In most parts of the world, renting is easy. You put down some money, sign a form, and take the key. But not here. In Singapore, the rental contract is like usually full of legalese, costs too much, and if not careful, may be the root of many rental nightmares.
With the price of housing continuing to increase and many finding it unaffordable (or unwise) to buy a property in the current market, renting is increasingly becoming a popular option.
If you’re not sure whether to buy or rent in Singapore, read this article first.
Types of properties available for rent
There are several options to choose from when considering the different types of property available for rent. It is helpful to familiarise oneself with these options first.
You can rent either entire units or one bedroom. Usually master bedrooms come with a bathroom en suite and therefore cost more than common rooms.
Note that subletting an entire apartment requires permission from the Housing Development Board, and that subletting a bedroom is only possible for 3-bedroom flats or larger. An entire unit would cost $2,500 to $3,500 per month on average to rent in Singapore, while a room can cost between $500 and $1,000.
It’s important to agree beforehand on issues such as the sharing of electricity, water and telephone bills and privacy rights.
These usually have gyms, cafes, business centres and cleaning services. The monthly rental prices for these typically range from $2,500 to $6,000 for a one-bedroom apartment, and $5,000 to $10,000 for a two-bedroom apartment.
These are properties with facilities such as security, gyms and pools. Smaller condominiums may not have as many facilities. Monthly rental costs for condominiums typically range between $2,500 and $10,000 for entire units.
Penthouses often have their own pools, rooftop gardens and terraces. They top most of the high-rise buildings in Singapore. Rental costs typically range from $10,000 to $30,000 monthly.
Depending on the location and the size of the house, rents for landed property can vary from $10,000 to $30,000 per month. Landed property can be split into three main types:
- Terrace Houses: These are houses that share common walls with neighbours on both sides, unless at the end of a row.
- Semi-detached Houses: These houses share one wall in common with a neighbour.
- Detached Houses/Bungalows: These houses do not share any wall with other houses.
Rental conditions in Singapore
Rental apartments come fully furnished, partially furnished or unfurnished.
Fully furnished means the apartment comes with a complete set of furniture, appliances (e.g. television, microwave oven) and white goods (e.g. refrigerator, washing machine).
Partially furnished means the apartment comes with the essential white goods, lights and curtains, but no or little furniture.
Unfurnished means the house is renovated but bare, perhaps only with the lights fitted. Of course you can always request for the landlord to add items – these can all be negotiated before you sign the tenancy agreement and can be incorporated into the rent.
Naturally, fully furnished units and rooms will cost more than unfurnished properties.
7 steps to rent in Singapore
Once you are familiar with the options available, you can take the following steps to rent the property you are interested in.
1. Decide on your budget: Having a budget in mind will help you decide the type of property to rent, as well as its location. Ensure that your budget is flexible enough to prevent situations where you are unable to find a house that is both within your budget as well as in a specific location of your preference.
2. Decide on the type of property and the location: Factors to take into account when making this decision include the facilities you require, the public transport options, the age and number of family members, the distance to office or school districts and the amenities you would like, such as supermarkets and libraries.
3. Gather a pool of specific options: First, examine property websites to come up with a list of potential properties that fit your choices on location, budget and other factors. You can also engage one or more agents to help you in your search.
4. Arrange for property viewings: Visit the short-listed properties and take photos and notes on each to help you make a decision later. It is helpful to visit at different times of the day to get an idea of the neighbourhood. You can then short-list further and do a second viewing if necessary. Make a note of any repairs or extra furniture you would like to have before you move in.
5. Sign the Letter of Intent: Once you decide on the home you want to rent you usually then sign a Letter of Intent (LOI), which states your intention to lease, as well as any requirements you have. Pay attention to the following components of the LOI:
- The Diplomatic/Repatriation Clause: This typically allows you to end the contract after 2 months’ notice and claim your security deposit, in the event that you are transferred to another country by your company or lose your job.
- Booking/Good Faith deposit: This is usually one month’s rent. After the LOI has been signed and this has been paid, the owner cannot rent the property to others.
- Security deposit: This is usually one month’s rent per year of lease. Once the lease term is over, this amount will be refunded. If any expenses arise due to the tenant breaching the terms in the Tenancy Agreement (e.g. damages to the property), the owner can deduct a reasonable amount from this deposit.
- Lease term: The standard lease term is one year or more, and the agreement may include a renewal option, which usually requires two or three months’ advance notice to exercise.
- Requirements: State your requirements (such as new furniture) clearly. Once the LOI is signed, the owner is required to provide all that is requested for.
6. Sign the Tenancy Agreement: After signing the LOI and putting down a deposit, you will then sign the Tenancy Agreement. You will also have to pay the advance rent together with the signing. Pay attention to the following components:
- LOI and Tenancy Agreement should match: Ensure that terms agreed in the LOI are also present in the Tenancy Agreement.
- Installation and monthly charges: You are usually responsible for the installation charges and monthly bills for the water, electricity and gas supply, residential telephone line, cable television and broadband internet connection. Sometimes you can negotiate some of these into the contract, e.g. cable television or internet bill.
- Repair and maintenance: You will be responsible for repair works that do not exceed a certain amount, usually $100-200, unless the repair required is due to your negligence. Also, certain maintenance services such as gardening and pool cleaning will be at your expense.
Note that this Agreement will have to be stamped by the Inland Revenue Authority of Singapore before it is considered a valid contract. The cost for this is usually borne by the tenant.
Don’t forget stamp duty! For leases of 4 years or less, the stamp duty payable is 0.4% of the rental amount. For leases of more than 4 years, it is 0.4% of 4 times the AAR for the period of the lease.
Also you may have to pay the agent half a month’s to a month’s commission depending on the lease term.
7. Taking over the property: Check the inventory list to make sure that all items are present, and note if there are any defects. Also ensure that you collect a complete set of keys.
These are the proper steps to go about renting. Don’t go for the shortcut — sign and grab the keys. Doing that can result in a lot of arguments and disagreements later on. Do it the slow way for your own sake!
Do you think that rental money can be better channelled into a home loan? Ask our Mortgage Specialist for unbiased advice on the latest home loan interest rates in Singapore today.
Are you renting or intending to rent a home? Comment and let us know what you think!