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Tenancy Agreement and Security Deposit: What Renters Must Know

· Rental

Tenancy Agreements

What Renters Must Know

A Tenancy agreement (TA) is the more detailed, legally binding version of the letter of intent (LOI). Ordinarily, the landlord – or the property agent of the landlord – prepares the Tenancy Agreement in accordance with the LOI.

Read through your tenancy agreement before signing on the dotted line!

The TA is more important than the LOI, and must be read in close detail. In the event of any legal disputes, the final outcome often hinges on this document. Note that the Singapore government does not standardise or protect tenancy arrangements to the same degree as many other countries, such as the US; as such, a TA may contain terms that you feel are unfair to you, yet are still enforceable.

Update: The Council for Estate Agencies (CEA) now has a standardised template for TAs. While it’s not yet enforced, it was created under a consultation with all major real estate firms; CEA is also empowered to act, as a regulatory body. As such, we now expect that most TAs will use the CEA template.

You are advised to have a property agent of your own to go through the TA, at least for your first time as a tenant in Singapore.

Security Deposit

In Singapore, the signing of the TA is often concurrent with your handing over of the security deposit.

By convention (not law), the security deposit is one month’s rent for a one year lease, or double that for a two year lease.

If there is any damage to the property besides fair wear and tear, the landlord can subtract the cost of damages from your security deposit. In general, the deposit is only used to cover damages for which you are directly responsible. A leak caused by an old kitchen pipe won’t be deducted from your deposit; but a hole in the wall from a wild party will be.

If there’s a premature termination of the lease – and no clause in the TA permits such a termination – your security deposit can be withheld. In short, breaking the lease causes you to forfeit the deposit.

For a more detailed account on the security deposit see our Good Faith Deposit vs Security Deposit Guide.

TA Outline

If the CEA template is not being used, all TAs must include the following minimum information:

The full name and contact address of the landlord and Tenant

The address of the property to be rented

The date the TA is signed

The date the tenancy is to begin

Addresses for service for both the landlord and the tenant

A note stipulating whether the tenant is under the age of 18

The rent amount and frequency of payments

The mode of payment, and the account to which payment is to be made

Any fees to be paid (including any commission for property agents) if applicable

Inventory List of all the items in the apartment.

What to look out for in a TA

In addition to the above, many TAs include clauses regarding:

Payment for utilities (find out if this includes internet access – some agreements only cover water and light)

Insurance matters (note that the landlord’s home content insurance may not extend to cover tenants)

Applicable stamp duties

Conditions of access to premises (this states when and how your landlord can enter the house, while you have a lease)

Any regular servicing schedules, such as air-conditioner servicing or gardening (for landed properties)

Conditions of the security deposit and good faith deposit

Termination clauses

Details of what happens if rent is paid late or not at all.

You can find a standard template of a Tenancy Agreement here.

Here are some clauses to pay special attention to:

Diplomatic Clause and Reimbursement Clause (Early Termination of Lease)

Expatriate workers should insist on this clause. This lets you to terminate the lease prematurely, if you lose your job or are transferred to another country. 

The clause can commonly be exercised after you are 12 months into your lease term, and allows you to terminate the contract without having to pay the additional months of rent.

By convention, a notice period of two months will be stated in the clause. 

If you require the landlord to include the Diplomatic Clause, it is not unusual for a Reimbursement Clause to be included. This stipulates that you have to reimburse a part of the property agent’s commission.

Diplomatic Clause and Reimbursement Clause (Early Termination of Lease)

Expatriate workers should insist on this clause. This lets you to terminate the lease prematurely, if you lose your job or are transferred to another country.

Minor Repair Clause & Other Maintenance Clause

This clause states how much you are liable to pay, for damage caused by wear and tear (damage from direct negligence is deducted from the security deposit). By convention, tenants pay the first $150 for fixing any wear and tear, while the landlord covers the rest.

We advise all tenants to insert a problem-free period in the clause, preferably 30 days or more. This way you are not liable for any damages during the initial period of the lease. It also protects you from damages caused y the previous tenant.

Option to Renew Clause

This is a clause that lets tenants extend the lease for another term – usually a year – with a twi month prior notice. If the clause is exercised, the landlord will prepare a contract for extension. The clauses stay the same as the current contract, unless specified otherwise.

Access to Premises Clause

There are usually a series of “Access to Premises ” clauses, allowing landlords to enter the premises for a stated purpose. Commonly, the purposes for which a landlord would enter the premises is for repair work, or the arrangements of viewings for future tenants.

Towards the end of your lease, the landlord will in all likelihood arrange for viewings to minimise the vacancy period of the unit. As a tenant you may want to include some details into the clause such as timing of viewings, and repair work.

“En Bloc” Clause

This clause states that, if there is a collective sale of the development, the landlord can sell the property and prematurely terminate your lease without compensation (note that en-bloc sales are passed by a majority of the development’s owners; your landlord has to sell the property regardless of whether he wants to or not).

This is a risk to take seriously when renting very old leasehold properties, such as those that are past 30 or 40 years in age. Given how long it takes an en-bloc to proceed however, it’s probable that your lease will be over long before you need to vacate the property.

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