Everything You Need to Know About Singapore’s Tenancy Agreement

What is a Tenancy Agreement?

The Tenancy Agreement is a legally binding document that establishes the terms and conditions agreed upon by both the landlord and tenant. Instead of seeing it as restrictive, it’s more aptly viewed as a tool to safeguard the interests of both parties. In situations involving disputes or breaches of the agreement, this document serves as a reference point for resolution.

In this article, we’re breaking down all the crucial info you need to know about tenancy agreements in Singapore. Plus, we’ll be tackling some of the most Frequently Asked Questions about these agreements. Let’s get into it!

Types of Lease

There are two types of lease, namely HDB Flat lease and Private Property Lease. The lease differs in terms of their minimum and maximum lease duration.

Timeline

Check out the general timeline for the transactional lease procedure below.

6 Salient Points of Lease

1. Relevant Parties and Addresses

The key players in the lease are the landlord and the tenant, and their addresses play a critical role. These addresses are vital for serving notices and initiating legal actions. Correspondence, including letters regarding important information, will be directed to their respective addresses to keep them informed and ensure communication is effective.

2. Rent Free and Defect Discovery Period

If a tenant requests a rent-free period, it might be wise for the landlord to consider granting it at the end of the lease. This way, the tenant fulfills the entire term, and it can serve as an incentive for them to stick to the tenancy agreement terms.

The defects discovery period typically spans 30 days from the tenancy’s commencement. During this timeframe, tenants can report any issues or defects found in the property to the landlord, exempting themselves from repair costs related to those problems.

3. Security Deposit

The security deposit serves various purposes in a lease agreement. It acts as a deterrent to prevent lease breakages, as tenants are aware that their deposit is at stake. Additionally, it functions as a repair fee for any damages to the property caused by the tenant during the lease term. In some cases, with mutual agreement between the tenant and landlord, the security deposit can also be used to offset rent payments. It’s a versatile element in the lease arrangement, ensuring both parties have a stake in maintaining the property’s condition and fulfilling the terms of the agreement.

4. Minor Repairs Clause

This clause is inserted in the tenancy agreement to clarify that after the defect discovery period, the tenant takes on the responsibility for minor repairs and replacing parts in the property. Typically, there’s a specified maximum amount mentioned in the clause that the tenant is obliged to cover for these minor repairs. Any excess beyond this limit will be the landlord’s responsibility. This specified amount usually falls within the range of $150 to $250 and excludes repairs for fair wear and tear. The aim is to establish clear guidelines on the financial responsibility of the tenant for property maintenance.

5. Diplomatic Clause

In a standard fixed-term lease, tenants typically can’t terminate the agreement before its expiration. However, recognizing the unique circumstances faced by expats working in Singapore, a specific clause has been included.

This clause in the tenancy agreement enables expat tenants to terminate the tenancy after 12 months by providing a 2-month notice. To exercise this option, tenants are required to provide proof of being posted out of Singapore, such as official documentation related to their job or relocation.

6. Option to Renew

In the tenancy agreement, the landlord can offer the tenant the option to renew, and there are two types: binding and non-binding. Typically, with a binding option, there’s a cap on the rent increase, usually set at 10%. Here are examples of both:

Breaches of the Tenancy Agreement

There are a few ways that tenants can breach the tenancy agreement such as but not limited to:

1. Non-payment of rent

2. Damage to property

3. Extreme nuisance to neighbours

4. Illegal occupants

5. Illegal activities in premises

6. Subletting without consent

Dispute Resolution

There are three ways to resolve a dispute between the landlord and tenant:

1. Mediation

Usually, this is the first approach taken to resolve the dispute. The advantage of using this method is that it is private and confidential, flexible, time and money saving, and preserves post-conflict relationships.

2. Legal Action

This action is taken in a situation where a tenant breaches the tenancy agreement, the landlord bears the responsibility of proving that the tenant failed to adhere to the agreed-upon clauses. If the court determines that the tenant is indeed liable for the breach of contract, damages will be awarded based on the actual losses incurred by the landlord.

3. Small Claims Tribunal

This process is typically reserved for resolving low-value disputes, specifically those amounting to $20,000 to $30,000 or less, and the lease duration must be under 2 years. It’s can be used for handling claims related to damages caused by neighbors and is not applicable to non-residential leases. Additionally, this method cannot be utilized if one of the involved parties is overseas.

Eviction and Repossession

A Writ of Seizure and Sale is a suitable option if you aim to recover rental arrears but are willing to permit the tenant to continue renting your property. Once approved, a court-appointed bailiff will enter the premises, seize valuable items, and sell them at an auction. It’s important to note that this process doesn’t automatically grant the landlord vacant possession of the property unless they apply for Writ of Possession.

In non-legal steps for repossession, it’s crucial to follow a sequence of notices to communicate with the tenant effectively. First, a notice of breach should be communicated to inform the tenant about the violations of the lease terms. Subsequently, a notice of termination of the lease should be sent to officially communicate the intention to end the tenancy.

Additionally, it’s a good practice to send several reminders to the tenant regarding the re-entry of the premises. These reminders can serve as a final warning and provide the tenant with ample notice about the impending repossession. The date and time of re-entry must be stated specifically.

Breaking the lock, with a witness present, and conducting a walk-through of the premises while video recording is a consequential step in the repossession process. This action is usually taken after all appropriate legal and non-legal notices have been provided, and the tenant has failed to remedy the breach or vacate the premises.

Following the secured entry, a notice should be given to the tenants, informing them of the intention to seize their items within the property and subsequently sell them. The proceeds from the sale will then be utilized to settle the outstanding debt, including any rental arrears or damages.

Frequently Asked Questions

Yes, E-Signing is enforceable. It is governed by the Electronic Transaction Act (ETA). E-Signing via DocuSign, Singpass etc. are acceptable as long as it is governed by the ETA and its criteria. However, wet-ink signing is still preferable.

It is recommended for landlord to have a cap on electricity usage. If the tenant exceeds the cap on the electricity usage, landlord can then charge the tenant on the excess bill of the excess usage.

It depends on whether the increase is due to increase in electricity fees or electricity usage. It is recommended for Landlord to set a cap on electricity usage so that Landlord will NOT have to absorb the excess fees.

First thing to note is that seller should not have signed a new Tenancy Agreement after the property is sold. The seller should have consulted the incoming buyer once the option has been issued for renewal of tenancy. In this case, the recourse for new buyer against the seller is to leave it to their representative lawyer to address the issue.

Yes, there are recourse to this matter but it may not be worthwhile due to the fact that it may involve suing the tenant which will incur further costs and time. There may be a challenge as well to provide proof to back up your claim.

You can charge the repair cost to the tenant if the tenant is unable to prove that they have been taking reasonable actions to service the AC units.

This is a material breach of terms. The best recourse will be to speak to the tenant to terminate their contract and evict the tenants out of the unit due to breach of terms of contract.

Court order typically involves high costs. It is advisable to consult your lawyer to contact the tenant and settle this matter. However, should a court order be enforced, go for Small Claims Tribunal. Unfortunately, the costs usually will not be waived by the court.

No, at least not immediately. The best course of action would be to follow the procedure. The landlord is entitled to go for Small Claims Tribunal or through legal firms for a court order, officially called a Writ of Possession. The latter will incur a heavier cost.

Non-legal eviction and repossession involves 3 steps:

Notice of breach to be communicated to the tenant.
Notice of termination to be sent to the tenant.
Several reminders on re-entry of premises to be sent to tenant.

The landlord should raise it to the tenant that it is a breach of terms and give the tenants a chance by giving a first warning. If the tenant repeatedly breaches the terms despite multiple warnings, the landlord can then consider this as a material breach of contract and begin termination of contract.

Take note of Binding Clauses within the tenancy agreement.

For example, take note of the “option to renew” clause, specific terms such as “revised rent shall be capped at 10% increase of rental” are binding. Vague clauses such as “renewed at prevailing market rent to be mutually agreed upon…” is non-binding. Other examples of binding clauses include the rent free period and defects discovery period.

Unfortunately, if it was before you bought it and you did not raise the issue during viewing or before the purchase, there is nothing you can do about it. It is considered sold as it is. Buyer Beware rule applies.

Landlord may want to request for more security deposit in the tenancy agreement, and stay more vigilant when the lease is coming to an end. Get in touch with the tenant if they miss the deadline for rental.

In most tenancy agreement, there is provision to allow valuer/prospective tenants to do viewings. There is no hard and fast rule as long as the Landlord is reasonable, the tenant has to allow.

If it is against SME, do a check on the company first. If the capital paid up is only a couple of dollars, it may not be worth your time as the company can easily cease operations and its directors may reopen another company.

If the tenant/company is a reputable company, and after assessment it is deemed worth it to seek recourse, landlords may seek recourse through legal means. However, it can be costly.

Absolutely, late interest with the rate of 1% a month is very reasonable. Penalties, however, are not recognised by the court. Late interest act as a deterrence so that tenant will pay rent on time.

Security deposits are not meant for that, but yes landlord can do it. But because landlord is the one who is holding back the money, it is up to the tenant to raise a dispute if any. If landlord is doing this, please back up the claims with evidence of late payment, etc.

Yes, landlord can do that. If landlord can show there is an opportunity cost, eg. messages from the incoming tenant wanting to start the tenancy earlier despite the repair works causing delays to the tenancy period.

If the whole unit is rented out, no, it is not OK. It is an invasion of privacy. Unless the tenant(s) is informed and is agreeable to it. If so, please state in the tenancy agreement.

If it is for co-living, you can do it. Always let the tenant know about it first, explain that it is for their safety and let them know the reasons why CCTVs are placed in the common area.

There is a punitive provision. Positive incentives encourages tenants to pay rent on time. For example, last month free rent if tenants pay rent on time throughout the lease term with a higher security deposit.

No, landlords do not need to provide rent free periods. But usually it is OK to provide it as the renovation cost will likely be valued more than the rental itself and any fixture/renovations done to the premise belongs to the landlord.

Firstly, you need to have fire insurance. Fire damages are definitely not going to be under small claims. Your neighbour will claim against you. If it is proven to be a deliberate attempt to set fire by your tenant, you have a recourse against your tenant but usually tenant do not have deep pockets and it will be difficult to get any monetary claims from them. Having a fire insurance policy will be your best protection.

The best practice is to do a thorough check of the premises before handing back the security deposit to the tenants. After handing over the security deposit, it is very unlikely the landlord make any claims as it is troublesome and costly to seek claims from tenant. Unless the landlord is very sure that the damage(s) is done by the tenant, there are still ways to seek recourse.