Code of conduct lays out fair tenancy practices for landlords, tenants

One key guideline is charging rent based on a single computation. ST PHOTO: JASON QUAH

SINGAPORE - Landlords and tenants of retail premises will soon have to abide by a code of conduct that lays out fair tenancy practices. It will apply to lease agreements entered into on or after June 1 with a tenure of more than one year.

One key guideline is charging rent based on a single computation. This means that the rent structure must not have a formula of "either/or, whichever is higher".

Landlord and tenant must both agree on any exception to this, and both parties must sign a joint declaration and submit it to the Fair Tenancy Industry Committee within 14 days of signing the lease agreement.

Landlords and tenants must also be transparent about costs charged in preparing the lease agreement as well as other third-party costs. These costs must be legitimate and justifiable, and must not be used as a way to profiteer.

Landlords must allow their tenants to choose their own open electricity market retailers.

A landlord can terminate a lease early if substantial redevelopment works requiring tenants to vacate the premises are to be carried out.

Similarly, tenants can terminate their lease early only if their business principal is insolvent or if they have lost distributorship or franchise rights not due to non-performance or a breach at their end.

In these two cases, both landlord and tenant must give at least six months' written notice to the other party and pay the compensation amount specified in the code.

The code also does not allow lease agreements to include exclusivity clauses that bar landlords from leasing to a business competitor of an existing tenant.

(From left) Mr Chia Ngiang Hong, President, REDAS; Mr R. Dhinakaran, President, Singapore Retailers Association; Mr Andrew Kwan, President, Restaurant Association of Singapore; Mr Lam Yi Young, CEO, SBF; Mr Michael Lim Choo San, Chairman, Fair Tenancy Pro Tem Committee; Mr Low Chee Wah, Vice President, REITAS; Mr Kurt Wee, Chairman, President, ASME; Mr Terence Yow, President, SGTUFF, at SBF Centre on March 26, 2021. PHOTO: SINGAPORE BUSINESS FEDERATION

It also prohibits lease agreements from including sales performance clauses that allow landlords to end a lease early if sales targets are not met by the tenant.

More details on the code of conduct can be found at the Singapore Business Federation website.

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