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Code of conduct lays out fair tenancy practices

Code of conduct lays out fair tenancy practices

Source: Straits Times
Article Date: 27 Mar 2021
Author: Charmaine Ng

One key guideline is charging rent based on a single computation.

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.

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

Panel unveils plans to ensure fair deal for retail tenants

A new initiative was introduced yesterday 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 yesterday 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.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.


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