Most expatriates choose to lease properties, particularly if they have not sought and attained permanent resident status.
Rental costs in Singapore
Singapore’s rental costs remain in the top 15 for cities worldwide, and averages naturally range depending on size, age, and proximity to the city. Prices are steadily rising in the city and the size of the property on offer in comparison to the rent required can be very alarming for most expatriates. A small two-bedroom apartment in a relatively new condominium development near to central amenities can be found for around SG$3000-5000, and three-bedroom apartments go nearer the SG$6000-9000 range. Semi-detached or terraced homes can be found for SG$6500-10,000, and bungalows near the city center or of historic value can range from SG$12,000-$30,000. To scan rental prices by area, visit iProperty at http://www.iproperty.com.sg or Property Guru at http://www.propertyguru.com.sg.
After finding a suitable property and entering discussions with the landlord, agent, or property manager, you may decide to lease a property. In doing so, you will need to furnish a photocopy of our passport and employment pass, optionally a Letter of Intent, a signed Tenancy Agreement, and a deposit worth one to two month’s rental, depending on your lease agreement. Your company may manage this process for you or provide a relocation assistant to walk you through the process, or you may find and lease a home on your own.
Letter of Intent / Deposit
The Letter of Intent (LOI) is a letter proposing your intention to lease the property and should clearly state any specific requirements you may have regarding the property or tenancy agreement. This is a common step in Singapore, though some skip this process and go straight into a Tenancy Agreement. When submitting a LOI, you should take note of the following:
- Diplomatic Clause: This clause is intended to safeguard you in the event you are no longer employed in Singapore or are transferred to another country. If this clause is included and written properly, you can terminate the lease after 12 months (or another agreed-upon duration) by giving 2 months notice. Thereafter, the security deposit will be refunded to you. Please note that most landlords will only include the diplomatic clause if the lease is more than a year. If this is not in the contract offered to you, you should specifically request it.
- Good-faith Deposit: A booking deposit (usually the amount of one month’s rent) reserves the property, and will be rolled over to become part of the security deposit or advance rental after the Tenancy Agreement is signed.
- Security Deposit: The amount of the security deposit is usually stated in the Letter of Intent. The standard practice in Singapore is usually one month’s rent for every year of lease, payable upon signing of the Tenancy Agreement. When the lease term ends, the deposit will be refunded without interest, unless the landlord deducts from the amount to cover damages or breaches of the covenants stated in the Tenancy Agreement.
- Term of Lease: The standard lease period is one or two years, with or without an option to renew the lease. The lease renewal is usually for another one to two years. For the lease renewal option, the landlord would normally require that you give 2-3 months’ advance notice of your intention to renew. Most landlords will not accept leases that are less than 1 year, unless advertised specifically as short-term rentals. The majority of landlords seek contracts that are for a minimum of 2 years and if there are more than one party interested in renting the property, the likelihood is that the person who is prepared to sign a contract for the longest duration will be successful.
- Your Requirements: Ensure that any additional requirements and requests are stated in the Letter of Intent clearly. After the landlord had signed the Letter of Intent, he is bound by the Letter to provide your requests.
After the Letter of Intent is duly signed, the landlord will prepare a Tenancy Agreement (TA). Any legal fees incurred related to the agreement are usually borne by the tenant; however, if the landlord’s agreement is acceptable or at least easily negotiable, there will usually not be any legal fees required. You will need to prepare the rest of the security deposit and advance rental upon signing of the Tenancy Agreement. The typical amount for a 1-year lease is one month’s rent deposit and one month’s advance rental, and for a 2-year lease, a two month’s rent deposit and one month’s advance rental (your deposit will be minus any good-faith deposit accompanying the Letter of Intent).
The following are important terms to take note of when signing the Tenancy Agreement:
- Diplomatic and Reimbursement Clauses: As previously mentioned, this clause is to protect you in the event of repatriation or your transfer to another country. Most clauses give you the right to terminate the lease after 12 months by giving 2 months’ notice and providing company verification. Thereafter, the security deposit will be refunded to you. The standard Singapore Tenancy Agreement usually includes a reimbursement clause together with the diplomatic clause. This clause states that if you exercise the diplomatic clause, you will have to reimburse part of the commission the landlord had paid to his agent. The reason behind this clause is that the landlord pays the agent a one-month’s rent commission for a two-year lease. If you terminate the lease by exercising the diplomatic clause, you may have to refund the prorated commission. Since landlords are the ones to grant the diplomatic clause, they may also demand inclusion of a reimbursement clause.
- Public Utilities, Telephone and Cable Television: the installation charges and the monthly bills for the following services are typically the tenant’s responsibility: water and electricity, telephone, cable television, and Internet. Sometimes, the tenant can negotiate for some of the fixed bills to be included in the rental amount as a package, which is helpful if your company pays the rental directly instead of giving you a housing allowance.
- Home Insurance: Requirements for / payment of home insurance are usually included in the tenancy agreement, and will be clearly stated. However, remember to clarify with the owner if the agreement is unclear or insurance is not stated at all.
- Repairs and Maintenance: Tenants are usually responsible for maintaining the leased premise and carrying out minor repairs at their own costs. In a standard agreement, the tenant is responsible for repairs under S$100-150, repairs due to their own negligence or misuse, and regular maintenance of airconditioning units.
- Rental Amount: Double-check the rental amount, and be sure you understand the segmentation of the rent in case the landlord divides the rental amount into rental of premises, rental of furniture and fittings, maintenance fees, etc. Just make sure it adds up to the correct amount that you have agreed upon.
- Stamp Duty: In Singapore, the Tenancy Agreement will need to be stamped by the Inland Revenue Authority of Singapore for a fee typically borne by the tenant. Only after the Tenancy is stamped can it be considered a valid contract as evidence in court. This is to protect the interests of both parties. The stamp duty is calculated as follows: For a 1-yr lease: (Monthly rental amount x 12)/250, rounded up to the nearest dollar + $2 for duplicate copy ; For a 2- to 3-yr lease: (Monthly rental amount x 12)/250, rounded up to the nearest dollar and multiplied by 2 + $2 for duplicate copy ; For a 3-yr+ lease: (Monthly rental amount x 12)/250, rounded up to the nearest dollar and multiplied by 4 + $2 for duplicate copy.
- When searching for a rental property you will see that some are advertised as co-broked and others are single-broker. Co-broked means that the landlord has a separate agent to the agent who is advertising the property and in this circumstance you will be required to pay commission to the advertising agent. If the property has a single broker then the landlord should pay all commission. Many agents operate by taking a property that is already advertised and then advertising it again themselves in order to gain commission. Depending upon whether you would prefer a separate negotiator or to cut costs, you may wish to try and find properties that are not co-broked as this can save you a lot of money in commission and it really isn’t necessary to have your own agent.
- When viewing properties remember that fixture and fittings are always negotiable. If there’s something in the apartment that you don’t like you can ask for it to be changed. Try and get as much included in the rental price as possible including plants for any planters, curtains, light fixtures, decking etc. Don’t be afraid to ask.
- Ensure that all your obligations as tenant are clearly detailed in the rental agreement. Check what expenses you are required to cover. Depending on your landlord and the property you rent, you may be expected to pay for the cost of twice yearly air conditioning maintenance, pest control, pool and garden maintenance.
- Photograph and detail any minor defect or issue when you first move into the property. Unfortunately there is very little legal protection for renters in Singapore and there are many horror stories doing the rounds about expats who have lost all of their damage desposit for defects that were in existence before they entered the property.