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Guidelines to renting a property

Guidelines to renting a property


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FINDING THE RIGHT HOME

Home is where the heart is, and choosing the right apartment is the key to happy and enjoyable experiences in Singapore. Every area in Singapore and every home has its own unique appeals. That is why it’s really important to choose a neighbourhood that matches your requirements. With decade-long experience, we are able to assist you greatly in choosing the perfect home with least hassle. To maintain good security, Singapore is also more strict when it comes to immigration. Therefore, a good agent is able to advise the requirements accordingly.

LET YOUR UNIT BECOME THEIR HOME

Over the years, I’ve seen and undertaken the leasing of many kinds of property, from the really porsche good class bungalows with taps made out of gold, to old walk-up apartments in secluded locations with shocking conditions. I must say, all can be rented out if the price is right and the unit is properly maintained. The key measurement is ‘you are willing to stay in it yourself’. Engaging too many agents isn’t going to help you achieve a high price but instead, you are likely to end up with a lower one. My other article on 5 rules to achieve the best price will explain this in detail. To the tenants, the state of upkeep will reflect the landlord’s character, and nobody will want a difficult landlord.

LEGALITY

The minimum legal least term in Singapore for renting is 6 months. Anything lesser than 6 months will have to resort to staying in service apartments that are much more expensive. Tenants will also have to have at least a valid dependent pass or employment pass to enter a tenancy agreement. The soonest you can make an offer for a unit is when your approval-in-principal for employment pass is ready, giving your FIN number. This is where you or your agent prepares the Letter of Intent (LOI).

LETTER OF INTENT

The LOI is signed by the main tenant, stating things like the occupants, tenancy period, required furnishing, amendments, etc, and handed to the landlord with 1-month rental as Good Faith Deposit. Usually, a verbal offer or acceptance is made before preparing of the LOI to simplify processes. While it is indicated that LOI is subjected to contract, there are exceptional circumstances where the 4 elements of a enforceable contract is valid (Offer, Acceptance, Consideration, Intention). So it is advisable to stay firm once a decision is made.

TENANCY AGREEMENT

The Tenancy Agreement (TA), is the key legal document.  Within the TA, there are a few key sections that a you need to know and understand:

  • Diplomatic Clause- Diplomatic Clause is a clause to allow tenant to terminate the tenancy in the event of leaving Singapore. This clause will only be applicable for expatriates only and for TA with minimum lease term of 2 years. In another words, when tenants are Singaporean or Permanent Residents, the TA will not contain Diplomatic Clause. Under Diplomatic Clause, termination notice can only be served after 12 months of tenancy with a official written notice served in advance a minimum of 2 months. Should the minimum duration of 12 months tenancy or 2 months advance notice not been meet, rental will have to be paid up to the point that fulfils this condition. The landlord will be entitled to deduct the pro-rated commission (based on the balance tenancy) paid to their agent for renting the place.
  • Safety Deposit– Safety deposit is 1-month rent for every 1 year lease. That means a 2-year lease will require 2 months of rent as safety deposit. This safety deposit cannot be used to offset rental, even when approaching the end of tenancy. It has to be returned to tenant once everything is made good when the unit is handed back to landlord.
  • Defects Liability Period– The first 30 days of the tenancy is a defects liability period for the landlord. As tenants, it is best to go through all appliances and equipment within this period and bring up any defects to the landlord. Once this period is over, Minor Repair Clause will commence, and tenants will have to bear the charges. This is one of the most common disputes between landlords and tenants, especially when some defects occur during the 2nd or 3rd month.
  • Minor Repair Clause– Due to the fact that items may be defective over time and most of the times items are not new when the unit was taken over, a Minor Repair Clause limits the tenant’s obligations up to $150 per item exclusive of GST. This is a commonly agreed amount but for some higher end properties, Minor Repair Clause can be set at $200 or more.
  • Air Conditioner Servicing– This is an important clause to note because most contract will state requiring tenant to sign up servicing package with a reliable air-con serviceman and have the air-con serviced quarterly. Although air-con defects is undertaken by the landlord, should the tenant not service the air-con, tenant will bear the responsibility to rectify the defective air-con.
  • Stamp Duty– The cost of stamping is to be borne by tenant. Stamping is compulsory because it allows the TA to be a legal court evidences in the event of dispute. Because the tenant is the party making the offer to obtain certain rights in return, stamp duty is payable by tenant. It is similar to buyers paying stamp duty in a property purchase, not the seller. The formula for calculating rental stamp duty is a 0.4% x Total rent for whole lease term. That means, if a unit is rented at $5000 per month for 2 years, the stamp duty would be $480. Stamping can be done online at www.iras.gov.sg and upon payment, a copy of the stamp certificate will be issued. Landlords will need to hold a copy of the TA and the stamp certificate just in case of selling the unit with tenancy.

 

RENT PAYMENT

In Singapore, rent is mentioned as inclusive of Goods & Service Tax (GST), management fees and taxes, unless otherwise stated. Utility bills, television channels subscriptions, internet subscriptions or any other kind of subscriptions are under tenants’ liabilities. Rent is also payable ahead. Once the TA is signed by both parties, the tenant is required to pay the first month’s rent together with the balance safety deposit if any.

HANDOVER

Once the date of handover is determined and the TA is signed, tenant can proceed to take up any subscriptions needed for the new address. The most important will be to apply for utilities to start from the day of handover in order not to have bill conflicts down the road. The landlords’ representing agent will prepare a list of inventory for this handover. Each party will keep a copy of the inventory list once all items checked and signed.

Any feedbacks or enquiries, feel free to contact Henry at +65 8686 8388 or email to henrylim.atm@gmail.com. We will be glad to help. You may also visit our portfolio of leasing properties and you may just find something that suits you. Alternatively, you may fill up the form below and submit.

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