- Following is a brief explanation of the rental procedure. Once you have found a property you like to rent, and the landlord has verbally accepted your offer. The formal offer is made in the form of a letter of intent.
- The landlord officially accepts your offer through the signing the “letter of intent”. Your agent or the landlord’s agent is the one preparing the documents required for the rental.
- This “Letter Of Intent” is a short proposal from you to the landlord to rent the apartment with a summary of the verbally agreed terms. With the signing of the document, the landlord accepts the conditions. Together with the letter of intent, the tenant gives the landlord a one month rent as good faith consideration.
- Typically the Letter of Intent specifies the following:
- Usually 24 months (but may be 1 to 3 years or other mutually agreed periods), with optional renewal of another 12 or 24 months – however not necessarily with same rent. Generally, landlords are not keen to rent less than 12 month and the tenant may have to pay premium for shorter term lease.
- The date when the lease is supposed to start. Generally, landlords are not keen to start a lease too far in the future. Often leases do start immediate, or after less than 1 month time.
Good faith deposit
- Usually is equivalent to one month rent. If the landlord signs the Letter of Intent and accepts the deposit, the landlord undertakes not to lease the apartment to someone else. When the tenancy agreement is signed, the good faith deposit constitutes part of the first month rental or security deposit.
- The amount of security deposit is normally stated in the Letter of Intent. It is payable only with the signing of the Tenancy Agreement. Typically – it is one month rent for every 12 month of lease. At the end of the lease, the security deposit is to be refunded without interest. The landlord however reserves the right to deduct from the deposit all costs, damages and expenses arising from the tenant for breaching any of the covenants stated in the Tenancy Agreement.
- e.g. Diplomatic Clause, Furnishing etc. The Diplomatic clause is to safeguard the tenant in the event the tenant is no longer employed. Typically it states that you can terminate the lease after 12 months by giving 2 months notice. The ‘Letter of Intent’ may also state that the property is leased furnished or partially furnished. You should also state in the ‘Letter of Intent’ if you are planning to have pets in the property. Standard tenancy agreement states that this is subject to landlord’s written approval, and you may want to agree this beforehand in order to avoid problems later.
Expiry of ‘Letter of Intent
- The Letter of Intent has a clause that specifies a period within the landlord has to sign it, or it otherwise expires. In case no agreement can be reached or expiry, the landlord has to return the good faith deposit back to the prospective tenant immediately.
- The ‘Tenancy Agreement’ is a binding contract to lease the property, signed by both, tenant and landlord. The ‘Tenancy Agreement’ will take over items from the ‘Letter of Intent’, but in more detail. It is advisable to use the standard tenancy agreement provided by the agencies as a template. At this point you will need to furnish the landlord with a copy of your passport and employment pass or Identity Card (IC). The landlord respectively the landlord’s agent will need to check that you are eligible to stay in Singapore. At this point the security deposit and the first month’s rent is payable, less any good faith deposit given earlier with the ‘Letter of Intent’.
You should check at least the following in the Tenancy Agreement:
Tenant’s complete details
- name, address, ID details
Landlord’s complete details
- name, address, ID details
- including when the rent is due and how it is to be paid
- start / end dates
- should be one month’s rent for every 12 months of lease
- normally this is included in the Diplomatic Clause. I may be accompanied by a reimbursement clause. The latter states that if you exercise the Diplomatic Clause, you will have to reimburse part of the commission the landlord had paid to his/her agent – pro-rated to the remainder of the lease term (for example, if you leave 2 months before the end of a 24-month lease, you will pay the landlord 2/24 of the commission he/she paid to the agent).
- Your agent will guide you through all legalities and negotiate on your behalf. Of course you should be aware of the basic responsibilities as a tenant, particularly as the Singapore law may be considered favoring landlords. E.g. in case the tenant fails on rental payments, the landlord may get a court order to re-possess the property and/or seize and sell goods inside the property to recover arrears in rent and legal costs. In other countries, getting rid of this kind of tenants might take considerably longer.
- (per 22 Feb 2014) The tenant is obliged to pay stamp fee to the relevant government body (to make the tenancy agreement a legal binding document). Usually the tenant’s agent will do the administration for you. The fee/duty is based on the value of the rental.
- A) If the average annual rent (AAR) is SGD 1,000 and below, there is no stamp duty payable.
- B) If the average annual rent (AAR) exceeds SGD 1,000 :
- Lease period of 4 years or less, the stamp duty payable is 0.4% of total rent for the period of lease.
- Lease period of more than 4 years or any indefinite term: 0.4% of 4 times the AAR for the period of the lease.
- Example: 2 years lease for S$5,000 rent per month; stamp fee is S$ 5,000 x 24 x 0,4% = S$ 480,–
Inventory / Moving In
- When the property is taken over, your agent will go through the place and verify (or create) the inventory inclusive of furniture and fittings and state the present condition. This inventory list will be signed and serves as reference at checking out later. For items not deemed to be in order it is advisable to take photos, or ask the landlord to fix them right away. This can potentially avoid problems when you are moving out.
- it is recommended that, together with your agent a “pre-inspection” is done prior to the actual moving out. This helps to verify the condition of the property and possibly rectify things. Also to make sure – if it is in the tenancy contract – that aircons are serviced, curtains are dry-cleaned (keep receipts) and the place is clean. It should be avoided that a landlord exercises his rights to deduct expenses from the deposit. It would make more sense for you to fix a small item (e.g. changing a light bulb) rather than the landlord sending an electrician.
- Although commission is negotiable, it is common practice that commission is a full month’s rent for every 24 months of lease. This commission is paid by the landlord. With two agents involved, the tenant’s agents will split the landlord’s commission based on their mutual agreement. Above commission sharing practice is valid for rentals above S$4,000.
With S$4,000 and below both the landlord and tenant agents, collect commission from their respective sides
- In any case however, the agent may not collect commission from two parties (e.g. landlord and tenant). The newly formed governement body CEA (Council of Estate Agents) does not stipulate or contradict above commission practices, however emphasizes that the party who engages the services of an agent should pay for it.
- For your electricity and water / gas needs Singapore Power Services (SP Services) requires you to pay a deposit before they will turn on the service. The deposit will be reflected in your first bill. The deposit currently varies, depending on your residency status as well as what kind of property you are renting. For a foreigner renting a private apartment, the deposit required is currently set at S$500. Please check SP Services website for more details-