Leasing Your Property

Leasing your property, especially when you are a new landlord, can be daunting as you come to grips with your responsibilities as a landlord. Here’s what you need to know in order to better understand said responsibilities, and also some common clauses in the tenancy agreement that you need to negotiate with your tenant.

Tenancy Agreement (or Lease Agreement)

What are the common clauses in a tenancy agreement that you need to negotiate with your tenant?

In their consumer guide on rental transactions, the Council for Estate Agents (CEA) suggest the following points to be covered in your tenancy agreement. This is to minimise the possibility of common landlord-tenant disputes regarding late payment of rent, return of rental deposit, repair and maintenance of the premises, and so on.

 Payment of rent, and payment and return of rental deposit

 The party to pay the utility charges, monthly maintenance, repair fees, etc

 Extent of the tenant’s responsibility to upkeep the property, including sanitary installations, fixtures and fittings

 Whether servicing work on air-conditioning is to be taken up with a maintenance contractor by the tenant at the tenant’s own expense

 Whether minor repairs such as replacement of light bulbs or electrical appliances, and plumbing work for blockage of sink/toilet are to be done at the tenant’s own expense

Lease Duration

This is a legal contract between you and your tenant. It lists out the terms of the lease. The lease duration can be 1 year or 2 years, with the possible option to renew for a further 1 year.

You may want to take note that, from 30 June 2017, the Urban Redevelopment Authority (URA) has lowered the minimum stay duration for private homes to 3 months. Read: URA Revises Minimum Stay Duration to 3 Months. In light of this, some landlords have started to offer short-term leases of 3 to 6 months to take advantage of the pent-up demand for leases under a year.

What if you aspire to be an Airbnb landlord? While currently not permissible, URA is exploring ways to allow Airbnb-style short-term stays in private homes under a new proposed regulatory framework. Read: Airbnb Short-term Rentals could be allowed in Singapore. Do keep an eye on future developments as this could become a potential source of tenants and additional revenue stream for you.

Diplomatic Clause

This clause allows your tenant to terminate the lease before the end of the lease period. If this clause is granted in the tenancy agreement, your tenant can terminate their lease after 12 months with 2-3 months’ written notice to you, subject to satisfactory documentary proof of the occupant being transferred or relocated from Singapore to another country, or cessation of employment.

Furnishings

If your property is equipped with air-conditioning, basic kitchen appliances, washing machines/dryer (also known as white goods), lighting and drapery, you may describe your property as partially furnished. To qualify as a fully furnished property, you need to also provide move-able furniture in addition to the above items.

Utilities (Water/Electricity/Gas), Phone & Internet

Your tenant has to apply for water, electricity and gas supply services (if required). They also need to apply for the telephone line or internet broadband services if required. The installation setup and monthly charges for such services are under your tenant’s charge.

Security Deposit

It is common practice for the tenant to pay a security deposit equivalent to one or two months’ rental, together with the first month’s of rental upfront. Thereafter, payment is usually done in advance on a monthly basis. The security deposit is refundable at the end of the contract period, provided there is no damage to the property. Any damages or breakages caused by your tenant will be deducted from the security deposit at expiry of the lease.  Most tenancy agreements allow the landlord to retain and forfeit the tenant’s deposit in the event that the tenant break the lease.

Service/Maintenance Fees

For properties with shared compounds or common areas, such as condominiums and apartments, the landlord usually pays the applicable services charges and maintenance fees and these are accounted for in the gross rent.

Repairs/Maintenance

Your tenant is obliged to maintain the leased premises in good order and, carry out minor repairs at their own costs (usually stated in the tenancy agreement under a “minor repairs” clause). Only major repairs and maintenance would be your responsibility. Your tenant is usually responsible for periodic servicing of the air-conditioning units whereas major repair works (including replacement of parts) will be under your charge.

Fire Insurance

Most tenancy agreements will include a clause requiring the landlord to insure the premises against potential loss or damage by fire. Do go through the terms of your fire insurance policy carefully. You could be pleasantly surprised that your policy may allow you to claim for loss of rental income for the period that your premises remain untenantable due to fire damage.

Quiet enjoyment of Premises

This is an important clause, found in most tenancy agreements, and obliges you to allow your tenant quiet enjoyment of the premises.

This means that you cannot enter the premises, even if it is your property, without your tenant’s permission or a court order. However, most tenancy agreements allow for landlords and/or their authorised representatives to enter into the premises for the following reasons:

 By prior appointment to view the condition of the premises and to conduct repairs

 By prior appointment, to show the property to prospective tenants and/or purchasers

Appoint an Agent

Most landlords do not have the spare time to market their properties, answer enquiries from prospects, and conduct viewings. You may find the money well-spent to appoint a responsible agent to do the job for you. Look for one whom you feel comfortable working with. Make sure the agent is registered with the Council for Estate Agencies (CEA). Be specific when you discuss your requirements with your agent. This will allow him to advise and service you in a professional manner. To understand more on an agent’s duties to you, read: Duties of a Property Agent – What can a Landlord expect?