LEVEL THE PLAYING FIELD
Business owner Wilie Goh said the Bill will “level the playing field for both landlords and tenants”.
“Since day one, the tenant is in a very unfair position,” he said. “These unfair practices that (the landlords) do, they do not want to stop because it is the norm in the marketplace.”
He had spent six months looking at 25 different properties before deciding on a space at Kallang Wave Mall for his gymnastics centre GymKraft.
He noted that while his current landlord treats him well, he encountered unfair lease contracts during his search in other areas.
“For example, if there’s a change in the lease agreement, tenants need to bear the costs for lawyers. The landlords only allow their own lawyers to make the changes. Imagine you are paying for their lawyers to act in your interest, which they will not, but you are paying for it anyway,” said Mr Goh.
The proposed legislation aims to change that. Landlords will no longer be allowed to include clauses in their contracts that make lessees pay for unspecified costs.
CALLS FOR DATA TRANSPARENCY
An association representing 1,000 tenants called the proposed law a “breakthrough”, but urged more to be done to ensure a healthy rental market in the long term.
“It is a first step in reviving the vibrancy of Singapore as a shopping destination. Setting the foundation is important to restore this vibrancy, and certainly balancing fairness in tenancy contracts is a key part of this foundation,” said Mr Terence Yow, chairman of the Singapore Tenants United for Fairness.
He highlighted market data transparency as another factor crucial to fair and balanced negotiations.
There is an imbalance between landlords and tenants stemming from the unequal amount of information each side is able to obtain, industry players said.
Currently, most landlords such as shopping centre owners are aware of their tenants’ footfall and sales turnovers, which allows them to justify rental rate adjustments during lease renewals.
On the flip side, tenants have limited data on the average market rental prices, putting them at a disadvantage when it comes to negotiations.
Furthermore, tenants are bound by non-disclosure agreements (NDAs) and are unable to find out rental terms from one another. Failure to comply can lead them to being subjected to legal action.
“Not only do we not know the market rate, we are also not allowed, by contract – which is a pretty standard clause – to discuss that with each other. This means landlords have more important data, and are able to do non-transparent pricing,” said Mr Yow.
“You could have a situation where two tenants are neighbours in the same mall but have extremely different rental rates. That is not healthy for the market in the long term and it is not healthy for a vibrant, free functioning commercial lease situation.”
FAIRER TENANCY NEGOTIATIONS
However, outside of big players like malls, smaller landlords said they may not have the means to provide such data.
Coffee shop owner Jimmy Giam, who rents out his unit at Apex @ Henderson to hawkers, said he is unable to record footfall for the commercial building. He is also in the dark on the rent amount his neighbours are paying for their units.
As both a landlord and a tenant, he hopes that these information can be freely shared, for instance on an online platform, as such data would put tenants in a better position to negotiate rent.
“I always view tenants and landlords as partners. I hope there is more transparency for both. The shared common goal is that we are able to look at the tenancy agreement more fairly,” said Mr Giam, the managing director of Apex F&B.
“If we are able to view how much was the last rental, the rental for the unit beside us and the nature of their business, and footfall numbers, then we will be able to better gauge and be better informed in the crucial decision making process.”