Leasing practices vary from country to country, and so does the terms and conditions. This leasing guide is to help you to better understand the common practices in Singapore and assist you in the process of securing your business space.
The Leasing Process
1. Plan & Establish Your Requirements
Planning is essential when exploring leasing options. It is useful to prepare a checklist of your needs before you start on your office search. This may include:
- Location & Accessibility
- Office Size – This usually depends on the number of employees. Evaluate both short and long term plans. You may wish to allocate additional space for future expansion.
- Start Date
- Lease Period
- Other requirements, examples include security, technical requirements, IT and communications infrastructure, etc.
2. Review Options
With a checklist, you are ready for your office search. You can either liaise with landlords directly or engage a property agent to assist you. Allow sufficient time to review and shortlist options.
Before committing on the lease or if you are unsure as to which shortlisted office space works best for you, you may engage a workspace/interior designer to perform a ‘test-fit’ of your shortlisted option(s) to ensure the space you are renting fits your needs.
‘Test-fit’ helps in planning the most efficient use of space. The designer can also work out the fit-out cost to enable you to compare the shortlisted options based on efficiency and financial aspect.
3. Commit on the Lease
- Letter Of Intent
Once you have identified the office space that is suitable, prepare and submit a Letter of Intent (LOI) to the Landlord’s representative to indicate your interest in renting the space. The LOI states the key lease terms such as date of possession, date of lease commencement, lease duration, gross rent and other essential information.
- Letter Of Offer
Upon receiving the LOI, the landlord will usually do a check on the company profile and paid-up capital. Once the landlord is satisfied that the company is financially sound and both parties have agreed on the basic lease terms, a Letter of Offer (in duplicate) will be issued by the landlord along with the sample Tenancy Agreement document for your perusal and execution.
To indicate your acceptance of the lease terms, you will need to sign and return copies of the Letter of Offer along with the security deposit, stamp fee and for some landlords, a month’s advance gross rent, usually within seven days of receipt.
Upon signing the Letter of Offer and the deposit and advance rent furnished, the premises will be secured and you will be bound by the contractual obligations under the lease. The landlord will proceed to stamp the Letter of Offer and return one signed copy of the Letter of Offer together with the stamp certificate to you.
- Tenancy Agreement
After the acceptance of the Letter of Offer, you will be handed a Tenancy Agreement (TA) prepared by the landlord for your execution. The TA is based on the same terms and conditions specified in the sample copy furnished to you at the Letter of Offer stage. The terms and conditions are usually standard and apply to all tenants in the building.
In Singapore, most landlords use similar terms and conditions that are reasonably simple to comprehend. However, you may seek professional legal advice at your own cost. Do note that as a common practice, the legal fee in relation to the preparation of the TA by the landlord’s solicitors is also paid by you.
Points to Note:
- The tenant usually must produce a certified true copy of their Business Registration certificate with the Accounting and Corporate Regulatory Authority (ACRA), the Memorandum of Articles, and company’s board minutes of resolution to execute the lease prior to signing the lease/tenancy agreement.
- Ensure that you have the necessary approvals, licences and permits from all relevant authorities before you carry out your business operations in Singapore.
- You may wish to refer to the Common Leasing Terminology in Singapore for reference on the key lease terms and costs associated with the lease.
4. Take Possession and Fitting-Out
After the TA has been duly signed and all required payments such as security deposit paid, you will take possession of the property on the Date of Possession indicated in the LOI and carry out fitting-out works. Do note that you need to submit all plans and specifications for your proposed fit-works to the landlord and relevant authorities for approval before you can proceed with your renovation. You will also need to contact relevant authorities for getting connections such as utilities, telephone, internet, etc.
Once the fitting-out works is completed, you can move in and commence your business operations.