Singapore Rental / Leasing Procedure
Appended is a guide on Singapore Rental / Leasing Procedure. If you would like to know more, please give us a call and we will be happy to assist you.
I) Letter of Intent (LOI)
Tenants submit a Letter of Intent with their business profile report (purchased from ACRA) to show their interest in the premises and begin initial negotiations with a Landlord.
Landlords would be able to understand the background of the potential tenant in terms of business nature, financial stability etc.
II) Letter of Offer (LOO)
The Letter of Offer is issued by the Landlord after both parties have agreed on the principal terms. LOO outlines the general terms based on the Tenancy / Lease agreement. The LOO is often accompanied with a draft Tenancy / Lease agreement. The Landlord usually allow the Tenant 7~14 days to sign the LOO and return together with a non-refundable deposit. In most cases, the LOO is a legally-binding document.
III) Tenancy / Lease Agreement (TA)
The Tenancy Agreement is issued after the LOO has been signed. The Tenant would have 2~3weeks to sign this document. Standard Tenancy Agreement is usually prepared by the Landlord’s solicitors and they would not want too much variations to it. It is unlikely to have major changes to the Tenancy agreement. It is recommended all tenants seek professional advice from local lawyers who are familiar with Landlord and Tenant legislation in Singapore, to review the terms of the Tenancy agreement.
IV) Handing Over the Premises
After the Tenant has signed all documentation and all monies (Security Deposit + Advance Rental + Stamp Duty) have been paid up, the Landlord will hand over the premises to the in-coming Tenant on the agreed Handover date.
Glossary
Lease Term
Common lease term would be 3 years but 2 years lease term are popular in the current market. Generally, Landlords are reluctant to sign a lease of more than 3 years although longer lease term of 4 years or more are possible too. Landlord will usually insert a rent-review clause in the Tenancy Agreement for longer lease periods.
Renewal Option
The standard renewal option would be 1~3 years. A clause such as “renewal rental rate at the then prevailing market rate mutually agreed by both parties” is common in the Tenancy / Lease Agreement.
Tenants leasing big / multiple floors area may negotiate to put a cap on future rental increase. Generally, Tenants with smaller space never enjoy this privilege.
Gross Rental
Office rental are quoted in per square foot / square metre per calender month. It includes 2 basic components, base rent and service charges (excludes 7% GST which is usually payable).
Rental is payable 1 month in advance, although quarterly payments can be done.
Service Charges
Service charges are levied by the Landlords for costs such as property tax, central air-conditioning, maintenance and management of common area and infrastructure of the building.
Such service charge usually range would be from $0.50~1.40psf and this might vary during the lease term. The exact figure would be determined in the Tenancy agreement.
Security Deposit
Landlords generally require a Tenant’s paid up capital to be of 6 months rental equivalent or$100,000 to qualify for 3 months deposit. Otherwise the deposit might go up to 6 months of the monthly rental.
Administrative / Legal Fees
The in-coming Tenant is normally responsible for the cost of preparation, completion and execution of the lease documentation. If the Landlord has its own in-house legal department, the cost of legal fees might be waived off.Stamp Duty Fees
The in-coming Tenant has to bear the costs of stamp duty pertaining to the lease documentation. An estimated guide would be 10% of the monthly rental for a standard 3years lease.
Rent Free / Fit-out Periods
Usual practice by Landlords is to give 1 month’s rent free period for the fitting out of a bare condition unit. For larger space, longer fit-out periods can be allowed by the Landlord. Fitting-out periods are normally outside of the lease term.
Reinstatement
All Tenants are required to reinstate the leased premises to the original bare condition at the expiry of the lease term. If an in-coming Tenant wishes to take-over the ‘as-is’ condition of the premises, then reinstatement may be waived by the Landlord. Reinstatement would normally take 2 weeks, and an average cost would be from $6~11psf.
Air-Conditioning
Central air-conditioning common operating hours
Mon~Fri 8am~6pm; Sat 8am~1pm
After office hours could often be arranged through:
1. Extension of central air-conditioning on hourly basis if sufficient notice is given to the management. Charges are likely between $30~70 per hour.
2. Fitting your own air handling unit and tapping into the Landlord’s chilled water supply. Costs are normally charged as per ton of chilled water. Some Tenants install their own split unit/condenser, however not all building management will allow external fittings to their buildings.
Telecommunications & Utilities
Tenants would have to set-up an account with the relevant service provider for telecommunications and pay for the services incurred.Electricity is normally supplied to the buildings. Tenants have to set-up an account with the relevant service provider and pay for the consumption in the premises, which would mainly be towards lighting, VRV air-conditioning etc.
Maintenance
Tenants are only responsible for internal repairs excluding structural items. Exterior repair and maintenance, eg: Lift servicing and maintenance, are under the Landlord or Building Management’s reponsibility.
Car-Park
Tenant are allocated car-park lots based on the size of space to be leased. An average ratio would be 1:2000sqft (figure varies). Allocated car-park lots monthly charges are payable by the Tenant.
