Renting a property in Singapore can be rather complex, given the maze of options and regulations you have to navigate. This makes it essential to stay up-to-date with all the trends as well as the rules surrounding them regardless of whether you are a local looking for a rental property while waiting for your home to be built, or an expat relocating to Singapore.
In this article, we provide you with a one-stop resource for all you need to know about renting in Singapore. By understanding all the necessary terms, the process, and your rights as a tenant, you will be well-equipped with all the knowledge you need to secure your ideal rental property in no time.
Understanding the Rental Market in Singapore
Due to the limited supply of residential properties and high demand from Singaporeans and foreigners, the rental market in Singapore is known to be highly competitive. Moreover, according to the Urban Redevelopment Authority (URA) and the Housing Development Board (HDB), there is an increase in rental demand from locals driven by the BTO construction delays, causing rental prices to surge in tandem.
There are various types of residential properties available in Singapore, including private and public housing options. Renters have the option to rent HDB flats, condominiums, apartments, or landed houses. You can read more about the different types of residential properties here. Each of these options has a different price range and conditions for renting.
Rental Jargons
Now that we have an overview of the rental market in Singapore, here are some terms you should take note of before you start the process of renting your new home.
Letter of Intent (LOI)
A Letter of Intent (LOI) is a document given to the landlord by the tenant, declaring their intent to rent property. This is not a legally binding document, instead, it serves as a preliminary agreement that briefly outlines the terms and conditions of the agreement between the landlord and tenant.
The LOI includes the names of the parties involved, property address, and agreements made such as the proposed rental amount, security deposit amount, lease terms, and special requests and conditions. Examples of special requests can be to keep a house pet or to have the landlord install wifi for the tenant prior to the signing of the formal agreement.
Signing the LOI typically indicates that the tenant is no longer looking for other rental properties, and the landlord is no longer going to consider other prospective tenants. However, it is important to note that not all landlords will ask for an LOI. Typically, upon signing the LOI, the tenant must pay the landlord a good faith deposit.
Good Faith Deposit
A good faith deposit, or booking deposit, refers to a downpayment a tenant pays a landlord to secure the rental property for a specific period of time. This is paid to the landlord as soon as the LOI is signed and further indicates your intention to rent the property.
The amount of the good faith deposit is typically one month’s rent if the tenant signs a one-year lease, and more if the lease is longer. This deposit may also serve as a rent advance or a portion of the security deposit, depending on the terms that both parties agree to.
Security Deposit
A security deposit is the sum of money paid to the landlord by the tenant as a type of financial protection or compensation for any damage that may be caused to the property, unpaid rent, and breaches of the tenancy agreement. This is paid at the time of signing the tenancy agreement along with the first month’s rent payment.
The amount of the security deposit to be paid is stated in the LOI and is also usually one month’s rent in a one-year lease, and more if the lease is longer. In some instances, the good faith deposit counts as the security deposit and the tenant can simply pay the remaining balance once the tenancy agreement is signed.
Once the tenancy agreement is terminated and all conditions and obligations on the tenant’s end have been fulfilled, the security deposit is returned to the tenant without any deductions. However, if any damages are made to the property (beyond the normal wear and tear), the landlord is entitled to deduct a portion or the entire security deposit.
Tenancy Agreement (TA)
A Tenancy Agreement (TA) is a legally binding contract between the tenant and the landlord that sets out the terms and conditions of the lease. This document outlines the terms and conditions that govern the rental of the landlord’s property and also contains the important details that both parties must adhere to throughout the period of the lease. The terms and conditions that are written in the tenancy agreement are the same ones that are agreed upon in the LOI.
The details stated in the tenancy agreement include the names and contact information of both parties, the address and description of the rental property, the duration of the tenancy, payment terms, the amount of the security deposit required along with its conditions, and the termination clause which comprises the conditions and notice period for terminating the tenancy agreement before its end date.
Additionally, the contract states the list of responsibilities of both the tenant and the landlord regarding property maintenance, repairs, utilities and services and any house rules and restrictions the tenant must adhere to.
Rental Process
The rental process in Singapore involves 6 key steps.
1. Property Search & Viewing
The first step in the rental process involves conducting research on the rental market in Singapore to determine what options you have available based on the different rental rates, locations, property types, and your budget. Then, you can start scheduling appointments to view properties that you have shortlisted in order to decide which place is right for you.
In this step of the process, you can take note of the size and condition of the property you are viewing, along with the facilities and amenities surrounding the property.
2. Application, Negotiations & Offer
Once you have decided on which property you are interested in renting, you can submit a rental application to the landlord and provide all the information that may be required for the process. This can include personal information, employment details and any additional information the landlord requests. This step also involves negotiations regarding the rental price, different terms and conditions of the deal, and the offer to rent.
3. Letter of Intent (LOI)
After the negotiation is done, an LOI is written up and sent to the landlord along with the good faith deposit.
Take note that in many cases, this step can be skipped. This is dependent on whether the landlord and tenant agree to do so and are willing to sign the tenancy agreement straight away.
4. Paying Rental Stamp Duty
The fourth step in the rental process is the payment of the rental stamp duty. Tenants are required to pay 0.4% of the total rent for the period of the lease.
5. Inspection and Inventory
This step includes conducting a thorough inspection of the property to ensure that there aren’t any damages or defects. Make sure to double check the inventory list to ensure that every provision and piece of furniture is documented properly. In the event that there are any damages or defects, ensure that the landlord is informed to prevent any disputes in the future.
6. Signing the Tenancy Agreement
Finally, you can sign the tenancy agreement after going over it in detail and pay the landlord the remaining rental amount before moving into the property.
Ensure that you have a copy of the agreement for your records and to refer back to in the face of any conflict or issues should it arise at any point during the tenancy period.
Tenant Rights
Tenants in Singapore are entitled to certain rights and protections that are stated in the tenancy agreement between a landlord and tenant. Here are a few:
With a lease, a tenant is entitled to their privacy without any unnecessary interference from the landlord throughout the duration of the tenancy agreement. Landlords can typically only enter the property with prior notice to the tenant or in emergency situations.
Furthermore, landlords generally are not permitted to increase the rent throughout the tenancy period unless it is explicitly stated and agreed upon by both parties in the tenancy agreement under a particular provision that allows for it under certain conditions. If the landlord chooses to increase rent, he or she must give the tenant a month’s notice at minimum, before the increase takes effect.
Landlords are required to provide tenants with a notice, typically a month, in advance if they choose to terminate the tenancy before the agreed-upon end date. This notice should be provided in writing with a specified date. As a tenant, you are also required to do this.
Overall, it is important for you to carefully review the tenancy agreement before signing, as your rights as a tenant are stated within the agreement and will be in effect throughout the tenancy period.
Consideration
Throughout the entire renting process, there are many important decisions you must make as a tenant that will determine your experience throughout the duration of your tenancy. Some things to take into consideration when searching for the perfect rental property include budgets and rates across the market, location and housing type, and whether or not you plan on self-sourcing or working with a realtor.
Budget
Before you start looking for rentals, the most important factor you must take into consideration is your budget. When you plan your budget, decide how much you can spend on rent per month based on your monthly income. Make a list of the extra costs that will be incurred throughout the tenancy period. These include utilities, maintenance fees, insurance, and some money set aside for emergencies. Additionally, ensure that initial costs such as security deposits, good faith deposits, and rent advances are included in your budget.
Some other things that can further help you finalise your budget are discussed below.
Type of Accommodation & Location
Ideally, your new home should be located somewhere with easy access to your workplace or public transportation. You should also consider the proximity to amenities such as malls, healthcare facilities, entertainment hubs, and schools if you have children. In a nutshell, you should look for a location that is aligned with your preferred lifestyle.
Take note that rental rates are influenced by the location of the rental property, the property/room size, and the property type. Certain locations such as those in the city centre are generally more costly to rent than places outside the city centre.
Self Sourcing vs. Working with a Realtor
Finally, a crucial point to consider in your rental journey is whether you want to self-source or work with a realtor.
As a renter, you can search for properties on your own through property websites or personal connections. Self-sourcing enables you to exercise more control over the entire search process and have lower costs because, with this option, you will not incur any commission fees.
So, if you have a smaller budget, this option could be ideal for you. However, you may have to spend more time and effort conducting your own research and communicating with different landlords on your own.
On the other hand, working with a licensed realtor will enable you to receive professional guidance throughout each step of the rental process. Realtors are able to source for a wider range of options available for you to choose from and will also have the expertise to negotiate terms with your landlord for you. This is a better choice for you if you have a slightly larger budget as commission fees are involved when working with a consultant and can typically equal a month’s rent on a one-year lease.
Take note that realtors are not allowed to represent and collect commission fees from both the landlord and the tenant. If you are not represented by a realtor and your landlord is, you do not have to pay any commission fees.
Conclusion
Renting in Singapore involves several steps through which you need to make important considerations such as budgeting, choosing the right type of accommodation, finding the ideal location that aligns with your lifestyle, and deciding whether you want to work with a realtor or not.
Moreover, it is essential for you to familiarise yourself with how a tenancy agreement works and what your rights are as a tenant in order to rent a home where you feel safe and where your needs are met.
We hope you found some useful tips from this article that can help you throughout the process of renting property. If you are looking for a rental property in Singapore, feel free to contact us here for any assistance or guidance throughout your rental journey.
As always, see you in the next one!
