For those allergic to reading, here’s a the 30 second explanation of an expat clause from our expat's guide to renting in Kuala Lumpur:

An expat or diplomatic clause allows a tenant to end the contract early without paying rent on the remaining months if they lose their job or leave university.

Now you know what an expat clause is!

However, in the interest of brevity, it does leave out some details which we cover below,

Since you’re already here and reading allergies don’t exist, might as well keep scrolling!

Here’s how we’ll break it down:

• Who benefits from an expat clause
• The reluctance of homeowners to include one
• Why a well-written expat clause protects everyone
• Examples of stipulations in an expat clause

Let’s begin.

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An expat clause isn’t just for expats

Despite the term, an expat clause can help anyone relocating for an activity that carries high risk of termination or transfer to another location, including:

• College and university students
• Those living out of state for work, and of course
• Expatriates

If you belong to any of these groups, it’s nice to rent a place without being shackled to it.

Sadly, homeowners and tenants sometimes see expat clauses as a ‘Get Out Of Jail Free’ card.

It’s really not, but that’s the unfortunate general perception.

And so, as much as tenants love an expat clause, landlords can be reluctant to include it.

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Expat clauses and the homeowner - tenant conflict

For obvious reasons, property owners usually prefer longer tenancies.

Equally obvious is that people relocating for work or studies prefer flexible tenancy arrangements, since they don’t know when it might suddenly end.

So you have homeowners who want to rent out their units for a minimum of several years and prospective tenants who might need to move elsewhere after a year.

You can see the issue here right?

That’s what a well-written expat clause aims to solve.

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Stipulations of a well-written expat clause

A typical expat clause only allows a tenant to prematurely terminate the agreement if two conditions are met:

1. They must prove they have been terminated or transferred to another location.
2. They obey a pre-agreed upon minimum termination notice period.

Let’s look at examples of how they might be written into a hypothetical expat clause:

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Without prejudice to Clause 8.2.1, in the event that the Tenant is an expatriate who of no fault of his/her own was relocated by his/her company and thereafter terminates or attempts to terminate this Agreement during the second (2nd) year of tenancy onwards, the Tenant would be entitled to have a refund of Deposits upon proving the relocation. Providing the Tenant gives two (2 months) notice in writing in advance or gives the Property Manager two (2) months Rental in lieu of such notice. 

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This clause means several things for the tenant:

1. They cannot terminate the agreement without reason
2. Even with reason, they must give the homeowner sufficient heads up
3. This clause doesn’t cover early termination for the first year of tenancy

This guarantees homeowners a minimum level of income while protecting tenants from long-term commitments they can’t fully commit to. 

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Benefits for property owners

Consider the biggest risk of refusing to include an expat clause: turning away a key tenant demographic.

Most honest tenants cannot and therefore will not commit to such a risky agreement.

That leaves the homeowner with two groups of tenants:

1. A minority of dream tenants with deep pockets and stable work situations
2. Tenants who will breach the agreement with or without an expat clause

Now consider what is gained from refusing to include an expat clause. 

Can you hear the crickets?

An expat clause attracts not just more potential tenants but more reliable ones. And if all goes well, said tenant will continue to rent until the natural end of the agreement.

It’s really a no-lose situation.

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