This is an unbiased step-by-step guide for owners on renting their property in Singapore. We have no commercial interest involved with any of the recommendations in this guide apart from enticing you to use our site (which is free). We do not pretend that this guide is exhaustive, so do your own research on top of reading this.
You are a landlord and have a property that you wish to rent? Well, good news: Singapore is considered a pro-landlord country. Singapore laws regarding landlords and tenants are mainly based on the Conveyancing and Law of the Property Act (CLPA) and on common law.
Who are the potential tenants since most Singaporeans own their home? Most renters are foreigners who got a job in Singapore. It can also be young Singaporeans (single or couples) who cannot afford their own home yet.
Step 1 - Know your rights
As a landlord, you can:
- Freely set and negotiate the rental rate of your property.
- Freely set and negotiate the term of lease for your property (up to 7 years). The most common are (from the most to the least popular): 1 year, 2 years, and 6 months.
- In case the tenant fails to pay the rent as stated in the Tenancy Agreement, the landlord may obtain a court order to seize and sell the belongings of the tenant inside the property in order to recover unpaid rent. The landlord may also repossess the property.
- The tenant may not sublease your property without your consent.
Step 2 - Know your duties
As a landlord, you must:
- Respect the right of quiet enjoyment of your tenant, which means you may not go to your rented property whenever you like without previously asking your tenant. Except for emergencies, you should not ask for a visit at late night or on holidays.
- If you sell your property while having a tenant, the Tenancy Agreement will be transferred to the new landlord, which means that if the new landlord wants a vacant property, you will have to terminate the lease early and bear the penalty specified in the Tenancy Agreement.
- You are obliged to provide a property in a tenantable or livable condition, which means no hazardous items, broken windows, etc...
- You must insure your property
- You must pay the property tax
- Make sure that your tenant is legally staying in Singapore (Singapore citizen, PR, foreigner with Employment/Student/Dependent Pass)
- If you are renting a HDB flat, there are some additional requirements that must be met and you must get prior approval from the HDB. Those requirements can be found here: http://www.hdb.gov.sg/fi10/fi10323p.nsf/w/RentOpenMktRentOutWholeFlat?OpenDocument
Step 3 - Set the asking price
To give you an idea of the market price, you can run a search for similar unit from EZ Property or other property websites. The Urban Redevelopment Authority (URA) provides a list of transacted rental rates every quarter that can be found here: http://www.ura.gov.sg/realEstateWeb/realEstate/pageflow/rental/RentalController.jpf
Once you have an idea of the price, you can refine it according to the following criteria:
- Renovations that you made can bring added value to your property.
- Floor: High floors can usually be priced slightly higher; low floors, slightly lower.
- Facing: People from Asia tend to look for North or East facing. South and West are usually less attractive. Westerners usually like bright apartments, so facing can be less of an issue for them. If a building or some trees are blocking the light, this might be more problematic.
- Furniture: Furnished apartments can be rented for a bit more but the quality of the furniture will be important to potential tenants if you increase the price significantly.
- Cracks, broken floor, damaged built-in furniture, leaks: unless you fix it, this should obviously be priced in.
Step 4 - Market your property
At this point, you should decide if you wish to market your property alone or if you need help:
- If you do it on your own, well, we recommend using EZ Property. It's 100% free! Then, be ready to receive a lot of calls/SMS or emails. On EZ Property, you have the option to show only your email address, so you will not be disturbed on your phone. It's up to you. If you decide to use your phone, make sure you have free incoming calls!
You should put as much details in your ad as possible, this will avoid you some questions from prospective tenants. We recommend that you take a couple of pictures of your property and post them. This will guarantee maximum response from potential tenants.
At this point, you should check your schedule for potential visits. Know exactly when you are available and when you are not.
- You may also hire an agent to help you with the rental process. You should be picky here and not just go for the first agent you see just because he is from a major real-estate agency. Think of it as hiring an employee. Ask for a track record of past deals, how long he/she has been in the business, if he/she can provide references, what is the average time for him/her to close a deal.
Of course, agent services are not free. The agent's commission is usually 1 month of rent per year of lease term. There is no fixed rule by law, so you can (and should) negotiate.
Nothing prevents you from hiring an agent while marketing your property yourself. Just be careful when signing a contract with an agent that you can still have the freedom to market yourself.
Step 5 - Screening
From all the response to your advertising, you should try to filter the prospects. Confirm that your property fits their criteria (number of bedrooms, size, budget). When this is confirmed, you can then set up a viewing. We recommend fixing a separate appointment for each prospect to avoid any kind of confusion and for you to be able to feel the seriousness of the prospective tenant. Open houses will save you time, but you will probably lose a lot of potential tenants.
If you hired an agent, he/she should do this screening for you.
Step 6 - Visits
During the visit, try to feel what the prospective tenant likes and doesn't like about your property. If you are renting with some furniture, keep in mind that the tenant might not like it. Some might try to point out flaws. It's part of the negotiation. Don't take it personally.
The tenants might try to bargain so think about what discount you can make (if any). If you have priced your property properly, it should be easy to convince the tenant that it's a good deal for him/her.
If you hired an agent, you may choose to be present or not during the visits. We recommend you do. On top of the previously described prospect feeling, you will be able to judge how the agent is marketing your property.
Step 7 - Letter of Intent
If a prospect is interested in renting your property and wants to make an offer, he should submit to you a Letter of Intent (LOI).
It is usually drafted by you (or your agent) and should include:
- Lease term: Please refer to Step 1 for common lease terms. You can specify here if you give an option to renew with 2 or 3 months notice before the end of the lease.
- Monthly rental rate: The agreed rental price should be there.
- Good faith deposit/Booking deposit: It is usually equivalent to one month of rent and it guarantees you of the tenant's good faith in renting your property. In exchange, you guarantee not to offer the property to someone else until the Tenancy Agreement (TA) is submitted and accepted (see Step 8). Once the TA is signed, this money is converted into the security deposit money or the first month of rent.
- Security deposit: Common practice is the equivalent of one month of rent per year of lease term. The security deposit is returned to the tenant at the end of the lease, without interest, and after deduction of any cost for damage or breach of contract the tenant has made according to the Tenancy Agreement.
- Expiry: This is the time frame you are given to accept or not the rental offer. If you accept, you will submit the Tenancy Agreement for the tenant to sign. If you do not accept it, you must return the good faith deposit to the tenant immediately.
- Additional requirements: The tenant may specify any requirement that he has such as additional furnishing, if he/she intends to sublet the property, if he/she has pets, if he/she requires a diplomatic clause (that allows him/her to prematurely end the lease for work related reasons), if he/she wants you to repaint the walls, etc...
You should ask the tenant to provide a photocopy of his/her NRIC if he/she is a citizen or a Permanent Resident or a copy of his/her passport and Employment/Student/Dependent Pass if he/she is a foreigner.
You may find a sample Letter of Intent here: http://www.ezproperty.sg/download/LetterOfIntent-EZProperty.pdf
Step 8 - Tenancy Agreement
If you accept the prospect's offer, you (or your agent) then need to draft the Tenancy Agreement (TA). This is the binding legal document for your rental. You may hire a lawyer to help you if you wish, but it is not necessary.
Agents often use the standard IEA (Institute of Estate Agents) Tenancy Agreement. You may find a similar Tenancy Agreement here: http://www.ezproperty.sg/download/TenancyAgreement-Apartment.pdf
Here are the main items that should be in the Tenancy Agreement:
- Your name and contact details
- The tenant's name and NRIC/passport number
- Rental rate
- Lease term
- Payment conditions: Specify how you want to be paid and within what time frame. The usual for this is by cheque and within 7 days from the due date.
- Security deposit: Usually, you should ask the equivalent of one month of rent per year of lease term. You may request for the payment of the first month of rent upon signing the TA.
- Repairs: Usually, the tenant is responsible for items costing less than S$100 (can go up to S$200 if you provide high-end furniture). You bear the whole cost of replacement for items more expensive than this amount. This rule does not apply to normal wear and tear for which you are supposed to bear the whole cost.
- Early termination of lease: The tenant might request for a diplomatic clause. Usually, the diplomatic clause allows him/her to terminate the lease with a 2-month notice after the first 10 months (so this clause is usually useful for a 2-year lease). You may add a clause to get financial compensation regarding agent's commission that you have paid should the tenant use this clause. In this case, you would pro-rate the agent's commission to the number of months left on the lease.
- Inventory: Usually comes as an appendix. The tenant might request for additional furniture. If you agree, you should put it there.
- Subletting: The tenant might request the authorization to sublet your property. If you agree, you should put it in the TA.
- Pets: You should ask the tenant if he/she intends to live with pets. If you agree to have pets living in the property, you should put it in the TA.
Once you are happy with your Tenancy Agreement, you should print 2 copies. Sign them and submit them to the tenant. Ask him/her to return one of them to you within a specified amount of time. Ideally, this should happen about two weeks prior to the move-in date, so both parties can fully agree with all the terms of the contract.
Step 9 - Payment of deposit and fees
Upon signing the Tenancy Agreement, your new tenant will have to pay:
- The agreed security deposit (minus the good faith deposit already paid) and the first month of rent in advance if it has been agreed in the TA.
- Stamp duties, which are basically a government tax, are usually paid by the tenant. They are dependent on the rent and lease term. The official website of the Inland Revenue Authority of Singapore (IRAS) provides a calculator. Agents usually take care of this. If you don't have one, you should help the tenant with this (especially if he/she is a foreigner). Stamp duty payment can be made online from the official website of the IRAS: http://www.iras.gov.sg/irasHome/page_ektid8990.aspx
You will have to pay:
Step 10 - Handover of the keys and check-in inspection
On the move-in date of your tenant or a few days before, you (or your agent) will meet him/her at the premises.
You should go through the inventory list and check each item with the tenant. To be fair, if you know that something is broken (fixtures and fittings, appliances, furniture, etc...) you should tell your tenant and either fix the problem or write down that the item was damaged at check in.
Congratulations, it's now time to enjoy the benefits of your investment! We hope that EZ Property was useful to you in this process. If we were, you can help us by making a donation.
Disclaimer: EZ Property and its representatives do not guarantee the accuracy of the information provided and shall accept no liability for loss or damage arising from decisions or actions made by readers of this guide.