From 1 August 2026, Penang officially implemented the Undang-Undang Kecil Tempat Inap Persendirian (TIP) 2026, bringing Airbnb, homestays and other private short-term accommodation under a formal licensing framework.
Existing TIP operators have been given a grace period to deal with their licensing requirements, with enforcement scheduled to begin from 1 November 2026.
For property owners and investors, however, the key issue is not simply getting a licence.
The more important question is whether the property itself is eligible for short-term rental.
For years, one common assumption in the property market has been:
"Commercial Title means Airbnb is allowed."
Under the new framework, it is no longer that simple.
The first thing to check is whether the property falls under MBPP (Penang Island) or MBSP (Seberang Perai), followed by the property type, approved use, location, management rules and TIP requirements.
QUICK ANSWER: MBPP VS MBSP
MBPP - Penang Island
Residential Apartment / Condominium:
Not permitted for TIP under the residential strata category.
Commercial Title:
Certain recognised property types may be considered, subject to other requirements.
Landed Residential:
May be considered, but relevant planning or building-use approval is required.
MBSP - Seberang Perai
Residential Strata:
Apartments and condominiums may potentially qualify, subject to MBSP requirements.
Commercial Property:
May also be considered, subject to the applicable conditions.
This is why saying "all condos in Penang cannot do Airbnb" is not accurate.
1. RESIDENTIAL STRATA ON PENANG ISLAND
Under MBPP, ordinary residential apartments and condominiums are not among the strata property categories permitted for TIP operations.
This means that even if a development has been used for Airbnb for years, or there are still multiple short-stay listings online, it does not automatically prove that a particular unit complies with the current rules.
Existing Airbnb activity should not be treated as confirmation of TIP eligibility.
2. DOES COMMERCIAL TITLE MEAN AIRBNB IS ALLOWED?
No.
Commercial Title alone does not automatically make a property eligible for TIP.
The relevant MBPP TIP guideline includes property types such as:
• Serviced Apartment
• SOHO
• SOFO
• SOVO
• Office Suite
• Office Duplex
Investors should therefore check the specific unit or parcel's property type and approved use, rather than relying on the words "Commercial Title" alone.
This is particularly important in mixed developments, where different components within the same development may have different approved uses.
For strata properties, JMB or MC requirements, planning conditions and TIP licensing requirements may also apply.
3. WHAT ABOUT LANDED PROPERTY ON PENANG ISLAND?
Terrace houses, semi-detached houses and detached houses or bungalows are treated differently from residential strata properties.
They are not automatically prohibited from TIP, but neither can a residential landed property automatically be used for short-term accommodation.
Relevant planning or building-use conversion approval may be required before proceeding with other TIP requirements.
Location also matters because certain areas on Penang Island fall within designated no-go zones.
4. TIP NO-GO ZONES
Apart from property type, investors should also be aware of properties and locations where TIP operations are prohibited.
Certain categories of premises cannot operate as TIP accommodation, including:
• Government or statutory body premises
• Healthcare or childcare facilities
• Workers' hostels
• Private educational institutions
• Low-cost housing
• Low-medium-cost housing
• Controlled-price housing
• PPR housing
Separately, MBPP has publicly identified residential no-go areas including:
• Jesselton Heights
• Pearl Hill
• Lebuh Bukit Jambul
• Taman Sungai Ara
• Minden Heights
Therefore, even when considering a landed property, its location should be checked before assuming that short-term rental operations are allowed.
5. MBSP RULES ARE DIFFERENT
The MBPP rules for Penang Island should not automatically be applied to Seberang Perai.
Under MBSP, residential strata properties including apartments and condominiums may potentially qualify for TIP, while commercial properties may also be considered.
However, this does not mean that every residential or commercial property in Seberang Perai can automatically operate as an Airbnb.
Applicable MBSP, planning, JMB/MC or management, and TIP licensing requirements still apply.
6. TIP FEES AND AIRBNB ROI
The announced TIP-related charges include:
• Application Fee: RM50
• Annual Licence Fee: RM1,000 per year for properties with three bedrooms or fewer
• Additional Bedrooms: RM200 per additional bedroom, up to two additional bedrooms
• TIP Fee: RM1,800 per unit per year
These costs should be considered when calculating the actual return from a short-term rental investment.
An advertised "8% or 10% Airbnb ROI" may be a gross projection.
Platform fees, operator fees, cleaning, utilities, maintenance and sinking fund contributions, together with TIP-related costs, can reduce the actual net return.
For investors, the question should therefore not only be "How much can this unit earn?"
The first question should be:
"Can this specific unit legally operate as a short-term rental?"
WHAT SHOULD INVESTORS CHECK BEFORE BUYING?
Before buying a Penang property specifically for Airbnb or short-term rental, check:
MBPP or MBSP
→ Property Type & Approved Use
→ No-Go Zone
→ Planning Requirements
→ JMB / MC / Management
→ TIP Licence
→ Net ROI
Commercial Title is not an Airbnb licence.
Likewise, the fact that other units in a development are currently operating as Airbnb does not automatically mean that the specific unit you intend to purchase complies with the current TIP framework.
If short-term rental income is part of your investment strategy, confirm the property's operating eligibility before calculating the expected return.
FREQUENTLY ASKED QUESTIONS
Can a condo in Penang do Airbnb?
It depends on where the property is located. Under MBPP on Penang Island, ordinary residential apartments and condominiums are not permitted for TIP under the residential strata category. MBSP in Seberang Perai has a different framework, where apartments and condominiums may potentially qualify subject to the applicable requirements.
Does Commercial Title mean Airbnb is allowed in Penang?
No. Commercial Title alone does not determine TIP eligibility. The specific property type, approved use, location, planning requirements, management rules and TIP licensing conditions must also be checked.
Are Airbnb rules the same on Penang Island and Seberang Perai?
No. Penang Island falls under MBPP while Seberang Perai falls under MBSP, and their TIP property eligibility frameworks differ. This distinction is particularly important when assessing residential apartments and condominiums.
TIP requirements and implementation details may change following further announcements or guidelines from the Penang State Government, MBPP or MBSP.
