New code of conduct for tenancy agreements for retail premises; Govt backs call for new laws

Landlords and tenants must be transparent about costs charged and third-party costs in preparing the lease agreement.
Landlords and tenants must be transparent about costs charged and third-party costs in preparing the lease agreement.ST PHOTO: DESMOND WEE

SINGAPORE - A new initiative was introduced on Friday (March 26) by an industry-led committee to ensure that retail tenants are given a fair deal in their lease agreements.

The Fair Tenancy Pro Tem Committee has also recommended that the Government introduce laws to ensure landlords and tenants comply with a code of conduct. 

This was confirmed at a media briefing by Minister of State for Trade and Industry Low Yen Ling, who said the Government supports the committee’s recommendation and will be working closely with industry stakeholders on the details in the next few months.

Meanwhile, she said, the Government would be an early adopter of the code and all government landlords would abide by it.

The issue of fair tenancy practices bubbled over at the height of the Covid-19 pandemic last year, when many tenants felt that landlords were abusing their powers, refusing to lower rents or even pass down rental rebates and waivers at a time when business and revenues were down.

Speaking to the media on Friday at a separate media conference at SBF Centre in Robinson Road, committee chairman Michael Lim Choo San, who is also chairman of financial services company Nomura Singapore, said he believes the code will bring about significant improvement from where the industry was before, and that it covers most of the issues between landlords and tenants. 

“I would say that at this stage, we are not aware that there are any significant issues of differences,” he said.

The code will apply to all retail premises held under a lease agreement entered into on or after June 1, with a tenure of more than one year.

It covers key tenancy terms, including who should bear the costs in preparing the lease agreement, what an acceptable rental structure is and when a landlord or tenant can terminate a lease early. 

While waiting for a possible law to take shape, the committee members will adopt the code from June 1, and will encourage their stakeholders in the retail, food and beverage and lifestyle sectors to abide by the guidelines.

The committee has heft as it includes key industry leaders and heads of major trade associations such as the Restaurant Association of Singapore (RAS), Singapore Retailers Association, Association of Small & Medium Enterprises, Reit Association of Singapore and Real Estate Developers’ Association of Singapore. 

Major landlords such as CapitaLand, Frasers Property Retail and City Developments are also part of the committee.

To ensure that the code is complied with, a Fair Tenancy Industry Committee (FTIC) comprising landlords, tenants and neutral parties such as academics will be formed by June 1.

If there is a dispute over compliance with the code during lease negotiations, either the landlord or the tenant can approach the FTIC for advice. 

This committee will also monitor issues of non-compliance and can update the code if required, said Mr Lim. 

If a party is repeatedly found not complying with the code, it could be named and shamed, said Mr Lam Yi Young, chief executive of the Singapore Business Federation.

“Of course, we hope that we won’t have such cases, that landlords and tenants will abide by the spirit of it, but that is something the FTIC would be prepared to do,” said Mr Lam.

The code of conduct and related materials are available on the Singapore Business Federation website. 

RAS president Andrew Kwan said the announcement of the code is not the end of a process.

Instead, it is “a beginning of a new journey between tenants and landlords, of one that is transformative, one that will reflect the symbiotic relationship that it ought to be, going forward”, he added.