Many expats look forward to moving to Singapore for it’s top-quality restaurants, international population and reputation as one of the cleanest and safest places in the world.
While Singapore is known for it’s high quality of life, that quality comes with a price. The cost of living in this modern metropolis is notoriously high and nowhere will that be reflected more than in the cost of your rent.
There are plenty of things to keep in mind when looking for a place to hang your hat in Singapore. Here are a few that might differ from your home country and a few useful tips to know before you go house hunting.
In Singapore, unlike in many other places, both the owner and renter will need to pay any agent that finds them an apartment or a tenant. Make sure you know the cost upfront before retaining an agent.
The most standard rate of commission for a Singaporean property agent is half a month’s rent for a one-year lease and a full month’s rent for a two-year lease. For properties costing upwards of S$2,500 per month, the fee is waived for the renter and paid by the landlord and his or her agent.
Tenancy Agreement (TA) and Letter of Intent (LOI)
These two formal documents are very important when renting a home or apartment in Singapore. Since there is not set of laws that cover relations between owners and tenants, everything must be laid out comprehensively in these documents, or a renter will have little recourse if something goes wrong.
The Letter of Intent (LOI) is created when you find a place that you would like to rent. It is not binding until the Tenancy Agreement (TA) is signed.
A goodwill deposit of one month’s rent is required along with the LOI and, once you come to an agreement with the owner, that becomes the first month’s rent. If the proposed tenant can’t reach an agreement with the owner, that money is forfeited. If the owner doesn’t agree to the negotiations, the money is returned and the property returns to the market.
If the letter and deposit are accepted by the owner, they agree to take the property off of the market at the TA negotiations can commence.
The LOI needs to explicitly list everything that needs to be done to the property before and during the tenancy. If the agreement is that the owner provides regular cleaning, upkeep or gardening; that needs to be included. If the owner has said he will provide a new oven and wash the walls; that needs to be included too. Things are not done on a handshake or someone’s word with LOIs or TAs, everything must be written out and documented.
Once the LOI is signed, it’s quite difficult to ask for anything else. The TA must include everything negotiated for in the LOI. The LOI must also note anything in the proposed rental that is in disrepair so that the renter is not held responsible for it upon leaving. We suggest that you photograph and document all damage to the property before you move in.
A standard security deposit in the Singapore rental market is a month’s rent on a one-year lease. One month’s advance rental is also required, which should have been transferred with the LOI.
Upon departure, the deposit should be refunded, with the cost of any necessary repairs, within seven days. Make sure the details of this are also detailed in the LOI and TA.
Because there are no strict laws governing these transactions, you may need to enlist legal help if the owner refuses to return your deposit.
Useful Clauses to Know
There are a few clauses that you might want to consider including in your LOI and TA. The first is exclusive to expats and, in the case of changes in your work status or position, is invaluable. The second is reassuring for your peace of mind.
Diplomat Clause: This clause allows non-Singaporean tenants to break their lease before the end of the rental period should they be transferred to another country, lose their job or must leave Singapore for another reason. They are still required to give a few months notice but it’s very useful if the unexpected happens with regard to your work.
Major Construction Clause: Though many owners do not like this clause, it states that if any major construction starts within 100 meters of the property during the tenancy, you may leave with a few months notice. You may be glad to have this should a very disruptive project begin, such as the building of a new condo next door to your building.
If you feel unsure about anything listed in the LOI and TA, of if you simply want the reassurance of a second opinion, it can be very useful to visit a lawyer and have them review your rental paperwork. Please keep this information and these tips in mind when searching for your first rented home in Singapore.