TIPs On Rental
Every residential projects, there will have a mix groups of buyers/owners. From locals, to PRs to foreigners. Either buying for own stay or as a form of investment purpose.
To rent a place may be stressful and difficult at times, therefore the purpose of this Rental Tips, is to provide some basic knowledge regarding the rental procedures.
To proceed in transact a property and you need to prepare the following:
Letter of Intent
The Letter of Intent, LOI for short, is a letter proposing the Tenant's intention to lease and their requirements to the Landlord. You should take note of the following:
1. Diplomatic or Repatriate Clause
This clause is to safe guard the Tenant if in the event the Tenant is no longer employed, transferred to other countries, the Tenant can terminate the lease after 12 months by giving 2 months notice. Thereafter, the security deposit will be refunded to the Tenant. Please note that most landlords will only include the diplomatic clause if the lease is more than a year.
2. Goodfaith Deposit (booking deposit)
This is the booking deposit, usually the amount is one month's rent. After the landlord signed the Letter of Intent and accept this deposit, he cannot rent the property to other party. This deposit will become part of the security deposit after the Tenancy Agreement is signed.
3. Security Deposit
The amount of the security deposit is usually stated in the Letter or Intent. The standard practice in Singapore is usually one month's rent for every year of lease. It will only be payable upon signing of the Tenancy Agreement. When the lease term ends, the deposit will be refunded without interest. However, the landlord reserves the right to deduct from the deposit all costs and expenses arising from the tenant for breaching any of the covenants stated in the Tenancy Agreement.
4. Term of Lease
In Singapore, the standard lease period is more than 1 year, with or without an option to renew the lease. The lease renewal is usually for another 1 to 2 years. For the lease renewal option, the landlord would normally require that you give 2 or 3 months' advance notice of your intention to renew. Most landlords will not accept leases that are less than 1 year. It is illegal to lease on short term (less than 6 months).
5. Your Requirements (From Tenants)
Ensure that all your requirements and requests are stated in the Letter of Intent clearly. Like requesting a new sofa, new bed or new washing machine etc. After the landlord had signed the Letter of Intent, he is bound by the Letter to provide your requests. Landlord can reject or negotiate on the requirements and request.
Fully Furnished (F/Furn) or Partially Furnished (P/Furn) - Fully furnished means the apartment or house you are renting comes with all the furniture, white goods (refrigerator, washer and dryer) and all the essential electric appliances. Partially furnished apartments or house usually only comes with white goods, curtains, lightings or some other loose items. Although a house may be partially furnished at the time of viewing, you can always request the landlord to fully furnish it or request him to get the items you require. All these issues are always negotiation and will determine the final rental amount.
After the Letter of intent is duly signed. The landlord will prepare the Tenancy Agreement. Any legal fees incurred for the drawing up of the agreement is usually borne by the tenant. However, if the landlord's agreement is acceptable, there will usually not be any legal fees involved.
If the landlord or the landlord's agent is using the standard IEA agreement, it should be fine. Your agent will then ensure that the Tenancy Agreement is fair and unbiased.
You will need to prepare the rest of the security deposit and advance rental upon signing of the Tenancy Agreement. For 1 year lease - 1 month's deposit and 1 month's advance rental. For 2 years lease - 2 month's deposit and 1 month's advance rental. Minus the goodfaith deposit (if applicable) that you have paid when signing the Letter of Intent.
These are the important terms you should take note of when signing the Tenancy Agreement:
1. Diplomatic or Escape Clause and Reimbursement Clause
Check for this clause. This clause is to safe guard the Tenant if in the event they are no longer employed, transferred to other countries, they can terminate the lease after 12 months by giving 2 months notice. Thereafter, the security deposit will be refunded to the Tenant. Please note that most Landlords will only include the diplomatic clause if the lease is more than a year.
In a standard Singapore Tenancy Agreement, there is usually the reimbursement clause together with the diplomatic clause. This clause states that if the Tenant exercise the diplomatic clause, the Tenant will have to reimburse part of the commission the Landlord had paid to his agent.
The reason behind this clause is that the Landlord had paid the full one month's agent commission for a 2 years lease but if the Tenant terminate the lease by exercising the diplomatic clause, hence unable to complete the full 2 years, the Tenant will have to refund the pro-rata commission. Since Landlord grants the diplomatic clause, they will usually demand reimbursement clause to be included in the tenancy agreement.
2. Public Utilities, Telephone and Cable Television
The installation charges and the monthly bills for the following services are the Tenant's responsibility:
3. Repairs and Maintenance
The Tenant is responsible for maintaining the leased premise, carry out minor repairs at own costs. In a standard agreement, the tenant will only be responsible if the amount of the repair does not exceed S$150 or S$200 or more. This amount will be determined by type of property and condition of the furnished items.
Only major repairs and maintenance would be the Landlord's responsibility provided that the damage or malfunction of appliances is not caused by the tenant's negligence.
The Tenant will have to take up service contract for items such as air-conditioning, gardening, pest control or pool servicing.
4. Rental Amount
Check the rental amount. Sometimes the landlord will divide the rental amount into a. rental of premises, b. rental of furniture and fittings, c. maintenance fees. Just make sure it adds up to the correct amount that you have agreed.
5. Stamp Duty
In Singapore, Tenancy Agreement will need to be stamped by the Inland Revenue Authority of Singapore. Only after the Tenancy is stamped then it can be considered a valid contract as evidence in court for any disputes that may arise in the future with your landlord. This is to protect the interest of both parties. The stamp duty is usually borne by the tenant.
Taking over/Handover of the property
The landlord will prepare an Inventory List on or before the day of handing over. Check the items listed in the inventory. Check all electrical appliances, air-con, lightings, water heater etc.If there is anything unsatisfactory, do not panic, note it down on the inventory. Even brand new houses have defects, therefore be understanding and allow the landlord to rectify it within a reasonable period.
As each realtor may charge differently, please refer to your realtor for the service fee payable.
Tenant and Landlord should ensure that an invoice from a licenced real estate agency is issued to them. Upon payment, the preferred method is to issue a cross-cheque payable to the realtor's agency according to the invoice.