Starting July 1, 2025, major changes to Malaysia’s electricity tariff structure and service tax (SST) are expected to affect homeowners, tenants, landlords, and investors alike.
With Tenaga Nasional Berhad (TNB) introducing a more detailed billing structure and SST applying to higher electricity usage, the real estate sector must brace for rising operational costs and shifting affordability.
In this article, we’ll break down what the changes are, why they’re happening, and how they could affect real estate, plus practical tips to manage your electricity bills under the new system.
Understanding TNB’s NEW Tariff & SST Charge:
What Is the New TNB Tariff & SST Policy?
Effective July 1, 2025, TNB will roll out a new electricity tariff structure under the government’s Regulatory Period 4 (RP4).
This includes a five-part breakdown of charges to enhance billing transparency, along with the implementation of 8% SST on households using more than 600 kWh/month.
Breakdown of the New Tariff Components:
- Energy (Generation) Charge – Cost to generate electricity
- Capacity Charge – Cost of maintaining supply availability
- Network Charge – Cost of delivering power through TNB’s grid
- Retail Charge – Customer service, billing, and meter reading
- Automatic Fuel Adjustment (AFA) – Monthly fuel cost variations, capped at ±3 sen/kWh
Why Is the Government & TNB Doing This?
The revised tariff is part of a national effort to:
- Reflect the true cost of electricity supply more transparently
- Encourage energy efficiency through usage-based incentives
- Replace the older ICPT mechanism with AFA for more timely adjustments
- Support national sustainability goals by discouraging energy waste
TNB and the Energy Commission (Suruhanjaya Tenaga) argue that this change brings Malaysia closer in line with international energy billing standards while shielding low-income households from excessive hikes.
New TNB Domestic Tariff (July 2025)
Here’s a simplified version of the new domestic electricity charges for consumers:
| Component | Usage ≤ 1,500 kWh | Usage > 1,500 kWh |
| Energy Charge | 27.03 sen/kWh | 37.03 sen/kWh |
| Capacity Charge | 4.55 sen/kWh | 4.55 sen/kWh |
| Network Charge | 12.85 sen/kWh | 12.85 sen/kWh |
| Retail Charge | RM10/month (waived if ≤600 kWh) | RM10/month |
| SST (8%) | Applies if usage >600 kWh/month | Applies |
Note: Households using ≤600 kWh/month are exempt from the RM10 retail charge and SST.
How Will This Affect the Real Estate Market?
1. For Homebuyers
Rising electricity costs, especially for homes that consume more than 1,500 kWh/month mean higher cost of ownership.
For homebuyers, the rise in electricity tariffs could reshape purchasing decisions and priorities.
As energy bills become a more prominent part of monthly expenses, buyers may begin to scrutinise a property’s energy performance just as closely as its location or layout.
Homes that lack proper insulation, ventilation or energy-saving features may be viewed as long-term financial burdens, particularly for first-time buyers already stretching their budgets.
Additionally, higher construction costs brought on by increased operational expenses could push property prices upwards, making affordability an even bigger challenge.
In response, homebuyers may start to favour properties with solar panels, energy-efficient appliances or green building certifications, viewing them as a better investment over time.
This could result in:
- New homes might become more expensive as building costs are going up
- People may avoid buying homes that are not energy-efficient
2. For Tenants
For tenants, particularly those in energy-intensive units or older buildings, the higher electricity tariffs could significantly reduce disposable income.
Monthly utility bills could rise sharply, especially in units that rely heavily on air conditioning, water heaters or outdated electrical systems.
This financial strain may cause tenants to seek smaller, more efficient units or negotiate for lower rents. The result could be a reduced demand for high-maintenance properties, especially in markets saturated with supply.
This could result in:
- Higher monthly rents
- Strained affordability
3. For Landlords
Landlords are likely to face increased pressure as tenants grow more cost-conscious.
To maintain occupancy rates and remain competitive, they may need to upgrade properties with energy-efficient fixtures or offer incentives to tenants concerned about high utility costs.
Retrofitting older units with modern solutions like inverter air-conditioners, LED lighting or solar-powered water heaters may no longer be optional, but a necessity.
While these investments require upfront capital, they could enhance long-term property value and attract more stable, sustainability-minded tenants.
Landlords unwilling or unable to adapt may face longer vacancy periods or be forced to lower rental prices to retain interest.
This could result in:
- Risk of lower rental income
- Pressure to upgrade units
4. For Investors & Developers
Commercial properties, especially those with higher energy needs such as Small-office Home-office (SoHo) or Small-office Versatile-office (SoVo) units, are likely to feel the brunt of increased electricity tariffs.
With operating costs on the rise, property owners and investors could face shrinking profit margins as they contend with larger utility bills and higher service charges.
Over time, this could affect the financial viability of energy-intensive developments, prompting a shift in investor preferences toward more sustainable, energy-efficient projects with lower running costs.
Projects using commercial titles (e.g., SoHo, SoVo) will face higher service charges. This impacts:
- Rental yields
- Long-term operational expenses
- Development pricing, particularly for energy-intensive properties
Overall Market Implications
1. Impact on Affordability and Transaction Volume
Higher energy costs add to the overall cost of living and homeownership.
This added financial strain could slow down property transactions, particularly in lower to middle-income segments where budgets are already tight.
Buyers and tenants may delay decisions or opt for more affordable, lower-maintenance alternatives.
2. Possible Government Intervention
To cushion the impact of rising tariffs, government support may become more likely.
This could come in the form of energy rebates, tax relief for green upgrades or new financing schemes aimed at encouraging sustainable homeownership and development.
Such interventions would help stabilise the market while guiding it toward a more energy-conscious future.
3. Shift in Buyer and Tenant Preferences
The increase in electricity tariffs is pushing both buyers and renters to become more selective.
Properties that are not energy-efficient (especially older buildings) are becoming less desirable due to higher monthly utility costs.
As affordability becomes a growing concern, demand is expected to shift towards homes that offer lower energy consumption through smart designs, green certifications or modern energy-saving systems.
4. Market Moving Towards Compact and Sustainable Living
In the long term, rising utility costs may lead the market to embrace smaller, more efficient, and environmentally friendly homes.
Compact layouts, passive cooling designs, and integrated smart systems could define the next wave of residential development making sustainability not just a trend, but a necessity.
How to Reduce Electricity Bills Under the New Tariff
To manage costs and stay below SST thresholds, here are some effective strategies:
1. Monitor Usage Monthly
Use less than 600 kWh to avoid SST and retail charges. Consider a smart meter or app to track real-time consumption.
2. Take Advantage of Time-of-Use (ToU) Tariffs
Shift heavy usage (laundry, air-conditioning, charging devices) to off-peak hours. (Weekdays: 10:00 PM – 8:00 AM, All day on weekends and public holidays.)
3. Invest in Energy-Efficient Appliances
Switch to LED lighting, inverter air-conditioners, and energy-rated refrigerators. These upgrades may reduce your total bill significantly over time.
4. Consider Solar Energy
Installing solar panels under the Net Energy Metering (NEM) scheme can help offset your energy consumption and stabilize long-term electricity costs.
5. Claim Efficiency Rebates
If your usage stays below 1,000 kWh, you may be eligible for energy efficiency rebates of up to 25 sen/kWh.
Final Thoughts
The new TNB tariff and SST structure may seem technical, but its impact is real especially in the context of homeownership costs, rental yields, and tenant affordability.
Whether you’re buying, renting, or investing in property, understanding how electricity charges work is now more important than ever.
As utility bills start playing a bigger role in real estate decisions, staying informed and energy-smart will give you a clear edge.
Frequently Asked Questions (FAQ’s)
When will the new TNB tariff and SST changes take effect?
The new tariff structure and SST changes will apply starting July 1, 2025.
Who will be charged SST on their electricity bills?
Households consuming more than 600 kWh per month will be subject to 8% SST on their electricity bills.
How will the new TNB tariff impact property buyers and renters?
It may increase monthly utility costs, leading to higher homeownership expenses and potential rent increases.
What is one way to reduce electricity bills under the new tariff system?
Shifting electricity use to off-peak hours through the Time-of-Use (ToU) scheme can help lower bills.
Looking to invest in property or buy your dream home? Connect with our expert agents today to discover the best and most affordable options tailored to your needs.
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