Lease agreement in Singapore: 5 things you must understand

The rental lease agreement is written in English, but so is Shakespearean literature or a James Joyce novel. Fact is, if you don’t speak legalese you’re going to be in a disadvantaged position when signing any contract. But even if we can’t put you through a law degree, we can give you a primer:

The Letter of Intent

The Letter of Intent (LOI) is the first step to renting. This is prepared by your property agent, and outlines your requirements to the landlord. Once the LOI is signed, you will receive the tenancy agreement – this is where you need to pay attention to the fine print, as it imposes some conditions on you.

A standard tenancy agreement will use the Institute of Estate Agents (IEA) document. You should speak to your agent about any changes or variations the landlord makes on this.

Keep an eye on the following:

1. Diplomatic clause in the lease agreement

This clause should be included if you are an expatriate. It allows you to break the tenancy agreement after you have stayed for a given amount of time (usually 14 months, if you have a two year lease).

In the event that you need to head home unexpectedly, this clause will allow you to end your rental agreement without incurring significant penalties. While this is included in the standard template, always double check to ensure it’s present in the lease agreement.

2. Security deposit

The security deposit is actually stated in the LOI, but it is payable upon signing the tenancy agreement. The deposit is usually one month’s rent for a one year lease. This sets the terms upon which the landlord can deduct money from your deposit, such as when you damage furnishings.

Ensure that the agreement states when the security deposit will be returned (e.g. 14 days, 30 days, and so on.) Remember that it’s a hassle to collect your security deposit after you’ve left the country, so see if you can negotiate for prompt recovery of it. So, it’s always better to get the security deposit mentioned on your lease agreement.

Did you also know, aside from normal payment methods like cheque, you can pay for the security deposit with your credit card via CardUp.co. This is especially beneficial if you do not have a large amount of cash on hand, or have not set up a local bank account yet.

3. Maintenance and repair liabilities

Under any section describing repairs and maintenance, check how much you are liable for. In a standard agreement, tenants are only liable for repair or maintenance cost not exceeding $100 to $150.

If the given liability is a lot higher, ask for justification. Abandon the deal if you feel such terms are unfair.
Also note the terms of reporting defects. In most cases, you should have up to 30 days to bring up defects such as bad plumbing, broken wall sockets, leaks, etc. The lease agreement of the contract should clearly state that the landlord is the one to deal with these issues.

4. Inventory of contents

This is a list of all the stuff in the house, such as microwave ovens, television sets, the refrigerator, etc. It’s tempting to get lazy here, but don’t – unscrupulous landlords can and do rip off tenants with the inventory.

You need to ensure that the items in the inventory correspond, and that they are in working condition when you move in. Also take note of the brand and model: unethical landlords may “discover” your microwave has been replaced with a cheaper version, and then demand you pay for it. So, better have an eye on the inventory while preparing your lease agreement.

5. Stamp duties

Your lease agreement must be stamped by the Inland Revenue Authority of Singapore (IRAS.) Like any country’s tax authority, they are devoted to the mission of ensuring that nothing is free. Visit their website to work out how much your specific stamp duties will cost; as a tenant, you are usually the one to pay this.

After you’ve forked out the money however, it is always the landlord’s responsibility to make sure the proper seals and stamps are in place. You should always get a proper receipt from the landlord, to prove your money went to paying the stamp duties.

It gets more complicated than this, but understanding these five points should put you on the right track.
Like it or not, you will probably be quite dependent on your property agent to double check the rest of the lease agreement. First time renters, especially, will find the agent’s fees well worth it.

Check out other rental related articles here: Tenant tips: How to up your negotiation game when renting in Singapore and Foreign tenant’s security deposit withheld by landlord – is there any truth to this?

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