When you rent a property in Singapore, the Tenancy Agreement (TA) is one of the two most important documents involved in the process, the other one being the Letter of Intent (LOI). The TA is the contract that binds both parties into the leasing agreement.
Tenancy Agreement Process
After the LOI is duly signed. The landlord will prepare the TA. Any legal fees incurred for the drawing up of the agreement is usually borne by the tenant. However, if the landlord’s agreement is acceptable, there will usually not be any legal fees involved.
The tenant will need to prepare the security deposit and advance rental upon signing of the Tenancy Agreement. Generally, for 1 year lease – 1 month’s deposit and 1 month’s advance rental and for 2 years lease – 2 month’s deposit and 1 month’s advance rental. Minus the good faith deposit (also known as booking deposit, if applicable) that you have paid when signing the LOI.
Early Termination Of A Tenancy
Usually, termination of a tenancy happens only after either party, the landlord or tenant, gives an appropriate period of notice. The appropriate period for notice is most often decided upon before an agreement is signed – it may be influenced by the length of the tenancy period or frequency of rent payment. For instance, if the rent frequency is monthly, the appropriate notice period will be a month.
Landlords usually establish rules of early termination of tenancy agreement with prospective tenants before any agreement is signed. Tenants should not, in any scenario, have the tenancy terminated before the lease or license ends. If certain unforeseeable circumstances requires a tenant to do so, landlords should be notified and be prepared to present monetary compensation.
Digitalizing the LOI and TA Process
As digitalisation asserts its position in Singapore’s economy, real estate wouldn’t be an exception. If e-commerce in the retail and F&B industry can prove to be so successful, why can’t real estate?
Carrying out property transactions over the internet, much like buying books or food, will soon become a reality for everyone. The inherent problem with carrying out this transaction over the internet is ensuring the integrity of data and fraud prevention. The use of Blockchain technology can make real estate transactions safer, reliable, efficient, faster and cheaper. Moreover, it aids data transparency and enables use of smart contracts for real estate transactions.
With the integration of blockchain technology, the LOI and TA procedure is made simple, accessible and speedy. No longer will landlords, tenants, or even salespersons for that matter, have to travel to physically courier the documents. With just a simple push of a button, the agreements can be delivered online to the other party to be signed and sealed. The digitally signed document is recognised in a court of law as much as a physically signed document.
It is market practice in Singapore that tenants pay stamp duty for tenancy agreements. According to IRAS, if the tenancy agreement is signed in Singapore, stamp duty has to be submitted within 14 days; 30 days if the agreement is signed overseas. Typically, duty rates are 0.4% of total rent for the period of the lease. This may differ depending on various circumstances. For more details please refer to the type of tenancy agreements and corresponding stamp duty rates on IRAS site. Payment of stamp duty on leases can also be done easily online. Please note that the Court of Law in Singapore will not recognize tenancy agreements without it being stamped.
This article is submitted by Averspace which helps Singaporeans to save money and time by empowering them to sell, lease and buy property on their own terms without the need for agents or intermediaries.