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RENTING A PROPERTY IN SINGAPORE: WE FIND OUT YOUR RIGHTS AND OBLIGATIONS AS A TENANT

renting a property in Singapore, rights and obligations as a tenant, Singapore

Renting a property isn’t always straightforward. We ask property expert Deborah Law from Expat Realtor about your obligations and rights as a tenant.

EL: What are the guidelines for security deposits?

DL: The amount depends on the length of your Tenancy Agreement (TA). It is based on the equivalent of one month’s rent per year of lease. However this is always negotiable. For instance, a one-month security deposit on a one-year lease doesn’t always give owners the security they might need, especially if it is not a company lease. A three-month deposit on a three-year lease, however, is lot of money to have tied up without interest for three years.

The security deposit, unlike in some other countries, it is kept in the owner’s personal account. It will be refunded usually within seven days of handing back the property, minus the cost of any repairs.

 

renting a property in Singapore, rights and obligations as a tenant, Singapore

EL: What is the Letter of Intent (LOI)?

DL: The LOI shows your intention to enter into a contract to lease the property. It is subject to the signing of the TA, and the TA should equally incorporate the requests of the LOI. A deposit of one month’s rent (which becomes the first month’s rental payment) is handed over with the signed LOI as a “good faith deposit”. Once this has been accepted by the owners, they will take the property off the market, and both parties can start negotiating the TA.

Should the tenant pull out of the agreement before signing the TA, for any reason other than both parties failing to agree on the TA, then this deposit is forfeited. Should the owners pull out of the agreement, they must refund the deposit within the time specified in the LOI, usually within three to seven days.

It is important that tenants ensure that everything they want is written in the LOI. Once it has been signed, it is almost impossible to request anything additional. We recommend that you go for a second viewing before submitting an LOI to check for details that may have been missed in the first viewing. Check for things like rusty hobs, mouldy fridges and washing machines, taps that need replacing, whether hot water is supplied to the kitchen and the maid’s shower, etcetera. Examples of some common requests put into the LOI are having the property professionally cleaned (including air-cons and electrical appliances, and having it re-painted or touched-up).

It is also wise to specify if you want neutral curtains, new appliances, or such, otherwise you might end up with something that is not to your taste or second-hand. Similarly, if you are not happy with the owner’s favourite chandelier or lighting, you may ask for it to be removed, or you can store it away until the end of your tenancy.

 

renting a property in Singapore, rights and obligations as a tenant, Singapore

EL: What is meant by partially furnished?

DL: A partially furnished home includes curtains, washer, dryer, fridge-freezer, oven and hob. As ovens are not common in Singapore, make sure you specify what size and type you want, otherwise you may receive a convection microwave. If there isn’t space to have an oven built in, you can request for a stand-alone one.

EL: There is often confusion over agent commissions. Can you clarify the current guidelines?

DL: The rule of thumb for properties rented at $2,500 per month or less is that the tenant and owner pay their respective agents separately. Commission on properties over $2,500 per month are paid by the owner. Note that if you are taking a one-year lease, the commission is halved, (because the one month’s rental paid as commission is based on a two-year lease), so a $4,500 property brings the commission below the $2,500 mark, hence you will be responsible for paying your agent.

 

renting a property in Singapore, rights and obligations as a tenant, Singapore

EL: What is the diplomatic clause and why is it a good idea to include it in your contract?

DL: This clause protects tenants who are not Singapore citizens by allowing them to break the lease earlier than the stated rental period, should they be transferred out of Singapore permanently by their employer, cease to be employed, or for any reason be ordered to leave Singapore. Death may be included too as this does not automatically terminate the contract. Take note, however, that documentary evidence of such a transfer, cessation or order will be required.

Tenants often misunderstand the diplomatic clause and think that they can break their lease by giving a two-month notice (for whatever reason) at the end of the lease period. Sometimes they have already committed to their new property before they realise their mistake. Ask your agent to check through your existing TA if you are in any doubt.

The rule of thumb is six months per year of lease. So, on a two-year lease, the tenant can give a two-month notice after twelve months, thereby taking it up to a minimum stay of 14 months. Be very careful to specify whether the diplomatic clause is carried over if you renew or extend the lease.

It may be possible to include a six-month diplomatic clause in a one-year lease (with an additional two-month notice period) but this isn’t always an attractive option for an owner, especially in a declining market. The owner may wonder if you are on the way out from your job, and decline the tenancy agreement completely.

 

renting a property in Singapore, rights and obligations as a tenant, Singapore

EL: What can you do if there is construction work being carried out near your home and it is causing noise pollution?
DL: Wherever possible, we try to include the “major construction” clause in our contracts. The clause states that if there is any major construction that comes within 100 metres of the property within the term of the tenancy agreement, tenants have the right to cancel the agreement by giving the owner a notice two or three months prior. Alterations and additions do not constitute major construction. Unfortunately, many owners refuse to accept this clause in the contract.

However, if you don’t have this clause and you want to complain about noise from a construction site, you can always call the National Environmental Agency. They will log your complaint and send an agent over to the construction site to investigate. Unfortunately, if the construction site is government owned, there isn’t any regulation of working hours. If it is privately owned, building work can be carried out seven days per week from 7am until 7pm (up to 75 decibels) but at a reduced noise level on Saturdays and Sundays (60 to 65 decibels). You can call the NEA Hotline at 1800 2255 632.

 

renting a property in Singapore, rights and obligations as a tenant, Singapore

EL: What can you do if the owner refuses (without good reason) to hand back your deposit? Many Western countries have tenancy tribunals to help with such disputes. Is there anything similar in Singapore?

DL: There is no such system here, and they would have to seek private legal action. Fortunately, none of our clients have ever faced such a situation that we are aware of. To prevent too much money being deducted for repairs at the end of the tenancy, it is a good idea for tenants to take photographs and write down every piece of damage in the inventory list prior to moving in. Also, be very careful that you go through the house in a similar fashion with the removal company to make sure that any damage caused by their employees is fixed by them. Prior to hand-back, I encourage tenants to get their own handyman (husband!) to fix loose cupboard handles, replace light bulbs, keys, basin plugs, remove glowing stars from the kids’ ceilings, and see to those other little items that the owner’s contractor is going to charge to fix up.

EL: Is there anything that might put people off renting an apartment?

DL: Sometimes it is difficult to see the potential in a property. Some people are put off by burglar bars on windows, for instance. They are quite common in Singapore, but they are actually removable. If the owner refuses to take them away, you can store them yourself. The same goes for unattractive light fittings.

 

renting a property in Singapore, rights and obligations as a tenant, Singapore

If the price is right, don’t be put off by old bathrooms and kitchens that the landlord is unwilling to fix up. You can negotiate to update these at your expense – highly recommended if you are here for the longer term.

EL: Do you have any standard clauses in your contracts that help to protect the tenant?

DL: Apart from the usual ones, it is good to be aware of the “major construction” clause where applicable, and also an “en-bloc” clause (although this isn’t essential in the current market), which states that if a property goes en-bloc, the tenant gets a notice of three to six months before having to move out. The “sale subject to tenancy” clause ensures that a purchaser of the property is subject to the tenancy agreement.

Since the 70’s the Singapore Government has imposed restrictions on foreigners purchasing private residential property. The idea is for Singaporeans to retain a stake in their country by keeping property prices affordable whilst also attracting foreign talent that make an economic contribution to Singapore to purchase properties for their own occupation. What classifies restricted properties?

Vacant residential land, landed property which include detached, semi-detached, terraced (including linked houses or townhouses) and landed property in strata developments which are not approved condominium developments under the Planning Act(usually these are cluster housing such as Binjai Crest and The Teneriffe) . However please note that some townhouses, semi-d’s and bungalows can be found, albeit rarely, in condominium projects eg: Casabella and Duchess Crest, and therefore foreigners to do not require approval. Foreigners can purchase Freehold or Leasehold. While foreigners are free to purchase apartments and condominiums they do however need permission to purchase all the units in a condominium or apartment block.

The maximum area of vacant residential land that foreigners can purchase is 15000sqft of land after which this constitutes a Good Class Bungalow and these are conserved.

Anybody who is not a Singapore Citizen, Singapore Company, Singapore limited liability partnership or Singapore Society constitutes a Foreign Person.

Permission to purchase must be sought from the Land Dealings Approval Unit under the Singapore Land Authority (SLA). Application forms can be found online at http://www.sla.gov.sg/htm/ser/ser0307.htm#d. Applications take approximately 30 working days and there is a non-refundable application fee of $520. The main criteria they look for is that you are PR and also the amount of economic contribution you make to Singapore, which includes your academic, technical and professional qualifications, and any investments in the type of industry or services required by Singapore.

If you do not yet have a specific property in mind I would encourage you to apply for Approval in Principle (AIP) first which expires after 6 months and a fresh application is needed after that. If you put an Option to Purchase on a landed property without AIP some sellers are not keen and if they do accept your offer it could well be subject to another offer coming in, hence protecting the seller from the possibility that your application is refused. On the other side of the coin you need to protect your interests by inserting a clause that the offer is subject to government approval. Without this clause the Option to Purchase (OTP) and Sales and Purchase Agreement are invalid under the Residential Properties Act and the LDAU cannot process the application. If the application is not approved you can appeal to the Minister within 3 months of receiving the letter of non-approval. Other restrictions include that you must own the property for 3 years before selling and that you must use it solely for you and your family members own residence and not for any other purpose. Should you have to move overseas then permission must be sought to rent it while you are away. Renting without permission is in breach of the law and a fine of no more than $5,000 and imprisonment of not more than 5 years can be imposed.

If you are looking to build on vacant land or rebuild an existing home, carry out reconstruction, or do additions and alterations (A&A) you must let the authorities know at the time of application. You can find a list of works that do not need BCA (Building & Construction Authority) or URA (Urban Redevelopment Authority) approval on www.ura.gov.sg website.

On new builds or reconstructed properties, the minimum 3 years requirement before you can sell the property starts from the completion of the property, either when the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) is obtained, whichever is earlier, and this must be within 36 months of the approval being granted.

If you already own a restricted residential property and wish to sell it and purchase another one then approval must be obtained again. You must sell the existing residence before legal completion of the purchase of the new property, or if it’s still under construction, within 3 months from the date of issue or the TOP or CSC, whichever is earlier, or within 3 months of the date the seller delivers vacant possession of the property to you.

A restricted property can be bequeathed to a foreigner but on the death or the bequeather permission must be sought by the foreigner to acquire the estate and interest in the property, if this is not approved then the representative of the estate of the deceased will have to sell the foreign beneficiary’s share within 10 years of the date of the death of the deceased person.

For any further information or clarification you may contact Deborah Law , Director of Expat Realtor on 91713392.