Tenancy Agreements in Singapore: A Complete Guide

Introduction

If you are new to the rental sector, the Tenancy Agreement is something you should not overlook.

What is a Tenancy Agreement?

The scope of the contractual connection between the landlord and the tenant is defined by the tenancy agreement, which specifies each party’s rights and responsibilities with the tenancy.

Both the landlord and the renter require tenancy agreements. They explicitly define each party’s rights and responsibilities under the agreement to govern the property’s rental.

Tenancy agreements protect parties from the consequences of the other party’s early termination of the tenancy, especially in the event of a tenancy dispute.

What terms should be included in the Tenancy Agreement?

1. Specified property and duration of a tenancy;
2. Payment of rent and utilities: such payments include any charges, subscriptions or license fees. The tenancy agreement may also require the tenant to put up a security deposit. This deposit may be forfeited if the property has incurred damage that requires repairs, or if the tenant fails to comply with the terms of the tenancy agreement;
3. Use of premises;
4. The immigration status of the tenants and occupiers;
5. Appropriate upkeeping of the premise;
6. Tenant’s covenants: e.g. to pay rent, to keep in repair, permit the landlord to view the premises, not to assign or rent any portion of the whole premise;
7. Landlord’s covenants: e.g. to provide quiet enjoyment of the premises, to provide premises fit for human habitation, and to not derogate from the grant;
8. Termination of the lease;
9. Suspension of rent;
10. Notices;
11. Anticipatory breach; and
12. Stamp fees.

Six common terms in a Tenancy Agreement

While a potential tenant or landlord has the freedom to negotiate the terms of their rental agreement, there are a few standard terms to look for. It is beneficial to have an understanding of such phrases and what they mean as a potential tenant or landlord.

The obligation to pay rent

A common express clause in lease agreements is a clause requiring the tenant to pay the agreed-upon rent. Rent does not always have to be paid in cash; it can alternatively be paid in the form of services performed.

A clause including “Quiet enjoyment” and “Exclusive Possession”

A clause for “peaceful enjoyment” or “exclusive occupancy” is commonly included in leases. In general, this requires the landlord to provide the tenant with the freedom to exercise his right of occupation as well as all of the benefits that come with it. As a result, a renter with exclusive possession of the property can keep strangers, including the landlord, out.

A diplomatic clause

This clause is usually included in tenancy agreements for a lease of 12 months or longer. A diplomatic clause allows for the lease to be terminated before it expires at a predetermined period (or times) or upon the occurrence of a predetermined event(s).

A diplomatic clause is particularly significant for foreign expatriates who may be staying in Singapore indefinitely. This clause safeguards the tenant in the event that he is unable to continue living in Singapore (e.g. if he is transferred out of Singapore or if his company terminates his employment during the tenancy). He can avoid paying the agreed-upon monthly rent for the duration of the vacant tenancy by using the diplomatic clause.

A diplomatic clause is frequently written specifically for the tenant to use. If the lease does not state who can exercise the option, it can only be done by the tenant.

The following should be included in any diplomatic clause:

1. What constitutes adequate notice to the landlord?
2. The amount of compensation that the renter must pay if not enough notice was given.
3. The tenant must reimburse the landlord for the brokerage expenses incurred by the landlord for the remaining period of the tenancy.

If the Diplomatic Clause is invoked, this clause can be coupled with a Reimbursement Clause, in which the renter reimburses a portion of the agent’s compensation. The amount of reimbursement is prorated proportionately.

Exercising the diplomatic clause

To exercise the diplomatic clause, the renter must present documentary evidence of his firm relocating him to another country or his termination of employment. Other terms and circumstances for exercising the diplomatic clause may be negotiated and included in the tenancy agreement.

When the tenant learns of the transfer of workplace or termination, he should produce proof to the landlord as quickly as possible to ensure that sufficient notice is given within the tenancy agreement’s notice period.

The obligation to keep the premises in “good and tenantable repair and condition”

A clause requiring the tenant to keep the premises in “good and tenantable repair and condition” is regularly included in rental agreements. In most cases, this means that the tenant is responsible for maintaining the property.

Often, this clause is followed by a caveat – “fair wear and tear and acts beyond the control of Tenant excepted.” The purpose of this caveat is to qualify the tenant’s obligation by restricting his liability to compensate the landlord for damage not caused by normal ageing or acceptable use.

As a result, if the damage was not caused by “fair wear and tear,” the landlord can keep the security deposit (or a portion of it) as compensation or ask the renter to arrange for repairs.

It should be highlighted that “fair wear and tear” cannot be defined in general because it is fact-specific. In most cases, it would be unfair for the landlord to withhold the security deposit or demand, for example, the replacement of a door due to a few scratches produced by regular wear and tear.

A clause forbidding “additions or alterations” to the premises

A standard rental agreement states that the tenant cannot make any changes or additions to the property without the landlord’s permission. Essentially, unless the landlord expressly authorises it, the tenant should not change the structural nature of the property.

A clause stating the right to re-entry

When a tenant violates the conditions of the lease agreement – especially, when the tenant fails to pay rent by the stipulated deadline – a right of re-entry clause allows the landlord to lose the tenancy and re-enter the premises. Notably, all leases for land covered by the Land Titles Act include an implied right of re-entry for breach of the agreement to pay rent.

Payment and Signing of the Tenancy Agreement

The Security Deposit is something that the tenant would have to pay upfront. This is paid when the tenancy agreement is signed, and both parties agree to the terms and conditions mentioned. The Security Deposit is normally calculated as a multiple of the monthly rent and can be used to cover the remaining months of your stay.

The signing should take place in the presence of both the tenant and the landlord, as well as a third-party witness, such as the agent. Both the tenant and the landlord should agree on a fixed and regular payment method, such as GIRO or internet banking. This is to ensure that all financial transactions are properly documented. Unless necessary, avoid paying any deposit or regular rent in physical cash.

Dispute Resolution between Tenant and Landlord

In general, you should try to prevent any conflicts with your landlord. If a misunderstanding arises, consult the tenancy agreement and try to resolve the conflict amicably. Otherwise, you might want to evaluate some options moving forward.

You could seek guidance from your agent if you hired one to negotiate the deal. Otherwise, to resolve any issue, contact a third-party mediator like the Singapore Mediation Centre or the Consumer Association of Singapore (CASE). The bulk of tenancy disputes in Singapore has been resolved due to these Alternative Dispute Resolution councils. If you believe the disagreement requires a hearing before a court, you can take it to the Small Claims Tribunal or the Singapore Civil Court.

Conclusion

There is no comprehensive law, or body of laws, in Singapore that governs landlord-tenant relationships. As a result, what is described in the Tenancy Agreement is critical in protecting both the tenant and the landlord’s rights. Both the tenant and landlord must agree to the terms in the tenancy agreement in front of a third party witness.