malaysia, it is extremely difficult to recover your loss especially if you do not have the identity of the con artist.
Hence, preventing myself from falling prey to these unscrupulous schemes is my utmost priority.
In my journey of being a property investor and home renter, I’ve developed my personal checklist where I would do my homework in hopes of minimising my risk of property scams.
1. Never pay in cash
In Malaysia, landlords still accept cash payments for rent and upfront deposits. However, it is better for tenants to pay through other methods such as checks or online bank payments. This will provide a trail of payment to the landlord, protecting against any dispute of non-payments.
Payments through cash or any hard-to-trace wire transfer such as crypto payments are impossible to track. If you do fall prey to a property scam and you paid in cash, it is closer to 100% impossible to recover your loss.
Instead, use bank cheques or money orders for any rental payment, but only after you are certain of the legitimacy of your property arrangement. If you are using a money order, you can also cross-check the recipient against the landlord or the agency you are dealing with and if there is a mismatch in naming, it is best to voice out any concern.
Legally, any payment to the landlord should only be made at the time of signing the lease. If a deposit of commitment is requested, be sure to ask for a receipt on your deposit as proof of payment. You should not be expected to make any other payments for as long as the lease is not signed.
2. Never rent without visiting the place
Renting a place sight unseen is room for many potential issues and among them is falling prey to property scams.
If you wish to rent a place, I personally recommend doing a property tour of the apartment to confirm the unit exists and it matches exactly what was advertised before you make a decision to lease or make any payments.
If you cannot visit the place in person, ideally you would want a family member or trusted friend to visit the place on your behalf. Otherwise, you should arrange for a virtual tour with the landlord or the real estate agent.
While visiting the place does not omit your risk to scam completely, it is a great way to reduce the chance of a scam.
3. Meet the landlord in person
Insisting on meeting the landlord in person significantly reduces your risk of a scam and will usually lead to a better-renting experience. Meeting the landlord helps establish rapport between you and the landlord and makes communication easier when you need the landlord’s assistance in home maintenance.
While some out-of-town landlords can be legitimate, it does raise red flags if the landlord consistently gives excuses for not being available to show you the unit or to meet you. Logically, if you are the landlord, would you not want to meet your potential tenant to decide if they are the right family to take care of your home?
As a landlord myself, I will definitely make time to meet my potential tenants to understand them better.
4. Be wary of landlords who are not interested in you
Any legitimate landlord will ask for a bunch of information about the potential tenant to decide if the two parties are a right fit for one another.
At the very least, a legitimate landlord will ask about the family, your profession and living habits. In some cases, they will ask you to understand your credit history and your payment habits.
I did previously prepare a comprehensive guide for landlords in choosing their tenants. While the guide was written for landlords, it serves the same to help you understand what a legitimate landlord will look for.
5. Do your due diligence
When I say do your due diligence, I’m not asking you to find out who the landlord is married to and where their family resides.
When I say do your due diligence, I’m asking you to conduct basic research on the property. Check out the property and the facilities that come with it. Is there other listings for the same property at the same price?
If you are dealing with a real estate agent or negotiator, can you find their registration in BOVAEP and are they blacklisted by the board for misconduct?
By doing basic due diligence work, you are already putting yourself ahead of falling prey to rental scams.
6. Be wary of a deal too-good-to-be-true
We all love a good property deal. At the very least, I know I love good property deals.
However, there will be the occasional deal that is too good to be true and it just seems so unbelievable. While I’m not asking you to make a swift judgement, I recommend that you do your due diligence and homework to protect yourself against property scams.
If the deal is legitimate, congratulations to you for bagging yourself a bargain!
7. Be wary of high-pressure sales tactics
Have you ever gotten that unshakeable feeling of being pressured into buying something you do not need? Perhaps it was the snake-oil salesman who is trying to sell you a fry cooker at twice the market price for a chance to win a trip to the Maldives?
Most of us have experienced something similar, maybe not in buying or renting property. However, my advice is to always look out for red flags when you feel you are being pressured to sign a lease or deposit money quickly.
Remember, you cannot be forced into a transaction. If you missed out on the deal, it is fine because another deal may come your way – be it better or worst. A legitimate deal is always better than a fraudulent transaction.
8. Demand an accurately written lease agreement
If it is a transaction, there needs to be a written agreement. This is the case for both renting and purchasing a property.
When it comes to preventing property scams, a written agreement is crucial in preventing fraud and it is also a great avenue to lay out the responsibilities and rights of both parties. In Malaysia, the tenancy agreement falls under the Contract Act 1950 and for it to be enforced and protected under the law, it needs to be notarised and stamped by the Inland Revenue Board Malaysia.
In your case, the lease agreement needs to be signed by both the landlord and yourself. On top of that, it needs to be notarized by the Inland Revenue Board Malaysia. The notarization does cost a small amount of money but it is crucial in protecting your rights in this transaction.
A quick tip is to keep a digital copy of the signed and notarized lease agreement for quick access. Physical copies of agreements can get misplaced rather easily if you are not an organised person.
When it comes to the accuracy of the agreement, make sure you know the details of the property you’re considering. Cross-check that information with the agreement and make sure all the details are correct.
if the information on the agreement is incorrect, get the landlord or his representative to amend the agreement, reflecting the correct information.
Please! I say Please, do not take this advice lightly. It might not seem like a big deal when you sign the agreement, but if any issue is to arise later, any inaccurate information on the agreement can be a stumbling block in your demand.
What To Do If You Fall Prey to Property Scams?
Despite all the work put into place to avoid property scams, the possibility of being scammed is never zero. While we do our best to cross all the checklists above, there is still the possibility of being a victim in a con job.
If you, unfortunately, do fall prey to such a property scam, please do not panic and take the necessary steps to report and attempt recovery for your loss.
Step 1: It’s not the time to panic and please do not blame yourself.
Stay composed, keep calm, and follow these 4 steps provided by Bank Negara Malaysia (BNM).
- Lodge a police report
- Report to the relevant enforcement agency
- Keep all records and documentation of the transaction
- Include as many details of the key persons you dealt with throughout the transaction
Step 2: Report to the police
The very first step when you fall for a scam is to report it to the relevant authorities. If you do not know where to begin, the best place to head first is the nearest Police Station when you realise you fell prey to a fraudulent scheme.
Step 3: Report to the relevant enforcement agency
If the scam is real estate related, then you will want to make your report to the Malaysia Institute of Institute Agent if you felt the con artist is impersonating a Real Estate Agent or Negotiator.
If the scam involves a housing development, then you should be reporting to the Ministry of Housing and Local Government (KPKT).
These reports to the relevant enforcement agency will provide the authorities with relevant data to assist not only yourself but future victims that may fall prey to similar scams.
Step 4: Prepare as much information to assist with the investigation
Keep all information of the transaction documented. In an investigation, any information you provide may and can be helpful towards identifying the con artist and preventing other future victims.
Can You Get Back Your Money if You are Scammed in a Property Scam?
At this point, you have done everything you should be doing. The reality is that such investigations are treated as low priority and it takes time before the investigation comes to a conclusion.
In most cases, because you “willingly” transferred the money from your account to the con artist’s account, it is difficult to recover your loss.
Whether you are able to get a refund is highly dependent on the investigation process of the authorities, and if they manage to capture the culprit.
Final Words: We Need More Awareness Against Property Scams
Seeing my friends fall victim to property scams during the COVID-19 lockdown really left me frustrated, helpless and angry.
I cannot imagine how many more people out there are falling victim to such scams every day, yet there is so little awareness against property scams and the steps you can take to safeguard yourself.
If you have, unfortunately, fallen prey to these con artists, I want you to know this is not the end of the world. Seek console in the people who love you – they’ll help you get through this rough patch, together.
You are not alone and you will not be alone.
