From today’s Straits Times:
MOST Singaporeans aspire to own the roof over their head but those with spare cash can go a step further – buy an extra property and become a landlord.
These investors hope to get a steady stream of rental income while waiting for their properties to rise in value in the rebounding market.
It sounds simple enough but as they always say, ‘the devil is in the details’.
Any experienced landlord will tell you that it pays to do some homework before leasing out your property. This includes knowing your responsibilities and rights as a landlord and drawing on the experiences of others when it comes to picking the ‘perfect’ tenant.
Disputes between landlords and tenants can be very frustrating with most revolving around repair and rental payment matters. Unlike countries such as Britain, where there are tenancy tribunals to assist in such disputes, Singapore does not have such a body and engaging a lawyer is invariably costly.
So it pays to have a watertight tenancy agreement that spells out both parties’ obligations and ensures there is little or no ambiguity when disputes arise.
TIPS FOR LANDLORDS
Letter of intent
THIS is usually prepared by the housing agent and should contain certain key details. Check for the correct address of your rental property, the term of the lease, notice period, rent and deposit amounts.
It should be signed by the landlord and the tenant. The rental deposit is collected at this point. The agreement is typically signed a fortnight from the date of the letter of intent. If not, the landlord stands to retain the deposit.
In Singapore, the letter of intent is not mandatory and there are parties that choose to enter into tenancy agreements directly.
AS THE tenancy agreement is a legal contract, it will include all terms and conditions necessary to protect the rights of both the landlord and tenant.
If the rental property is mortgaged to a bank, the landlord must get the bank’s nod for leasing the property.
The agreement should include the names and identification numbers of the landlord and tenant and, if relevant, the name and address of any company paying the tenant’s rent directly.
It should be clear on the rental amount, when it is due and how it can be paid – say, through a Giro arrangement.
A tenancy usually runs for one to three years with renewal options for an extended period and that should be stated. The notice period for renewal or termination is typically three months before the tenure expires.
The agreement should also spell out the respective responsibilities of the landlord and tenants.
There should be an ‘escape’ clause allowing the landlord to sell the property during the tenancy to a buyer who may want to purchase without tenancy.
The landlord should reserve the right to bring prospective buyers to view the property at reasonable hours and by prior appointment.
Like the letter of intent, both the landlord and the tenant sign the tenancy agreement and the document is stamped at a lawyer’s office.
Depending on the tenure and rental amount, the stamp duty – payable by the tenant – may cost a few hundred dollars. It must be paid within 14 days of the date of agreement, after which a penalty is payable to the Inland Revenue Authority of Singapore.
Sizing up prospective tenants
WHEN asked what constitutes a ‘perfect’ tenant, most landlords agree on two criteria – paying rent promptly and keeping the property clean.
Try to assess the financial standing of the tenant by inquiring about his profession. Get his business card and verify if he is really an employee of the firm indicated. Find out where he is moving from and the reasons for the change.
If the tenant is a company, the landlord should run a check on it. If it is a two-dollar firm, then he should insist that the tenant provide a guarantor, or guarantors, or ask for a larger deposit.
It is harder to verify if the tenant has the ability to look after your property.
Still, it is useful to pay attention to the tenant’s general grooming and, if he owns a car, how well kept it is.
Check employment status
LANDLORDS should also ensure the premises are not rented to illegal immigrants.
If tenants are work permit or employment pass holders, they should check with the authorities that the permits and passes are valid and not forged, said Ms Lie Chin Chin, the managing director of law firm Characterist LLC.
MS LIE also recommends that landlords take photographs of the premises before the tenancy starts. ‘In case the tenant fails to return the premises in tenantable condition at the end of the tenancy, these will serve as evidence to claim for damages for rectification works,’ she said.
Ask for references
DO NOT hesitate to ask for a few references just to check if there are people who are willing to vouch for the tenant.