Lease Process

In Singapore it is common practice to have two realtors, each representing a different party, i.e. one for the landlord and another for the tenant. It is the realtor’s responsibility to find and negotiate the best deal for his/her Client.

The process begins with the tenant’s realtor receiving information on the housing criteria, i.e. budget, type of housing, size, facilities, etc. Realtors shall base on the housing requirement, client’s family profile to start the search. A preliminary property list will be shared to the client for first round review and comments. This helps the realtor to understand the housing needs and eliminate those properties which are not preferred. Hence, on actual viewing days, the Realtors will have a better knowledge to line up the properties according to the tenant’s preference of the housing needs.

Viewings may take 2-3 days with the final day being set aside for the shortlisted properties. Once the assignee has selected a property, the realtor will prepare a Letter of Intent (LOI). This Letter of Intent will have the tenant’s information, the rental price offer, start date, length of the lease, terms and conditions and list of requests from the assignee. There is usually a small negotiation process at this stage. If both parties do not come to an agreement over the LOI, Client may consider their second option. Realtor will encourage Client to have a second choice as a back-up plan should the first option fall
through.

When the LOI is agreed and signed, a holding deposit shall be payable to the landlord in order to secure the property. Upon acceptance, the landlord is obligated to lock in the property for the Tenant and reframe from showing the property to other potential tenants. The holding deposit is usually the equivalent of one month’s rent which will be used as the first month’s rent once the lease is formalised. It is a duty of Tenant’s realtor to do a thorough ownership search before raising the holding deposit payment to the Landlord.

The Tenancy Agreement (TA) is the final contract with legal terms and clauses to supplement the Letter of Intent. It is a practice that Landlord will be the party who provide the TA template. However, most Landlords are open to accept the TA template prepared by the Tenant and/or his Company. Noted that for corporate landlords, they have their own TA template to adopt. TA review process is usually 7 to 10 days from the acceptance of LOI. In the event if both Tenant and Landlord could not come to an agreement on the TA, the lease shall be voided and the holding deposit paid to the Landlord shall be refunded.

When both parties have agreed and signed the Tenancy Agreement, the tenant will have to pay a security deposit equivalent to one month’s rent for a 1-year lease and two months’ rent for a 2-year lease. The deposit is held by the landlord for the duration of the tenancy without interest. It cannot be used to offset the final month’s rent. At the end of the tenancy, if rectification work is required, the landlord may use some of this deposit to cover the cost. The remainder of the deposit will then be returned to the tenant within 14-30 days. Examples of rectification costs would include dry cleaning of curtains, final servicing of all air conditioning units, re-polishing of wood floors if there is severe damage, touching up paint work, replacing light bulbs, professional cleaning of premises, etc.

To legalise the contract, stamp duty will be payable to the Inland Revenue Authority of Singapore. This is a one-off payment and the amount depends of the monthly rent and length of the lease. The higher the rent, the higher the stamp duty. This is payable by the Tenant.

An important point to bear in mind when looking for a property, the best time frame to conduct the homesearch would be 4-6 weeks before the commencement of the lease. Any earlier could lead to disappointment for the assignee. Landlords tend not to wait more than a month before the start of the lease. If the assignee finds a suitable property, but only needs it in 3 months’ time, the landlord is unlikely to hold the property.