A selection of frequently asked questions about lease agreements in Singapore

The two figures, namely "Rent" and "Service Charge" are broken down to show

  1. "Rent" payable for the premises and
  2. "Service Charge" associated with tenant's contribution toward the apportioned costs and expenses for services (like central air-conditioning) supplied in relation to or in respect of the Building (common areas and shared facilities like toilets, pantry etc.).

In most cases, rent will be maintained as per the agreed terms throughout the lease, while service charge may be revised anytime during the terms of lease whenever necessary.

"Service charge" is payable by all tenants of the building and fees (based on per square feet/metre) are the same regardless of the leased space. The revision of service charge may be due to changes in utility rates or tariffs imposed by the service provider and/or statutory boards. Any revision will be imposed on all tenants and for reasons of fairness, landlords will not allow any tenants to be exempted from the change.
The landlord is responsible to pay property tax for the annual value that is up to the annual rent for the premises paid by the tenant based on the prevailing tax rate. The tenant is only required to pay the difference in property tax if the annual value of the premises exceeds the annual rent for the premises and/or the tax rate is revised upwards. The costs are imposed on all tenants and for reasons of fairness, landlords will not allow any tenants to be exempted from this.
It is imperative that tenants take up adequate insurance policies to protect them against any theft, loss or damage to their property within the leased premises in the event of fire, any unforeseen or unfortunate situations, as the landlord's insurance coverage will mainly be in the common areas and the structure of the building.
It is the duty of tenants to yield up and reinstate the lease premises back to the original bare condition at the expiry of the lease regardless of the unit's handover condition. However, landlords will generally as much as possible pre-market the unit in the fitted up state to tenants interested in taking over the fittings/fixtures.
For Singapore's commercial market, it is common practice that tenants pay for the landlord's legal costs when a landlord engages a law firm for the preparation of legal documents and providing advice in the event of any comments and enquires from tenants on the lease agreement. This is not negotiable. Tenants however, do have the option on whether to hire lawyers to review and advise them on the lease agreement. For situations when only an administration fee is charged, legal fees may still be payable if there are substantial changes to the original legal documents as the landlord will seek a lawyer's advice.
Commercial leases, unlike residential, do not allow pre-termination of leases or provision of diplomatic clauses. More commonly practiced will be for out-going tenants to novate/assign the lease to a new party in order to be released of their obligations. All expenses which arise out of the pre-termination process will be borne by the out-going tenant.
Subletting of space is not allowed under the terms of the lease. Exceptions though can be made for associate/sister companies of the main tenant to share or sublet the premises with the landlord's agreement. In any case, there should be no monetary gains to be made by the main tenant.
A redevelopment clause is commonly present in lease agreement in the event that the owner of the building have intentions to redevelop or plan major improvements/refurbishment works. Tenants will need to ensure that a fair amount of notice period be given for relocation to take place. There will however, be no compensation given to tenants whether they are a new or a long term tenant.

More reading
The bane of redevelopment break clauses in office leases. What can tenants do to deal with them?
Tenants typically need to inform the landlord 3, 6, or 9 months (sometimes longer for much larger space users) ahead of their intention to renew or return the premises. This is to allow the landlord sufficient time to market the space to the next tenant, and tenants should also take note of the notice period in order not to jeopardize their relocation plans.
A Director or Authorised Representative of the company as reflected in the company business profile will be able to sign off the legal documents. Any other person not listed in the business profile will require a Board resolution.

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