Gross Rental – The rent payable by the tenant inclusive of all service charges (typically between $0.80-$1.20 per square foot and all outgoings per month) and excluding any incentive (rent-free or fit-out period).
Rent Rate – This is the rent charged per square foot ($/sqft)
Lease – The length of the lease period (typically 2-year or 3-year) is outlined in the tenancy agreement with the commencement date, date of possession etc. In a rising market, landlords are not too keen to do long leases to forgo any opportunity to maximize their rental income.
Lessee – The lessee is the subject that leases the premises and is often known as the ‘tenant’. Upon expiry of the lease, the ‘interest’ is returned back to the lessor.
Lessor – The lessor owns the premises and is often known as the ‘landlord’.
Legal Costs – The tenant is usually responsibly for both their own and the landlord’s legal costs in preparation of the tenancy agreement. Landlords with in-house legal department usually have lower legal costs.
Rent Review – A term that is usually included in the tenancy agreement. It can be indexed to the Consumer Price Index (CPI) or market review. The review structure is agreed prior to lease commencement.
Reinstatement – Tenant’s obligation to restore the premises back to its original state at the expiry of the lease.
Assignment – Subject to the landlord’s consent, the lease may be assigned to another tenant for the remainder of the original lease and the original tenant usually makes up any shortfall in the rental.
Novation – Subject to the landlord’s consent, a new tenant takes over and new tenancy agreement with fresh terms is drawn up with the landlord.
Stamp Duty – It’s statutory tax payable as stipulated by the Inland Revenue Authority of Singapore (IRAS). The stamp duty is levied on the gross rental payable for the period of the lease inclusive of service, maintenance, advertising and promotion, furniture/fittings charges and any other charges excluding GST.
Option to Renew – Tenants are given option to renew their lease at a mutually agreed rent prior to the expiry of the lease.
Rent Free – An incentive given by certain landlords and is usually given upfront or spread over the entire lease period.
Fit-Out Period – This is usually given outside of the commencement of lease and is dependent on the size of the premises leased.
Security Deposit – A sum of deposit that is held by the landlord (usually 3-6 months) and is refunded to the tenants at the expiry of the lease subject to the conditions in the tenancy agreement. Most landlords expect their tenants to have a certain amount of paid up capital. Depending on the amount of rent,
Floor Area – The total floor area of the premises that is surveyed.
Insurance – The protection against any unforeseen circumstances or public liability that may arise against the lessee by any third party.
Landlord’s Covenants – Landlord’s obligation to provide quiet enjoyment and exclusive possession to the tenant and to ensure non-derogatory from grant, i.e. not to frustrate the purpose for the lease was granted.
Tenant’s Covenants – Tenant’s obligations to the landlord which usually includes the payment of deposit, rent, proportion of any increase in property taxes, preservation of the premises during the period of tenancy.
Date of Possession – The date where the tenant takes possession of the premises. The tenant is liable for any incidents that may happen within the leased premises on and after the date of possession.
Dispute Resolution – Dispute resolution mechanism is usually defined in the terms of tenancy agreement. Mediation and arbitration are two ways used to resolve any conflict or dispute that may arise during the period of tenancy.
Maintenance – Tenants are only responsible for internal repairs (excluding structural items). The repair and maintenance of the exterior and common parts are left to the owners/management corporations.
Air Conditioning – Central air-conditioning provided by the landlords during normal office hours:
Weekdays: 8.00am to 6.00pm
Saturdays: 8.00am to 1.00pm
Subject to landlord’s approval, tenants can fit their own auxiliary air-conditioning units tapping into the landlords’ chilled water supply after office hours. Costs are charged per ton of chilled water. For ad-hoc usage after office hours, air-conditioning can be indented on a hourly basis from the building management. Cost will range between $50-$90 per hour depending on the floor area.