SINGAPORE Law and Practice Contributed by: Benjamin Tay, Chou Ching, Norman Ho, Vikna Rajah, Chun Kiat and Marcus Tay, Rajah & Tann Asia
6.4 Typical Terms of a Lease Commercial office leases typically have initial terms of three years, often with renewal options. Retail leas - es in managed malls commonly run for three years without automatic renewal rights, while industrial and logistics leases frequently span three to five years, with longer terms used for build-to-suit projects. Tenants are generally responsible for internal main - tenance and non-structural repairs, while landlords retain responsibility for structural elements and common areas. Rent is usually payable monthly in advance, although quarterly payments may be agreed Rent is commonly fixed for the duration of the ini - tial lease term. In longer term leases, rent escalation may be structured through fixed step-ups, indexation or periodic market rent reviews, depending on asset class and tenant profile. Turnover rent arrangements are frequently used in retail leasing, particularly in shopping malls, where a percentage of gross turnover is payable in addition to base rent. 6.6 Determination of New Rent Where leases provide for rent review or escalation, the methodology is specified in the lease. Market rent reviews typically involve independent valuation, with disputes resolved by an appointed valuer whose determination is binding. for larger tenancies. 6.5 Rent Variation At lease renewal, rent is negotiated afresh between the parties, and tenants have no statutory right to renew at a regulated rent. 6.7 Payment of VAT Singapore imposes a goods and services tax (GST) which applies to the rental of commercial real estate where the landlord is GST registered. Residential leas - es are exempt from GST. GST on commercial rent is generally recoverable by GST-registered tenants, making it cost neutral for many business occupiers. GST has been 9% since 1 January 2024.
6.8 Costs Payable by a Tenant at the Start of a Lease At lease commencement, tenants typically pay a security deposit equivalent to one month per year of tenure (generally capped at 12 months), together with the first rental payment in advance. Stamp duty on the lease instrument is customarily borne by the tenant. Fit-out costs are a significant upfront consideration, particularly where premises are delivered in a base- build condition. Landlords may offer rent-free periods or fit-out contributions as commercial incentives. 6.9 Payment of Maintenance and Repair In multi-tenanted buildings, the cost of maintaining and repairing common areas is usually recovered through service charges or management fees appor - tioned by floor area or share value. For strata-titled developments, maintenance is admin - istered by the management corporation, with owners contributing to management and sinking funds. 6.10 Payment of Utilities and Telecommunications Utilities such as electricity and water are typically metered and billed directly to tenants, or charged through sub-metering arrangements managed by the landlord. Telecommunications services are generally procured directly by tenants from their preferred pro - viders. 6.11 Payment of Property Taxes Property tax is assessed on the property owner, but landlords commonly recover this cost from tenants through service charges or as a separately identified pass-through under the lease. 6.12 Insurance Issues Landlords typically insure the building against stand - ard property risks, while tenants are responsible for insuring their contents, fit-out works and business interruption risk. Lease provisions commonly require tenants to comply with the landlord’s insurance requirements. Many business interruption claims faced coverage and causation challenges for pandemic-related claims,
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