Tenancy Agreement in Singapore: 3 Facts You Must Know

17/06/2019

Tenancy Agreement in Singapore: 3 Facts You Must Know

 

Tenancy Agreement in Singapore: 3 Facts You Must Know

 

A tenancy agreement is a contract between the landlord and the tenant, which states in print the terms and conditions of tenancy: the tenant’s period of stay within the landlord’s property. Other than the security deposit, this is the next most important item in any rental transaction between a tenant and a landlord in Singapore.

Before you sign off on—or create—a tenancy agreement in Singapore, here are three facts to note.

Free Templates Can Be Found Online

Yes, there are free templates available online. Here is one from the Consumers Association of Singapore (CASE), a non-profit and non-governmental organisation. With such templates, landlords do not have to splurge on lawyers to draft tenancy agreements; and first-time tenants can also get an idea of what a tenancy agreement should look like.

According to PropertyGuru, here are typical details that must be included in a tenancy agreement:

  • Full name and address of both Landlord and Tenant

  • Address of property to be rented

  • Date that the agreement is being signed on

  • Start date of tenancy

  • Service address of both Landlord and tenant

  • A note if tenant is under age 18

  • Rental amount and payment frequency

  • Bank account number or place for rental payment

  • Any applicable fees such as agent commission

  • Inventory list of all the items in the rental property

If the free template you are using does not contain any of the above, be sure to add in whatever is missing. And if you can afford it, get a lawyer to review your wording of the added-in details.

 

Defines Rental Duration and Security Deposit Value

As a contract, the tenancy agreement naturally specifies vital details concerning both parties (i.e. landlord and tenant). Perhaps the two most important ones are rental duration and security deposit value.

All tenancy agreements put in writing your rental duration. In Singapore, this can span from six months to two years. In some cases, the rental duration can be longer than two years, especially for rental properties in high-end districts such as Orchard Road. 5 Most Expensive Private Homes to Rent in Singapore.

Additionally, every tenancy agreement stipulates the amount of money that a tenant must pay as security deposit to a landlord before the move-in. In Singapore, security deposits are usually worth 1–3 months' rent. Landlords and tenants may agree to varying values for the deposit, but ultimately, the value must be in black and white to serve as tangible proof of the agreement.

Without the tenancy agreement, any rental would fall apart. Think of it as the backbone that upholds the rights and responsibilities of both parties.

 

Early Termination Clauses Possible

The Diplomatic Clause, which allows early termination of a lease, should not be overlooked or underrated.

Given that most tenants in Singapore are expatriates, this type of clause can be very helpful for those who may get transferred to another country for work at the drop of a hat—tenants who work as diplomats, for example.

By including such a clause in the tenancy agreement, these expatriates can safeguard their circumstantial interests with the legal wiggle room provided by the possibility of early lease termination. They would not face that huge a financial penalty (compared to arrangements without the clause) for prematurely ending their tenancy.

 

Here are some caveats:

  1. Two-month notice period is typically written into the clause.

  2. Minimum stay of 12 months is also typically written into the clause.

  3. Proof of early termination must be presented.

  4. Reimbursement Clause can be requested by the landlord.

 

The Reimbursement Clause usually accompanies the Diplomatic Clause to protect the landlord’s interest with regards to the property agent’s commission. It requires the tenant to reimburse the landlord for the commission at a prorated amount.

Importantly, the Diplomatic Clause is typically written to be applicable to the tenant only. Also, if the tenancy agreement does not explicate which party can exercise the clause, the general understanding is that it may be used by the tenant only.

To sum up, the three facts above are just some things to look out for when signing a tenancy agreement in Singapore. The agreement may be the "rulebook" that both parties use as reference to avoid conflict, but it is not always absolute. Both parties can certainly negotiate the terms beforehand to strive for a transparent and pleasant relationship during the tenancy.

 

Have a smooth rental journey with Sing-Guarantee today. We are the island-nation's first innovative alternative solution to security deposits, to make renting in Singapore a worry-free experience. Read the rest of our blog for more rental tips!

 

 

Copyright © 2018 SG, Sing-Guarantee Pte. Ltd. All rights reserved.