Fair Tenancy Framework

Introduction

The Fair Tenancy Framework (Framework) aims to establish a set of clear leasing guidelines and negotiation principles for small businesses looking to rent premises for commercial, industrial, retail and food and beverage activities. These guidelines are developed based on the feedback and studies on the impact of rental overheads on business operating costs.

Objectives

The Framework aims to help tenants and landlords understand the key terms and conditions of the lease agreement, the respective roles and responsibilities and the implications of prevalent industry lease clauses. It also serves as a checklist for negotiation between tenants and landlords.

The Framework also highlights to landlords the concerns and perspectives of tenants. With a common understanding, it will encourage both parties to conduct open, transparent and fair negotiations.

Framework

The Framework was developed by the Rental Practices Working Group (RPWG) of the SBF-led SME Committee (SMEC) and outlines a three-pronged initiative:

Part A: Rental Data Transparency – Work with the relevant government agencies to develop rental data information for businesses

Part B: Education and Awareness – Develop a Business Leasing Guide and a Basic Reference Lease Agreement for Business Space to help small businesses understand lease terms and conditions

Part C: A Preferred Dispute Resolution Channel – Facilitate partnerships between trade associations and chambers (TACs) and the Singapore Mediation Centre (SMC) for mediation to serve as a preferred dispute resolution channel to resolve issues between tenants and landlords.

Download the Fair Tenancy Framework Guide

Contact Information

For more information on the framework, please e-mail us.


Access to credible market information on rental rates is an important component for tenants to make comparisons, and provides a basis for negotiations over rates quoted by landlords. Transparency of such information will help level the playing field for both tenants and landlords, which will in turn have a stabilising effect on the market.

SMEC has recommended that authoritative rental data for business premises be published and made readily available on a regular basis.

It is recognised that there is a trade-off between releasing detailed data versus protecting business confidentiality. For the information to be useful, the rental data needs to be sufficiently detailed e.g. relating to the location, floor level and size of the premises. On other hand, the data should not reveal so much detail that it would identify a specific transaction and compromise business confidentiality.

RPWG has worked closely with the Ministry of Trade and Industry (MTI) and relevant government agencies to determine the parameters under these constraints for release of meaningful rental data for business premises to be published.

For rental data released by the various government agencies, please refer to the respective websites:

Type of business space

Website

Retail

URA Retail

Commercial

URA Commercial
HDB Commercial
 

Industrial

JTC Industrial


This Guide aims to help small businesses understand the typical terms and conditions in a lease agreement and make them aware of some of their implications. In addition, some common restrictive practices are highlighted in this Guide.

This Guide should help tenants and landlords better understand their respective roles and responsibilities in a lease agreement. It would enable the tenant and landlord to work out a mutually agreed, fair lease agreement through open and transparent negotiations.

Included in this booklet is a Basic Reference Lease Agreement for Business Space which covers various aspects of fair lease terms and conditions for tenants and landlords.

The Guide covers three main areas: Negotiations, Financial and Contractual. Each of the above three areas are elaborated under three columns as follows:

The “Description” column spells out the major terms of a lease agreement under different business conditions and their implications;

The “Guide” column cites experienced professional advice on specific aspects of the lease term;

The “Tick Box” column provides tenant and landlord a checklist to guide them through negotiation.

Please click here to download the Fair Tenancy Framework.


Mediation is a strategic conflict management tool for every business. A business that integrates conflict management into their management model, is a business that will be better prepared for disputes, better protected against risk, and have better control over commercial relationships.

To encourage the early settlement of disputes between tenants and landlords, the third initiative of the Fair Tenancy Framework is to facilitate partnerships between trade associations and chambers (TACs) and the Singapore Mediation Centre (SMC) for mediation to serve as a preferred dispute resolution channel. Any type of civil dispute can be mediated. There is no limit to the type of dispute that can be mediated at SMC, nor any upper limit on the quantum in dispute. The common types of tenancy disputes that are mediated include breach of agreement, termination of tenancy agreement and rental increase.

Why Mediate?

Disputes often arise from miscommunication or misunderstandings between tenants and landlords. Mediation seeks to bridge this gap by bringing clarity and objectivity to complex situations. A mediator, who may be a respected lawyer or industry figure, facilitates the process by helping parties to identify issues, explore their options and negotiate a constructive settlement. The terms of the settlement agreement depend on the parties as the mediator does not impose a decision on them.

Benefits of Mediation

  1. Save Time & Money – On average, a mediation can be set up within 2 weeks and cases that are settled usually take one working day. In contrast, court proceedings could take months and consequently result in higher legal fees. At mediation, you avoid spending lots of time and resources preparing for court proceedings, time and resources which could be better spent growing your business.
  2. Take Ownership – The goal in mediation is to reach a practical solution acceptable to everyone involved. The outcome of your dispute is firmly within your control and you avoid the risk of losing in court.
  3. Preserving business relationships – There are no losers in mediation. Parties can settle their disputes amicably, thereby preserving relationships such as ensuring continuity of a tenancy with little disruption to your business.
  4. Private & Confidential – Mediation provides a confidential environment where you can safely explore your options without generating negative publicity about the dispute in public or in the media. This is critical for landlords to maintain a good image amongst existing and potential tenants.

About the Singapore Mediation Centre

Established in 1997, SMC pioneered the use of mediation as the mainstream mechanism for dispute resolution, as well as training in negotiation and conflict management. Today, SMC offers a suite of alternative dispute resolution services which brings clarity and objectivity to complex situations. These services include mediation, neutral evaluation and domain name dispute resolution. Through our panel of professional mediators with legal and industry expertise, SMC is well-placed to manage difficult negotiations and unlock standstills for businesses by providing cost-effective and timely solutions. At SMC, our vision is to help all businesses fully appreciate the value of mediation as a strategic risk-management tool that they can count on in commercial dealings.

SMC’s track record includes having facilitated over 2,600 mediation matters, with a 75% success rate in assisting clients to arrive at satisfactory solutions. More than 90% of these successful cases were completed within a single day, helping clients reap significant time and cost savings. In 2014, SMC recorded an increase of about 38% in matters mediated over the previous year.


Background

The tenant had subleased, without the landlord’s permission or knowledge, part of the landlord’s commercial premises to various sub-lessees, and had received a considerable amount of rental.

Key Issues

The tenant’s lease with the landlord had expired but the tenant was unable to provide vacant possession because the sub-lessees’ lease arrangements with the tenant were still on going

The sub-lessees finally vacated the premises 3 months after the tenant’s lease with the landlord had expired. The landlord commenced litigation proceedings for more than $300,000

The tenant counter-claimed under various heads including injuries to workers (some workers were sub-contracted to the landlord)

Overcoming Differences

Although parties initiated court proceedings, they agreed to try mediation first.

Through the confidential nature of the mediation process, both the tenant and landlord were comfortable with ‘brainstorming’ for possible options and making concessions. After understanding the parties’ different interests, the mediator was able to narrow the monetary difference between the claims and counter-claims. The mediator emphasised the benefits of settling, as well as the long-standing relationship and consequential goodwill between the tenant and the landlord. After 3 hours of mediation, the parties were able to agree on the payment of $150,000 by way of 6 equal monthly instalments.

Conclusion

The tenant and landlord resolved their dispute amicably through mediation, and were relieved that they could now continue about their respective business without the shadow of litigation hanging over them.


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