The Story In 60 Seconds
- A tenancy agreement is a legal document that temporarily transfers the lease for a piece of land or property from the landlord to the tenant for a designated period of time. In exchange, the tenant gives the landlord a certain amount of money.
- There are four main types of tenancies in Singapore, but the most common one would be a fixed term tenancy.
- Residential tenancy agreements can take the form of a lease (which allows for the tenant to sublet the property), or a license (which does not allow the tenant to sublet the property).
- While residential tenancy agreements are generally similar, you should pay special attention to these clauses among others:
- Diplomatic & Reimbursement Clause;
- Minor Repairs & Other Maintenance Clauses;
- Option To Renew;
- Late Payment/Non-Payment of Rent; and an
- “En Bloc” Clause
How is a tenancy defined?
According to the definitions set out in the Rent Control Act, a “tenancy” is a legal agreement which temporarily transfers the lease for a piece of land or property from the landlord to the tenant. In exchange for a certain amount of money over a designated period of time, the tenant would have exclusive possession of the land or property. However, this does not include the letting out of furnished rooms. Generally, the duties of the landlord and tenant would be listed in the terms of the tenancy agreement, and if either side fails to uphold those terms, then it could potentially lead to the termination of the tenancy.
Types of Tenancy in Singapore
There are four main types of tenancies in Singapore:
- Fixed Term Tenancy:
- This sort of tenancy has a definitive start and end date, and automatically ends when the fixed term is finished.
- A tenant who refuses to move out after the lease has ended becomes a “tenant at sufferance”. Such a person can be considered a trespasser if the landlord does not give consent for the tenant to continue staying.
- The landlord is entitled to claim double rent from a tenant who overstays, after the termination/expiry of the lease.
- Tenancy at Will:
- In this scenario, the landlord or tenant can terminate the contract at any time, as long as either side gives reasonable notice of their intention to quit the contract, or if either side dies.
- In some cases, this form of tenancy can last for years with the tenant continuing to pay the same rent as stipulated under the expired Tenancy Agreement but it can be ended at any time by either the landlord or tenant without providing a reason.
- Periodic Tenancy:
- Depending on the term of rent payment by the tenant, this form of tenancy can last from week to week, month to month or year to year.
- Either the landlord or the tenant party may give notice to terminate the agreement when the contract is nearing its end.
- Neither party may terminate the agreement before the designated period has ended without having to pay for the months remaining on the lease.
- Service Tenancy
- Based on the expiry date of a service contract between an employee or employer.
- Such a tenancy cannot be assigned or transferred to someone else unless the employer agrees.
Under Singapore’s legal system, residential tenancy agreements are only allowed to take the form of either leases or licenses.
- If the landowner grants the tenant the right to exclusive possession and use of the land in return for rent money, then that would take the form of a lease.
- This also grants the tenant the right to create a sublease and lease out the property to another sub-tenant. In addition, the tenant can also sue other people if they trespass on the property, or create a nuisance.
- But in the case of a licence, it is only a personal arrangement between the landlord and the tenant – where the landlord allows the tenant (or licensee) to use the property for a short period of time only.
- In this case, the licensee does not have the right to assign the property to another person, nor can they sue other people for nuisance or trespass.
Under Singapore’s legal system, residential tenancy agreements are only allowed to take the form of either leases or licenses.
- If the land owner grants the tenant the right to exclusive possession and use of the land in return for rent money, then that would take the form of a lease.
- This also grants the tenant the right to create a sublease and lease out the property to another sub-tenant. In addition, the tenant can also sue other people if they trespass on the property, or create a nuisance.
- But in the case of a license, it is only a personal arrangement between the landlord and the tenant – where the landlord allows the tenant (or licensee) to use the property for a short period of time only.
- In this case, the licensee does not have the right to assign the property to another person, nor can they sue other people for nuisance or trespass.
If you are planning to rent out your property, do note that the government has special regulations regulating both private property and Housing and Development Board (HDB) flats.
Generally, private residential properties must be rented out for at least three consecutive months; while HDB flats have a minimum subletting period of 6 months per application each subtenant.
The Tenancy Agreement
As with any contract that you may sign, it is important to be aware of the terms of the tenancy agreement. Moreover, this document will also help to pre-emptively address any areas of future disputes that may arise over the course of the rental arrangement.
In general, a residential tenancy agreement will give the tenant the right to “quiet enjoyment and exclusive possession” – i.e. the landlord must allow the tenant to occupy the premises exclusively, without any intrusions or disturbances caused by outsiders. But in turn, the tenant must agree to pay regular rent, and if required, agree not to sub-lease the premises to other people.
Aside from basic information detailing the amount of rent, the period of rental, and other relevant details pertaining to the landlord and tenant in the property, the agreement should also include clauses stipulating such topics as:
- the rights and responsibilities relating to maintenance and repair, utilities, insurance matters, stamp duty, access to the premises by prospective tenants, and aircon servicing (if applicable);
- conditions of the security deposit and good faith deposit;
- an early termination clause; and
- a clause detailing what happens if the rent is paid late, or not at all.
If you wish to obtain a standard template for a tenancy agreement, you may find a version written by the Consumers Association of Singapore (CASE) here.
In addition, you should take note of some clauses that are quite important:
- Diplomatic & Reimbursement Clause
- For tenants: This clause should be included in rental contracts that are longer than 12 months. This clause allows you to terminate the lease prematurely in the event that you have to leave Singapore for whatever reason, subject to a minimum notice period.
- For landlords: In turn, if a tenant should request for this clause, you are allowed to include a Reimbursement Clause – which stipulates that the tenant should reimburse a prorated part of the rental agent’s commission (if applicable).
- Minor Repairs & Other Maintenance Clauses
- This clause addresses minor damages resulting from wear and tear of the property and any other related items. Generally, this clause should specify an amount beyond which the landlord would be responsible for the damages.
- In the case of damage caused by the tenant’s negligence, the responsibility would fall solely on the tenant.
- Option To Renew
- This is a clause that allows tenants to extend their lease for another term as long as they give prior notice.
- Once the tenant has exercised this clause, then the landlord must allow the extension to the lease.
- Generally, the clauses will remain the same as the current contract unless specified differently.
- Late Payment/Non-Payment of Rent
- In this clause, the landlord is allowed to set the consequences should the tenant pay rent late, or is unable to pay their rent. Usually, this will involve an interest rate to be imposed on the amount of rent that is outstanding.
- “En Bloc” Clause
- This clause can only be exercised by the landlord, and serves to protect his/her interest in the event that the landlord’s whole condominium is sold for redevelopment. In such circumstances, the landlord can choose to terminate the lease without having to compensate the tenant.
Renting out your residential property as a landlord can be a win-win situation for both you and your potential tenants – especially if demand for rental apartments in Singapore picks up. However, it is equally important to look out for your own interests – whether you are a landlord or a tenant – which is why timely legal advice is necessary if you want to draft a tenancy agreement that fairly protects you.
Frequently Asked Questions
Question 1: What is the tenant’s liability if the tenant wishes to terminate a fixed term tenancy before the tenancy expiry date?
If the tenancy agreement is for a fixed term of 2 years, and if the tenant prematurely terminates the agreement after 1 1/2 years, the landlord will be entitled to claim rental from the tenant for the unexpired 6 months. It is therefore in the tenant’s interest to find a substitute tenant, with the consent of the landlord. The landlord is also under a duty to mitigate his loss by finding another tenant as soon as possible.
Question 2: Is the tenant entitled to use the security deposit to offset rental towards the end of the tenancy?
No. The security deposit held by the landlord is to cover the entire period of the tenancy. The tenant should not use this security deposit to offset rental due and payable to the landlord during the notice period given for the termination of the tenancy.
Question 3: Should all tenancy agreements be accompanied with an inventory?
It is advisable for the Tenant to insist on an Inventory. This will be a record of the items in the rented premises as well as the condition of the said items. At the expiry of the tenancy and during the handover, the tenant should not be in a position where the landlord holds the tenant liable for damage to the items, which in fact had existed at the beginning of the tenancy.
Question 4: Can a landlord lock the tenant out of the leased premises if the tenant is late in paying rent?
Most tenancies agreements give the tenant a grace period of 7 days to pay rent. Late payment interest may also be included in the tenancy agreement. If rental is not paid after the grace period, the tenant is in breach of the tenancy agreement, which gives the landlord the right to forfeit the lease and bring it to an end. However, if the tenant does not peaceably vacate the premises, the landlord should apply for an order of possession before re-entering the premises by, for example, locking up the premises.
Have a question on your residential tenancy agreement?
If you would like to seek legal advice on your tenancy agreement, you can do so by booking a Quick Consult one of our practicing lawyers. With Quick Consult, you can check out in minutes and for a transparent, flat fee of S$49, the lawyers will call you back on the phone within 1-2 days to answer your questions and give you legal advice. Alternatively, you can request a quote from Lucy Netto.
This article is written by Lucy Netto from Netto & Magin LLC and Tang Chee Seng from Asia Law Network.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.
You may be interested in these articles:
- How to resolve disputes with your condominium management or MCST
- Security Deposits: A Guide For Tenants & Landlords
- Implied Covenants in Leases
