January 18, 2018By Rental Authority

This is an informative guide regarding the formal procedures for tenants looking to rent a condo residential property in Singapore.

It is advisable that you enlist the services of a real estate agent, especially if you are still unsure of the procedures you need to go through.

However, this guide should at least be able to give you an idea of what to expect.

Renting from a Landlord

1. Letter of Intent

A Letter of Intent is a formal letter presented by a tenant to a landlord, proposing an offer to rent a residential property. If the landlord signs the letter, it is taken as an official sign of acceptance.

The letter should dictate the tenant's intention to rent the property and his or her conditions. These conditions would most likely have been agreed on between the landlord and the tenant prior to the preparation of the Letter of Intent.

A term of lease, as depicted in a Letter of Intent, can range from 12 months to 24 months, with an option for renewal upon expiration. However, this is subject to any changes made to the rental price by the landlord, based on prevailing market rates, and the tenant may be required to give two to three months' notice in advance to the landlord if he or she wishes to renew it.

The standard term of lease in Singapore lasts for 12 months and most landlords will not accept a shorter lease period.

The first deposit made by the tenant, also known as a good faith deposit or a booking deposit, usually amounts to one month's rent. When a landlord accepts the deposit, and has signed a tenant's Letter of Intent, he or she has essentially promised not to offer the property to lease to other prospective tenants until a Tenancy Agreement has been signed.

After the Tenancy Agreement has been signed, the deposit can be kept either as payment for the first month's rent or as a security deposit.

A security deposit is a deposit made by a tenant after a Tenancy Agreement has been signed. It is kept by the landlord and is only returned to the tenant when his or her term of lease expires.

While in the safekeeping of the landlord, the security deposit is not subject to any interest rate and should be refunded to the tenant interest-free.

However, the landlord reserves the right to deduct any expenses incurred should a tenant breach his or her contract or cause damages to the inventory. For a standard term of lease, the tenant is required to make a security deposit amounting to one month's rent. For a 24-month term of lease, the security deposit is equivalent to two months' rent.

The monthly rental price of the property should also be stated in the Letter of Intent. Other conditions or terms which should be stated explicitly in the letter include the level of furnishing, intention to sublet and occasionally, the ownership of pets, if any.

It is important to agree on these details with the landlord beforehand, and obtain his or her written approval of the additional requirements in order to avoid the possibility of a misunderstanding taking place later.

Expatriates should look into including an expatriate clause to protect themselves in the event that they are no longer employed in Singapore or are transferred to another country. This clause should allow an expatriate tenant to terminate the contract after a period of 12 months, as long as two months' notice has been given.

This will also restore to them their security deposit. However, expatriate tenants should take note that this clause is only accepted if the term of lease is longer than a year.

A Letter of Intent should also carry a clause specifying an expiration date. If a landlord does not sign the Letter of Intent within a certain period, the letter will expire and the landlord will then be required to return the booking deposit immediately.

2. Tenancy Agreement

A Tenancy Agreement is usually prepared by the landlord, or his or her property agent. It dictates the landlord's obligation to lease the property to a tenant, and both the tenant and the landlord are required to sign the agreement.

The Tenancy Agreement is, in essence, a far more detailed version of the Letter of Intent. It is advisable to use the standard form of the Tenancy Agreement.

Any legal fees incurred during this process should be the responsibility of the tenant. However, if there are no amendments to be made to the landlord's Tenancy Agreement, there should hardly be any legal fees incurred.

The tenant is also required to provide the landlord with a copy of his or her passport and identification card or employment pass, if he or she is a foreigner. It is necessary for the landlord to verify that the tenant is allowed to stay in Singapore as the landlord will be deemed to have committed an offence if he or she rents out residential property to illegal immigrants.

Upon signing the Tenancy Agreement, the tenant must pay the sum of the first month's rent and the security deposit, less the booking deposit made with the signing of the Letter of Intent.

Some things tenants should look out for in a Tenancy Agreement are:

a. Tenant's identification details

b. Landlord's identification details

c. Terms of payment

This includes details such as the date the rent must be paid by for every month and the mode of payment.

3. Security deposit

This concerns the amount that is paid for every standard term of lease.

4. Inventory of contents

This is basically an inventory list, which is a supplement of the Tenancy Agreement. The inventory of contents lists all furniture and fittings in the rental property as they are in their present condition.

It has to be signed by the tenant when he or she moves into the rental property, as an indication that the landlord has provided the furniture and fittings as stated in the inventory of contents, and signed by the landlord will sign this list when the tenant moves out.

5. En-bloc

If the tenant is renting a housing unit in a condominium or a private apartment, there might be an en bloc clause to protect the landlord from the necessity of compensation in the event of early contract termination.

6. Termination of lease

This concerns expatriate clauses. If an expatriate clause, also known as a diplomatic clause, is stated, a reimbursement clause could be added. This ensures that the tenant, if he or she is an expatriate, will have to reimburse the landlord some part of the commission fees he or she has paid to his or her agent.

However, the Tenancy Agreement does not generally have this clause because the rental property might be sold during the lease period, during which, the tenant will simply continue to pay rent to the new owner because the new owner will still have to honour the existing Tenancy Agreement.

The standard form of the Tenancy Agreement does not consist of any clause pertaining to the subletting of the rental property, or for allowing pets to live in the rental property.

These details are subject to the approval of the landlord. However, the tenant does not need to negotiate these details if he or she has an agent, as the agent would have already negotiated these clauses on his or her client's behalf.

Also, the agent will usually take care of other details on the tenant's behalf, such as power supply, water connections and the home telephone line, as landlords do not normally provide these.

c:propertyguru