We were fortunate enough (while we were both in Singapore in April) to find a Real Estate Agent. Over here, it is very important that you find one RE Agent before you even start looking for property. Once you have found your Agent, this is the agent that you should only liaise with, as this person will eventually know what you are looking for.
Here is a little of what you need to know:
Letter of Intent
A Letter of Intent is a formal letter presented by a tenant to a landlord (via the landlord's agent), proposing an offer to rent a residential property. If the landlord signs the letter, it is taken as an official sign of acceptance.
The letter should dictate the tenant's intention to rent the property and his or her conditions. These conditions would most likely have been agreed on between the landlord and the tenant prior to the preparation of the Letter of Intent.
A term of lease, as depicted in a Letter of Intent, can range from 12 months to 24 months, with an option for renewal upon expiration. However, this is subject to any changes made to the rental price by the landlord, based on prevailing market rates, and the tenant may be required to give two to three months' notice in advance to the landlord if he or she wishes to renew it. The standard term of lease in Singapore lasts for 12 months and most landlords will not accept a shorter lease period.
The first deposit made by the tenant, also known as a good faith deposit or a booking deposit, usually amounts to one month's rent. When a landlord accepts the deposit, and has signed a tenant's Letter of Intent, he or she has essentially promised not to offer the property to lease to other prospective tenants until a Tenancy Agreement has been signed. After the Tenancy Agreement has been signed, the deposit can be kept either as payment for the first month's rent or as a security deposit.
A security deposit is a deposit made by a tenant after a Tenancy Agreement has been signed. It is kept by the landlord and is only returned to the tenant when his or her term of lease expires. While in the safekeeping of the landlord, the security deposit is not subject to any interest rate and should be refunded to the tenant interest-free.
However, the landlord reserves the right to deduct any expenses incurred should a tenant breach his or her contract or cause damages to the inventory. For a standard term of lease, the tenant is required to make a security deposit amounting to one month's rent. For a 24-month term of lease, the security deposit is equivalent to two months' rent.
The monthly rental price of the property should also be stated in the Letter of Intent. Other conditions or terms which should be stated explicitly in the letter include the level of furnishing, intention to sublet and occasionally, the ownership of pets, if any. It is important to agree on these details with the landlord beforehand, and obtain his or her written approval of the additional requirements in order to avoid the possibility of a misunderstanding taking place later.
A Letter of Intent should also carry a clause specifying an expiration date. If a landlord does not sign the Letter of Intent within a certain period, the letter will expire and the landlord will then be required to return the booking deposit immediately.
A Tenancy Agreement is usually prepared by the landlord, or his or her property agent. It dictates the landlord's obligation to lease the property to a tenant, and both the tenant and the landlord are required to sign the agreement. The Tenancy Agreement is, in essence, a far more detailed version of the Letter of Intent. (The landlord and the tenant does not need to sign the TA at the same time).
The tenant is also required to provide the landlord with a copy of his or her passport and identification card or employment pass, if he or she is a foreigner. It is necessary for the landlord to verify that the tenant is allowed to stay in Singapore as the landlord will be deemed to have committed an offence if he or she rents out residential property to illegal immigrants.
Upon signing the Tenancy Agreement, the tenant must pay the sum of the first month's rent and the security deposit, less the booking deposit made with the signing of the Letter of Intent.
Some things tenants should look out for in a Tenancy Agreement are:
- Tenant's identification details
- Landlord's identification details
Hey great post! I was formerly quite confused between the TA and letter of intent.ReplyDelete
Quick qn- what about the agent's commission? Was it fixed or made known prior to sealing the deal? Cause I've looked around and apparently, there isnt a standard market rate to adhere to.
From memory, I think the agent's commission was agreed prior to sealing the deal.Delete