Question 1

Why are there two prices quoted in the lease agreement?

Accepted Answer

Lease agreements often separate costs into "Rent" (payable for the premises) and "Service Charge" (the tenant’s contribution to apportioned building services such as central air-conditioning, common areas and shared facilities). In most cases rent remains as agreed during the lease term, while service charge may be revised during the term when necessary.

Question 2

Why does the landlord have the rights to revise "Service Charge" during the lease term and is this clause negotiable?

Accepted Answer

Service charge is payable by all tenants of a building on the same basis (typically per square foot/metre) regardless of the leased space. Revisions may occur due to changes in utility rates or tariffs imposed by service providers or statutory boards. Any revision is applied to all tenants and landlords generally do not allow exemptions, so it is typically not negotiable.

Question 3

Why do tenants need to bear the increase in property tax when they are not the owners of the property?

Accepted Answer

The landlord pays property tax up to the amount attributable to the annual rent for the premises at the prevailing tax rate. Tenants may be required to pay the difference if the annual value assessed for the premises exceeds the annual rent and/or if the tax rate is revised upwards. These costs are commonly applied across tenants and landlords generally do not allow exemptions.

Question 4

Insurance – Why do tenants need to take out insurance policies for the premises?

Accepted Answer

Tenants typically take out insurance to protect against theft, loss, or damage to their own property within the leased premises (for example in the event of fire or other unforeseen incidents). Landlord insurance generally focuses on the building structure and common areas rather than tenant-owned contents inside the premises.

Question 5

What does yielding up and reinstatement at the expiry of term mean?

Accepted Answer

Yielding up and reinstatement means the tenant must return the premises to the landlord at lease expiry, typically reinstated to the original bare or agreed condition, regardless of the condition at handover. In practice, landlords may try to pre-market the unit in its fitted state to incoming tenants interested in taking over fittings and fixtures.

Question 6

Why do tenants have to pay the landlord's lawyer's fee when they are not acting for me?

Accepted Answer

In Singapore’s commercial leasing market, it is common for tenants to pay the landlord’s legal costs for preparing lease documents and advising on tenant comments and queries. This is generally not negotiable. Tenants may separately appoint their own lawyer to review and advise them, and additional legal fees may apply if substantial changes to documents require further legal input.

Question 7

Why is there no pre-termination clause in the lease agreement?

Accepted Answer

Commercial leases typically do not allow early termination in the way some residential leases may. Where a tenant needs to exit early, a more common approach is to novate or assign the lease to a new party, subject to the landlord’s requirements. Costs arising from the early-exit process are usually borne by the outgoing tenant.

Question 8

Are we able to sublet the premises?

Accepted Answer

Subletting is commonly not permitted under standard lease terms. Exceptions may be allowed for related or associate companies to share or occupy space with the landlord’s agreement. In such cases, landlords may require that the arrangement does not generate monetary gain for the main tenant.

Question 9

Why is there a redevelopment clause?

Accepted Answer

A redevelopment clause may be included if a building owner intends to redevelop or carry out major improvement or refurbishment works. Tenants should ensure that a fair notice period is provided to allow relocation. Typically, there is no compensation payable to tenants whether they are new or long-term occupiers.

Question 10

Option to renew – When?

Accepted Answer

Tenants usually need to notify the landlord of their intention to renew or vacate several months in advance (commonly 3, 6, or 9 months, and sometimes longer for larger space users). This notice allows the landlord time to market the space and helps tenants plan relocation without missing critical timelines.

Question 11

Who can execute the Letter of Offer and Lease agreement?

Accepted Answer

A director or authorised representative reflected in the company business profile can typically sign the legal documents. If the signatory is not listed in the business profile, a board resolution is usually required to authorise execution.

Question 12

What does the service charge in the gross rental cover?

Accepted Answer

Service charge is typically included in gross rent and may be around S$1.20 to S$1.70 per square foot per month, depending on the building. It commonly covers items such as electricity and chilled water for central air-conditioning during normal office hours (unless independently metered systems apply), cleaning and maintenance of common areas, security, property tax, building insurance, water for restrooms, fire alarm system operation, lift maintenance, and exterior cleaning.

Lease Agreement FAQs Singapore

Common Questions About Office Lease Agreements in Singapore

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