Singapore housing rental agreement guide

Renting residential property in Singapore is often viewed as a daunting process by those who are unfamiliar with the process of renting various types of property, drawing up a rental agreement and all the other protocol associated with it. In reality, renting residential property in Singapore is a fairly simple and straightforward process, once you have decided on suitable premises.

The purpose of this guide is to help you become knowledgeable about the tenancy process and the common terms and conditions of any tenancy agreement in Singapore so you can handle this task with more ease.

Pre 'Tenancy Agreement Process' Considerations

Prior to finalising your decision to rent a particular property and signing the rental agreement, it is important that you look into the following factors of consideration.

• If you are planning to rent a Housing Development Board (HDB) flat or rooms within a HDB flat you must ensure that you are eligible to do so i.e. you must fall in any of the below mentioned categories:
  • Singapore citizens
  • Singapore Permanent Residents
  • Non-citizens legally residing in Singapore (holders of Employment Passes, S Passes, Work Permits, Student Passes, Dependant Passes, Professional Visit Passes, Long Term Social Visit Passes).
• If you are planning to rent a HDB flat wholly, you must ensure that the flat is approved by the HDB. You can request the flat owner to show you the written approval he/she has obtained from the HDB.

• For renting of rooms within a HDB flat, no approval from the HDB is required. However, the flat owners must continue to live in the flat during the period of subletting and comply with other subletting conditions.
• Renting private apartments, condominiums or landed houses does not require any approval as they fall under the category of private property.
• It is important that you visit the property you intend to rent and personally meet the owners to ensure that the person is the rightful owner. You are advised to request for any valid documentary proof of flat ownership, before you go ahead with the tenancy agreement process.
• Most tenants refer to classified advertisements in the newspaper or property websites. Most often these advertisements are published by real estate agents. It is advisable to go through a real-estate agent as he/she will ensure that
  • you find a property to suit your needs and budget
  • all the correct documentation is in place
  • you deal with the rightful owner
  • you get the best possible rental price by negotiating on your behalf with the owner/owner's agent
• You must be prudent and exercise caution while dealing with real-estate agents. Always collect the agent's business card and work only with those agents who registered with the Institute of Estate Agents (IEA), as they operate by a set of regulations. A simple and easy online search on http://www.iea.org.sg/ will help you verify if the agent is registered.
• Sometimes a property is represented by several agents. In such cases, it is advisable to approach only one agent and deal with him/her. If however, you find the that agent's services are not satisfactory, you can contact an alternative agent for the particular property.

Once you have clarified, that the property you are interested in is HDB approved (if approval is required) and that you are dealing with the rightful owner and a registered real-estate agent, you can go ahead with the tenancy agreement process.

Tenancy Agreement Process

As a common practice, the steps involved in negotiating and signing a tenancy lease agreement in Singapore include:

1. Submitting a Letter of Intent and paying a good faith deposit
2. Signing the Tenancy Agreement and paying agent fees (if agent fees is applicable) , first month's rent and the security deposit
3. Moving in

Letter Of Intent and Good Faith Deposit

Once you have identified a residential property that suits your needs, the lease negotiation process begins. Most tenants tend to deal with a real estate agent who liaisons between the tenant and landlord or the landlord's representing agent. Once you have decided to lease a property, you will have to sign the Letter of Intent, prepared by your real estate agent and pay a good faith deposit. The rationale behind submitting an LOI is to indicate that you are serious about renting the landlord's property. The good faith deposit is usually paid in order to secure the unit.

The Letter of Intent or LOI outlines:

• your intention to lease the property
• the monthly rental fee against which you intend to lease the property
• the intended lease duration
• requisitions for repair, renovation, furniture, appliances etc. and whether the rental fee is inclusive of these costs or if you will make an additional payment

The good faith deposit is a token deposit, usually one month's rent and is non refundable. Hence it is important to be absolutely sure on your decision to rent a particular property to avoid forfeiting the good faith deposit. The deposit will be absorbed in the security deposit or advance rental once the Tenancy Agreement is signed. Please be advised to make the good faith deposit payment only by cheque, payable to the owner of the property, and to avoid making any cash payments.

The LOI along with the good faith deposit will be presented by your agent to the landlord's representative. If LOI and good faith deposit is acceptable by the landlord, he will sign the LOI and return it to you and acknowledge receipt of the good faith deposit. This ensures that he cannot rent the property to anyone else and that you have secured the unit. However, if the land does not wish to lease the property to you, he must return the cheque and LOI to you.

Tenancy Agreement

Once the landlord accepts the LOI and good faith deposit, it is time to sign the Tenancy Agreement. The Tenancy Agreement in Singapore is normally a simple document, that usually spells out all terms and conditions. You are strongly advised to thoroughly read and completely understand all the terms and conditions in the tenancy agreement and clarify any ambiguities or questions before signing it. Some of the common terms and conditions include:

• Rental amount and due date for payment of rent - The common practice for payment of rent is usually an advance monthly payment, on the day of tenancy commencement and thereafter on the same day of each subsequent month.
• The value of security deposit paid - Most landlords in Singapore generally ask you to pay a rental deposit, usually one months rent for a one year lease and two months rent for a two year lease, prior to occupation at the time of signing the lease agreement. This deposit is refundable and will be returned to you at the end of your lease, provided there are no payment dues and the leased premises is left in the agreed condition. However, the lease security deposit will be forfeited on pre-mature termination of the lease.
• Lease duration, with or without the option to renew - The most common practice for duration of a lease agreement in Singapore is between one to two years. Upon the end of your lease term, the lease can be renewed for a similar duration if both you and your landlord mutually agree to do so. However, the rental value may vary depending on the market price prevalent at the time of renewal.
• Terms and conditions for pre-mature termination of lease - There are no standard terms regarding the pre-mature termination of lease. The terms can be drawn up in the agreement depending on what is mutually agreed upon by both parties.
• Diplomatic Clause or Escape Clause - Depending on the mutual agreement between the landlord and you, this clause may or may not be included in the rental agreement. The Diplomatic Clause or Escape Clause, as the name suggests, is a provision that protects the tenant in the event that he/she loses his job or is transferred overseas by his employer, by allowing him/her to break the lease by giving a one month notice period upon completion of one year. However, you need to furnish sufficient proof of relocation or job loss by providing a letter from the company. This provision is usually applicable only in the case of a two year lease. However there is no hard and fast rule and if the landlord is agreeable, it can also be included in a one year lease agreement.
• Inventory list - The tenancy agreement must contain a list of items that the landlord is providing for the tenants use in the property to be leased, such as furniture items or electronic goods etc. and their condition.
• Repairs and Maintenance Charges - Most agreements state the common practice which is, that the you must inform the landlord of any repairs to be done or if there is any damage or equipment malfunction within the first 14 days of moving in. Any minor repairs that arise after the first 14 days will have to be done at your cost for the first SGD 100 or SGD 150, depending on which amount is mutually agreed upon by both parties. You are responsible for periodic servicing of air-conditioners. The service period duration is usually on a quarterly or half-yearly basis and will be spelt out in the tenancy agreement.
• Payment of public utilities - Most residential properties are installed with the public utilities of gas supply, water supply and electricity. The tenant is responsible for the monthly payment of utility bills to the relevant suppliers. It is usually the tenant's responsibility to arrange for the installation of a telephone line, cable television and cable broadband Internet at his/her cost and thereby pay the monthly charges for usage.
• Conditions regarding sub letting of premises by the tenant - Generally, most landlords do not allow you to sub-let full or part of the residential premises to another party unless written consent is given by the landlord. The tenancy agreement usually contains a clause on the conditions of sub leasing.
• Stamp Duty payable - You are required to pay stamp duty to Internal Revenue Authority of Singapore (IRAS) once you have signed the rental agreement. Stamp duty will be computed based on the gross rent for the rental period and must be paid within 14 days from the date of execution if the document is signed in Singapore or within 30 days of its receipt in Singapore if the document is signed overseas. For stamp duty rates, click here.

For a quick reference you can view a sample tenancy agreement prepared by the Consumers Association of Singapore. Most tenancy agreements are prepared along similar lines.

Paying agent fees

Once you have signed the tenancy agreement, you will have to pay your real estate agent his commission or fees, if applicable. The common practice in Singapore regarding agent's fee is as follows:

• For rentals below SGD 2500, the tenant has to pay half a month's rent for a one year lease or one month's rent for a two year lease.
• For rentals above SGD 2500, usually the agent does not collect any fee from the tenant and recovers his commission from the landlord.

You are strongly advised to make payments only by issuing a crossed cheque payable to the real estate agency that the agent is representing. Make sure that your agent gives you a valid receipt acknowledging your payment. Maintain all documentation for your future reference.

Moving In

Once all formalities have been settled and the agreement has been signed, security deposit, one month's rental and agent's fees have been paid, the landlord will hand over the property keys to the tenant, who is free to move in on after the appointed date of moving in.

Once you move in you may have to arrange for opening a public utilities account (gas, electricity and water supply), arrange for the installation of a telephone line, and secure an Internet connection, if such services have not been installed by the landlord. Getting the above mentioned services is easy and uncomplicated. For more information, refer to our guides on opening a utilities account, getting an internet connection and getting a land line phone connection.

Tenancy Disputes

You are advised to carefully read and understand all the terms and conditions of the tenancy agreement to avoid any tenancy disputes in the future. However, should there be a dispute between you and the landlord on tenancy matters like amount of rental fees, payment or forfeiture of deposits, right to terminate tenancy etc., you can adopt the following approaches. First, try and contact the property agent who brokered the deal and seek his advice. If you are still unable to resolve the dispute with the landlord, you can approach groups such as the Consumer Association of Singapore (CASE) and Singapore Mediation Center (SMC), where most landlord and tenant disputes are resolved through Mediation or other forms of Alternative Dispute Resolution. Alternatively, you can approach the Small Claims Tribunal, but this would entail a time consuming process.

Other Related Topics

Singapore Branch | Singapore Subsidiary | Singapore Representative Office