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SINGAPORE – On Friday (March 26) an industry-led committee of landlords and tenants unveiled a new code of conduct to establish industry standards on fair leasing practices and lease terms.
The Fair Tenure Pro Tem Committee also recommended that the government introduce laws for landlords and tenants to comply with the code of conduct, committee chair Michael Lim Choo San said during a press conference.
This was confirmed at a separate press conference on Friday by State Minister for Trade and Industry Low Yen Ling, who said the Government supports the committee’s recommendation and will work closely with industry stakeholders on the details. “in the next few months”.
Meanwhile, the 18 committee members have pledged to adopt and comply with the code as of June 1, and have pledged to encourage their stakeholders in the retail, food and beverage (F&B) and style of business sectors. life to adhere to the guidelines.
These include key industry leaders, academics and directors of major trade associations such as the Singapore Restaurant Association, the Singapore Retailers Association, the Small and Medium Business Association, the Singapore Reit Association and the Association. of real estate developers in Singapore.
To monitor industry compliance with the code, a Fair Leasing Industry Committee (FTIC) will be formed on June 1.
The FTIC will also act as custodian of the code of conduct, updating it periodically as necessary, said Lim, who is also chairman of Nomura Singapore and a member of the Public Service Commission.
“This code has been carefully thought out and each and every internal clause has been vigorously deliberated,” Lim said.
“While it may not cover all possible situations, I think it will generate enough change and that it is a significant improvement over where the industry was before,” he added.
The code of conduct applies to all retail premises that are held under a lease concluded on or after June 1 that are more than one year old, and the authorities have permitted their use for specific uses, such as in retail, F&B, outlet or entertainment venue.
One of the key guidelines in the code, which can be found on the SBF website, is to collect rent based on a single calculation throughout the entire lease. This means that the income structure should not have a formula of “one or the other, whichever is greater.”
For any exceptions, both the landlord and the tenant must agree. Both parties must also sign a joint statement and send it to the Leasing Industry Committee within 14 days of signing the lease.
Additionally, landlords and tenants must be transparent about the costs charged in preparing the lease, as well as other third-party costs. These costs must be legitimate and justifiable and must not be used as a way to make a profit.
As part of this, the code specifies that landlords must allow their tenants to choose their own retailers from the open electricity market, unless the landlord is on the Block Competition Plan.
On the early termination of leases, the code states that the owner can only do so if substantial remodeling works are to be carried out that require tenants to leave the premises.
Similarly, tenants can only terminate their leases early if the principal of their business is insolvent or if they have lost distribution or franchise rights not due to default or default on the part of the tenant.
In these two cases, both the landlord and the tenant must notify the other party in writing at least six months in advance and pay the compensation amount specified in the code.
If disputes arise about non-compliance with the code during lease negotiations, either party can turn to the FTIC, which will provide advice and monitor the non-compliance.
Repeated instances of code breaches can lead to the FTIC naming and shaming the offending party, said Mr. Lam Yi Young, executive director of the Singapore Business Federation and a member of the Pro Tem Fair Tenure Committee.
“Of course, we hope that we do not have such cases, that the owners and tenants abide by their spirit, but that is something that the FTIC would be willing to do,” said Mr. Lam.
If there are instances of code breach after the lease is signed, either party can refer the matter to the Singapore Mediation Center within 14 days of signing.
The code of conduct and related materials can be found on the SBF website.
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