Who are potential renters?

- Expatriates who are stationed overseas for a prolonged period of time.
- Couples who are saving to purchase their own home
- Singles who need to have their own privacy

What to consider when choosing a property to rent?

When looking for a property to rent, above all else you need to consider the location. Selecting the right location is very important because it determines the level of convenience to you and your family. Apart from that, property size, facilities, duration of lease, level of furnishing, and your budget are also other important factors to consider.

Do you prefer to live in a quieter neighbourhood surrounded by lush greenery or do you feel more at home living right in the heart of the city? Before you make a decision, you need to consider the needs of those living with you too i.e. if you have children, where is the nearest school, what is the distance to the workplaces of your other family members, does the area have good public transportation and so forth.

How many rooms would you need? Would your children be sharing a room or will they each have their own? Where would the maid sleep? Do you need additional space for storage e.g. a storeroom? This will help you in choosing the property size that best suit your needs and budget. You also need to consider how you are going to manage the upkeep of the property as a bigger property would require more time and money to upkeep.

Facilities near the property or facilities that come with the property must be convenient to you. For example, some condominiums provide gyms and swimming pools. This should be included in your checklist when searching for a property to rent if they are important to you. Proximity of grocery shops and markets are also points to consider.

Duration of the lease is another important aspect. If you know that you need the accommodation for a substantial period of time, it is advisable to specify your intention right from the very beginning to the Landlord. This will help you to negotiate a better rental deal with the Landlord as Landlords prefer Tenants who would rent for a longer term.

Rental properties come either partially or fully furnished. Ensure that you inquire about the level of furnishing in order to find one that suits your need. A partially furnished property usually comes with lightings, washing machine, air-conditioning and basic kitchen equipment. A fully furnished property usually comes with extra items such as beds, sofa, and television.

Evaluate your budget and stick to it as this will help you find the area and type of property that is most appropriate for you. You need to evaluate how much you are willing to spend on the rental, and you have to factor in other expenses such as utilities, cable television, internet access, telephone line and electricity.

Offer to rent
Once you have found the property that suits you, you need to go through some formal procedures with the Landlord.

You will need to give the Landlord a formal offer to rent the property through a “Letter of Intent”. The Landlord officially accepts your offer when he/she signs the letter. Generally, the property agent assigned by the Landlord or you will prepare all the necessary documents.

Letter of Intent
The Letter of Intent is a proposal by you to the Landlord, citing your intention to lease and your requirements. Most Landlords will of course have agreed to accept the requirements verbally ahead of time. As good faith, most rental agreements will start with the Tenant giving the Landlord 1 month’s rental in advance as a deposit.

Generally in a Letter of Intent, the terms addressed are as follows:

Term of lease – typically ranges from 12 to 24 months, with an option to renew for another 12 to 24 months upon the expiration but subjected to possible adjustments of rental price at the discretion of the Landlord based on the prevailing market rates. When the market rate is good, Landlords prefer to have 24 months lease terms to lock-in the good rental rates. The standard term in Singapore is 12 months and most Landlords will not accept leases less than 12 months. For renewal, the tenant is usually required to give between 2 to 3 months advance notice to the Landlord.

Good faith deposit or booking deposit – it is usually the amount of one month’s rent. Good faith means that once the Landlord signs the Letter of Intent and accepts the deposit; he/she has promised not to lease the property to other renters until the Tenancy Agreement is signed. Upon signing the Tenancy Agreement, this deposit is usually considered as either the first month’s rental or kept as security deposit.

Security deposit – this is the amount kept by the Landlord as security. It is not to be paid by the Tenant until the Tenancy Agreement is signed; and only refunded to the Tenant once the lease term expires. This deposit will be refunded interest-free and the Landlord has the right to deduct all costs of damages and expenses arising from any breach of contract as stated in the clauses of the Tenancy Agreement. For every 12-month lease term, a 1-month deposit is required. (i.e. 2 months deposit is required for a 24-month lease term)

Monthly rental price – the Letter of Intent will state the amount of the monthly rental price.

Expiry of the Letter of Intent – this letter will need to have a clause to specify a period within which the Landlord must sign, or it will otherwise expire. The Landlord will then have to return the good faith deposit immediately.

Additional requirements – any additional requirements need to be stated clearly in the Letter of Intent.

Examples are: -

• Diplomatic or Expatriate Clause- is to protect the expatriate Tenant in the event that he/she is no longer employed or transferred to another country. (Generally it means that you can terminate the lease after 12 months by giving 2 months notice). Your security deposit will be refunded. However, Landlords will only include this clause if the lease term is more than a year. 

• Furnishing – states whether the property is rented out partially or fully furnished.

• Sublet – if the tenant intends to sublet, it should be clearly stated in the Letter of Intent.

  Pets – if the tenant has pets living with him/her on the property, it needs to be clearly stated in the Letter of Intent

  A standard Letter of Intent will also state that all these additional requirements are subjected to the Landlord’s written approval; hence you might want to have these agreed beforehand with the Landlord prior to making an offer to avoid any misunderstandings later.

Tenancy Agreement
Tenancy Agreement is an obligatory contract to lease the property. This agreement is prepared by the Landlord or his/her agent, and both the Landlord and Tenant needs to sign this contract. Tenancy Agreement is a more detailed version of the Letter of Intent. Generally, it is better to use the standard agreement template (standard IEA agreement) provided by the agency.

Any legal fees incurred will usually be borne by the Tenant. But, if the Landlord’s entire Tenancy Agreement is acceptable without amendments or additional clauses, then there are usually no legal fees involved.
You need to provide the Landlord with a copy of your passport and identity card (IC) or employment pass. This is to verify that you are entitled to stay in Singapore. It is against the law for Landlords to rent out their property to illegal immigrants. At this point, you need to pay the first month’s rental and security deposit, less the good faith deposit given with the Letter of Intent.

What to check for in a Tenancy Agreement?
Listed are thing to look out for in a Tenancy Agreement:

• -	Tenant’s details – name, address, ID details
  -	Landlord’s details – name, address, ID details
  -	Payment terms – include the date when rent is due, rental mode of payment
  -	Payment terms – include the date when rent is due, rental mode of payment
  -	Security deposit – how much security deposit is paid for every 12-month lease term
  -	Inventory of Contents - is an attachment to the Tenancy Agreement. This is an inventory list of all the furniture and fittings in their present condition, which is included in the rented property. You will sign this document when you move into the property and the agent or Landlord will check the inventory against this list when you move out. Your agent will usually help you to check the inventory when you move in, and deal with the Landlord should there be any maintenance issues
  -	En-bloc – this is Singapore’s recent “enforced block sale” fever. This clause is to protect the Landlord from early termination compensation. If you are renting an older block in an apartment or condominium, do ensure that you negotiate out this clause or reduce it; as it may become a hassle that could include additional costs if you move out within the lease term.
  -	Termination of lease –this will mean that a Diplomatic/Expatriate Clause is stated, and sometimes a reimbursement clause will be added. When the Diplomatic/Expatriate Clause with a reimbursement clause is exercised, Tenants have to reimburse part of the commission (pro-rated to the remainder of the lease term) the Landlord has paid to his/her agent.

  
  Example:-

If you have 6 months lease left out of a 24-month lease, you will pay the Landlord 6/24 of the commission he/she paid to the agent.

Generally, a Tenancy Agreement will not have this clause because Landlords may sell the property during the lease period. In this case, the new owners have to honour the existing tenancy agreement and the Tenant will continue paying the rent to the new owner.

The standard Tenancy Agreement does not include any clause for subletting or allowing pets to live on the property. If you intend to sublet or have pets, you need to request to state this in the Tenancy Agreement. However, this is subjected to the Landlord’s approval.

You should not be troubled by the intricacies of the Tenancy Agreement, as your agent is there to help you and to explain all the clauses to you. Agents will also negotiate on your behalf.  However, as a Tenant, it is very important that you understand the fundamental accountability of renting in Singapore, because Singapore’s laws can be deemed as Landlord friendly.

Landlords can get a court order to re-possess the property including seizing to sell off all the goods inside the property if the tenant fails to pay his/her rent. This is to protect the Landlord and help recover any rental or legal cost losses. This differs with many other countries whereby it could take many years to remove uncooperative tenants.

Guidelines on moving in and out
Do examine the property thoroughly against the Tenancy Agreement and the Inventory of Contents before you sign it when moving in. It is advisable to take photographs of the property and its inventories if you think it is not in the condition as stated in the documents. You should highlight to the Landlord immediately and request for it to be fixed. In doing so, you can avoid a potential misunderstanding when you are moving out.

Electricity and water connections need to be arranged by the Tenant, as Landlords will not usually provide this. You can do this prior to moving in, by calling SP Services. These connection process can take up to a few days to be ready. 

If the property you are renting has piped gas (selected areas), you need to contact City Gas to install the gas. As for telephone lines, Singapore Telecom will connect residential lines upon your request. In Singapore, there are cable television and cable broadband Internet. You may contact Starhub Cable Vision (SCV) to get this installed if required.

When moving out, go through the Inventory of Contents and ensure that everything is in the same condition as it was when you moved in. Common wear and tear is tolerable; however any damaged or lost items must be reimbursed by the Tenant. The property must be in a clean and liveable condition and all air-conditioning units serviced.

Landlords have the right to deduct any expenses out of your deposit if he/she finds defects in the inventory items, and this is very subjective based on individual judgements. Hence, as mentioned above, it is advisable to take photographs as evidence when you move in. If there were any defects, most Tenants would prefer to fix it themselves, as it is relatively cheaper than what the Landlord would deduct from your deposit. In a standard agreement, Tenants are usually only responsible to pay for repairs that do not exceed S$100 or S$150. Major repairs and maintenance should be the Landlord’s responsibility if the damages or breakdown is not due to Tenant’s carelessness. 

What are the fees and commissions incurred to rent a property?

Agent’s Commission
Agent’s Commission is paid by the Tenant if the rental is below S$2,500 per month, unless the agent is appointed as a delegate to the Tenant. Most of the time, the commission is one month’s rent for every 12 months lease term.
Landlords are also required to pay commission to the agent. The amount is the same as what the Tenant is required to pay. If there are two agents involved, then the agents will share the landlord’s commission based on mutually agreed portions.

Stamp Fee
The Tenant will pay the stamp fee. Generally, the agent will arrange for the payments to be made to the relevant government agency (i.e. the Inland Revenue Authority of Singapore), but the Tenant needs to pay the agent in advance or reimburse the agent later; depending on what is agreed between the agent and Tenant in advance.

There is a standard way to calculate the stamp fee. It is based on the annual rent using the rules below:

• - If the lease term does not exceed a year; S$1 for every S$250 or part thereof of annual rent
  - If the lease term exceeds 1 year, but does not exceed 3 years; S$2 for every S$250 or part thereof of annual rent
  - If the lease term exceeds 3 years, or has any indefinite term; S$4 for every S$250 or part thereof of annual rent.

Example:-
Rent is S$4,000 per month (i.e. S$48,000 annually)
Lease term = 24 months
Stamp fee payable = S$48,000 / S$250 x S$2 + S$2 (for duplicate copy) = S$386

You can go to Inland Revenue of Singapore (IRAS) website for more information (http://www.iras.gov.sg)  

Utilities Deposit
Singapore Power Services (SP Services) will take a deposit before they turn on the electricity and water supply. Deposits will be billed in your first bill. It is usually between S$40 to S$800 and really depends on your citizenship status and what type of property you are renting. For foreigners, renting a private apartment will require a deposit of S$500 following the current rate.

SP Services website is http://www.spservices.com.sg/.