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Common Lease Terms and Conditions
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Procedures
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Rentals
Generally office rentals are nearly always quoted at a gross rate per sq ft per calendar month. This includes service charge, but excludes Goods and Service Tax (GST) which is currently 7%. There are no other hidden rental overheads. Rental is usually paid quarterly in advance, but monthly rental agreements also exist. |
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Service Charge
The charge covers landlords costs such as property tax, maintenance and management of common parts and air conditioning of the offices and common parts during normal office hours. The average service charge is between $0.80 to $1.20 per sq ft but is included in the gross rental. The exact figure will be specified in the lease but can change during the lease term. |
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Length of Lease
Normally 3 years but 2 year leases are also quite popular. Longer leases over three years are now difficult to negotiate because this is a rising market. A five year lease with a rent review is possible in many cases but then the tenant is locked in even if they are unhappy with the then market rate. |
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Options to Renew
These are standard and lease renewals for 1 to 3 years should be no problem. Care should be taken in the drafting the revised rental clause in the option, which is sometimes worded "at a rate to be agreed" or "at market rate" with no provision to settle any disputes as to what is a fair rate. |
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Legal Fees
The ingoing tenant is normally responsible for both parties reasonable legal costs incurred in connection with the preparation of the lease documentation. The scale varies from landlord to landlord but this is not a major expense item. |
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Utilities
Electricity is usually supplied to the premises and the charges for consumption are paid by the tenant. The tenant is responsible for connection charges and opening an account with the relevant authorities. See later notes. |
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Maintenance
Tenants are only responsible for internal repairs (excluding structural items). The repair and maintenance of the exterior and common parts is the owners/management corporations responsibility. |
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Air Conditioning
Normally provided by the landlords during normal office hours. Usually:
Weekdays: 8.00am to 5.30 - 6.00pm
Saturdays: 8.00am to 1.00pm
After office hours air conditioning can often be provided on an hourly basis on giving sufficient notice. Costs range from $40 to $80 per hour depending on the size of the floor/area.
Alternatives include fitting your own air handling unit and tapping into the landlords chilled water supply. Costs are charged per ton of chilled water. Some tenants install their own split unit/condenser but not all buildings will allow external fittings to their buildings.
For regular out-of-hours use, tapping into the landlords water supply is the most cost effective. For infrequent use free standing / portable air conditioning units are commonly used. |
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Car Parking
The number of lots allocated to each tenant is usually based on the total floor are leased. The average ratio is 1 lot per 1,000 to 2,000 sq ft. Costs average $100 to $250 per month per lot, exclusive of GST and is not included in the office rental. Additional spaces are sometimes offered on a seasonal quarterly basis, subject to availability. |
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Reinstatement
All tenants are required to put the premises back into their original state (fair wear and tear excepted) at the termination of their lease. This normally takes a period of 2 weeks for the average unit and costs around $6 to $10 per sq ft. |
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Rent Free/Fit-Out Period
This will depend upon the size of the premises and is normally one month. For larger space users 2 to 3 months is often possible. This will always be given outside the lease term. |
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Stamp Duty
The ingoing tenant is also responsible for the cost of the stamp duty fees payable on the lease documentation. As an estimated guide, the amount payable on a standard 3 year lease would be approximately 10% of the monthly rental. |
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Letter of Offer
On agreeing heads of terms the landlord will normally issue a Letter Of Offer which outlines the general terms upon which the agreement is based. Often this is accompanied with a copy of a draft standard lease. The landlords usually give 1 week to 10 days for the tenant to sign the Letter of Offer and return together with an initial deposit of 1 months rental. |
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Lease Documentation/Security Deposit
Before the tenant signs a Letter Of Offer and pays over the initial 1 months rental deposit ( sometimes landlords ask for 3 months) he/she should be happy with the terms of the offer and be reasonably comfortable with the draft lease. This is because the deposit is normally non refundable.
Whilst it is not intended that all the terms and terminology of the lease are finalized at this stage, the tenant should be satisfied there are no major obstacles in the lease before signing the Letter of Offer.
After signing the Letter of Offer tenants as usually given one month to finalize the drafting of the lease. Many landlords in Singapore will have their own standard lease documentation which they will not want to vary too much. Therefore major changes are unlikely and we always recommend all tenants to use local lawyers familiar with landlord and tenant legislation in Singapore. |
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Taking Possession
Before taking possession the tenant must have signed the lease and paid the remainder of the deposit monies and one months rent in advance i.e. four months rent in total. |
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