Many companies requiring office space for rent in Singapore are often not aware of the process pertaining to the composition of the lease agreement, paperwork and protocol related to it. So, this guide serves as information regarding the process of office rent in Singapore especially in the tenancy agreement stage. The following will help you in managing this task easily.
You can relocate to your ideal office space in Singapore in two ways. The first option is you can hire an office rent agent and the second one is you can search the office space for rent yourself. If you want to go with the second option, then you will have to look through different websites, classified ads and local newspapers that advertise for available office space. But, you must know that this option of searching an office space for rent can be very time-consuming. So, the best way is to hire an office rent agent in Singapore, because the landlord pays commission to the agent instead. Hence, tenant could engage the service of this agent free of charge (provided rental per month goes above S$3000).
Also, you must be aware of all types of costs for leasing an office before you sign any agreement in Singapore. In addition to the office rent, some other bills like office cleaning, telecommunications, electricity, public liability insurance, renovation deposits etc. should also be known.
The Process of Tenancy Agreement
The 4 most common steps required for signing and negotiating any tenancy agreement include:
1. Letter Of Intent
When you have found your required office space, you must start negotiating. You should request your agent to put forward a Letter of Intent to the Landlord’s representative. If you do not have any agent, you can do this on your own. The LOI or Letter of Intent is just a brief letter, outlining the basic terms & conditions associated with the office rent. It also allows the landlord to have a grasp of how serious you are in desiring to rent their office space. This process can be time-consuming so you should be patient.
2. Letter of Offer
When the landlord receives the Letter of Intent, he will perform a background check on your company including its paid-up capital so that he is assured of your company’s ability to pay the office rent. When the landlord is satisfied with the checks and both parties agree on the terms, he would issue the Letter of Offer along with the draft copy of the tenancy agreement. After vetting through the documents, you can then return a copy of the signed Letter of Offer, together with its stipulated payment such as the balance security deposit, one month advance rent, admin or legal cost etc . As the Letter of Offer gets signed and the payment is deposited, the space will be available to you according to the date of taking possession of the office which is spelt out in the Tenancy Agreement.
The landlord will hand over the Tenancy Agreement to you for your signature and company stamp endorsement once the Letter of Offer gets signed. In Singapore, the Tenancy Agreement is a very standardized contract, but if you want, you can use your own legal service or lawyer to draft out relevant clauses.
Once you sign the lease agreement, you must pay the stamp duty to IRAS or Internal Revenue Authority of Singapore. Stamp duty related to the lease, includes some fixed rental for entire rental period. It is computed on the basis of gross rent. If you sign the document in Singapore, the stamp duty should be paid within 14 days from the execution date of the tenancy agreement. If you sign the document outside Singapore, it must be paid within thirty days from the date of execution.
4. Taking Possession of the property
Once the Tenancy Agreement is signed and the security deposit paid, you will be able to take possession of the premises. Generally, you can do any fitting out, alteration or modification to your office space but approval must be obtained by the landlord. At this point, you must focus on completing the renovation as quickly as you can so as to safe time on the free fitting-out period given by the landlord. For getting the connections like internet, telephone, utilities, etc., you should contact the relevant authorities. You will have to contact some agency for office cleaning too.
In conclusion, even though the above are just common procedures for office rent in Singapore, be prepared for any variations as not all landlords practice the same. The key is to engage the service of an office space agent who is familiar with the practices of different various landlords just so that to anticipate this issue.