What to look out for in Tenancy Agreements in Singapore

What is a tenancy agreement?

A tenancy agreement states the scope of the contractual relationship between landlord and tenant by stipulating each parties’ rights and duties in respect of the tenancy.

Tenancy agreements are vital for both landlord and tenant. They clearly set out each party’s rights and duties under the agreement in order regulate the leasing of the property.

Tenancy agreements therefore safeguard parties against the repercussions that come along with early termination of the tenancy by the other, especially in event of a tenancy dispute.

What terms should a tenancy agreement contain?

A comprehensive tenancy agreement will generally include the following terms:

1. Address of property;
2. Lease period;
3. Payment of rent and utilities;
4. Security deposit: amount which may be forfeited if the property has incurred damage that requires repairs, or if the tenant fails to comply with the terms of the tenancy agreement;
5. Additional fees such stamp fees and agent commission;
6. Diplomatic clause;
7. Use of premises;
8. Immigration status of tenant and occupiers;
9. Maintenance of premises and effects (for example, the maintenance of air-conditioners);
10. Tenant’s covenants: e.g. to pay rent, to keep in repair, permit landlord to view the premises, not to assign or sublet;
11. Landlord’s covenants: e.g. to provide quiet enjoyment of the premises, to provide premises fit for human habitation, and to not derogate from the grant;
12. Termination of lease;
13. Suspension of rent;
14. Notices;
15. Anticipatory breach;
16. Inventory

We will quickly go through these terms and discuss what are some things to note.

Lease period

Generally, leases in Singapore are for a period of 1 to 2 years. Take note that the Small Claims Tribunal hears cases for tenancy agreements of residential premises not exceeding 2 years, if you ever need to lodge a claim regarding your tenancy.

Security Deposit

There is variation in the amount of security deposit required because in the end it’s a matter of contract, but generally a lease period of 1 year requires a security deposit of 1 month’s rental, and a lease period of 2 years requires 2 months’ worth.

The security deposit is meant to offset the cost of repairing and replacing damaged property, if any, at the end of the rental period. The deposit cannot be used to offset rent during the lease, and this is sometimes explicitly stated in the tenancy agreement as well.

Remember to take note of the deadline for when the security deposit will be refunded after the end of the lease period. This should be stated explicitly in the agreement.

Payment of utilities

When renting an apartment, generally, utilities are not included and you have to set up your own account with the utilities provider. In this case, you pay the utilities company directly. When renting a room, however, utilities are usually included because the landlord cannot tell how much each person uses anyway.

Stamp duty and agent commission

Stamp duty is payable for tenancy agreements to the Internal Revenue of Singapore (IRAS). Essentially, it’s a tax on the document (physical or electronic).

For a typical lease with an Average Annual Rent of more than $1000 and a lease period of less than 4 years, the stamp duty is 0.4% of total rent for the period of the lease. Generally, the tenant pays for the stamp duty.

Diplomatic clause

A diplomatic clause allows the tenant to break the lease under certain conditions by giving notice, for example if the tenant is posted to another country. Generally, the tenant must show documentary evidence of his company transferring him to another country or that of his cessation of employment to invoke the diplomatic clause. If you are an expatriate, it doesn’t hurt to ask for one.

Maintenance of premises and effects

In most tenancy agreements, tenants are obliged to keep the premises in good condition. In some cases, it is written into the agreement that tenants are liable to pay for any repair and maintenance costs that fall below a certain amount, for example, $150. The landlord would still be responsible for repairing or replacing faulty big-ticket items, such as the refrigerator. Depending how the clause is written, the cost could be borne by the landlord, or shared.

In addition, tenants may also be liable to service the air-conditioners every few months, or to send the curtains for washing. If these tasks are not performed, the landlord could make deductions from the security deposit.

Landlord’s and tenant’s convenants

The landlord promises the tenant quiet enjoyment of the property. The landlord can’t be showing up to check on the tenant all the time. Most tenancy agreements oblige the tenant to co-operate if the landlord decides to sell the property and needs to get viewers in.

In the case of private apartments, tenancy agreements generally have to be respected even if the property changes hands. For HDB flats, it’s not possible to continue the lease once the property is sold as the new owner would have their own Minimum Occupation Period to fulfil.

Termination of lease

Most tenancy agreements set out several scenarios for the termination of lease. For example, if the tenant doesn’t pay rent, the landlord gets to terminate the agreement and re-enter the property. If the tenant needs to end the tenancy early, it’s usually a matter of negotiation with the landlord. In normal contract law, the tenant has to compensate the landlord for the loss of rental income under the rental agreement. However, the landlord also has a duty to mitigate his losses, i.e. by renting to someone else.

Inventory

Attached to the tenancy agreement is usually a list of items present in the property. Do take the time to verify the list and to take pictures of the items and also the condition of the property when you move in. Report any defects within the first 30 days. The security deposit is kept with the landlord (some other countries use escrow services), so it pays to be thorough in documenting the condition of the property.

For further enquiries regarding your tenancy matter, you can consider our Call a Lawyer service: