Here’s how expats can save when renting property in Singapore

House-hunting in Singapore can be a difficult task. There is a wide range of locations to choose from and the various options on offer can leave you confused.

A four-bedroom condominium in the Marina Bay area could set you back by S$8,000 every month. A property of a similar size in one of the city’s suburbs could be available for a little more than half that amount.

While it is true that you can’t avoid paying a premium for an upmarket location, there are several steps that you can take to minimise your costs.

 

Start your search before you arrive in Singapore

If you are moving to the Lion City from overseas, it makes sense to begin your hunt for a suitable home before you reach here.

Familiarise yourself with the various types of properties that are available. Approximately 80% of the country’s population live in buildings that have been constructed by the government’s Housing and Development Board. It is possible for expats to rent a flat in an HDB building subject to certain restrictions.

A condominium could be a better option but would be more expensive. These high-rises are usually equipped with their own swimming pool, tennis courts, a gym, and other facilities.

A third option is a landed property. These are independent houses that have their own garden. Obviously, you would have to pay a much greater amount to rent a landed property.

 

Understand the documentation involved – the LOI

It is advisable to familiarise yourself with the paperwork that renting a home involves. If you do this, you will be prepared when it is time to finalise the transaction.

The formal process of renting a home begins with a Letter of Intent (LOI) being made. This document will be signed by you as well as the landlord. At this point in time, you will be expected to pay a deposit referred to as a “good faith deposit,” which will be for a sum equal to one month’s rent.

Once you pay this amount, the landlord will stop showing the property to other prospective tenants.

Remember to pay the good faith deposit by cheque or a bank transfer. Avoid paying cash.

The LOI serves several purposes. Firstly, it signifies that the landlord is committed to renting the property to you at the agreed rate. Additionally, before signing the LOI, you can negotiate with the landlord and ask for some furniture or appliances to be provided. You could also request that some items be removed from the premises if you don’t require them. Whatever has been agreed to must be mentioned in the LOI.

 

The tenancy agreement

The next stage is to sign a tenancy agreement. When you do this, you will need to pay a security deposit. This could be an amount of one month’s rent for a year’s lease and two months’ rent for a two-year lease.

Don’t just sign the agreement without reading it. There could be a clause that may impact you negatively. At this stage, you should check that the points agreed to in the LOI find a place in the tenancy agreement.

Confirm whether the agreement contains a “diplomatic clause.” This is especially relevant if your job could require you to get transferred out of Singapore.

This clause requires the landlord to allow you to terminate the lease by providing a notice of two months if you are leaving the country. The diplomatic clause normally comes into effect only if you have stayed for a minimum period of 12 months in the property that you have rented.

 

Check the condition of the furniture and fittings before you move in

In Singapore, you could get a flat that is completely furnished or one that is only partially furnished. The latter usually denotes that the property will have air-conditioning and a washing machine. It could also have a few items of furniture.

Your tenancy agreement should include a list of the furniture that has been supplied with the flat. You must be careful not to damage any of it during the tenancy period. Consider taking photographs and making notes regarding the condition of the furniture and fittings.

The accepted norm in Singapore is that the landlord will bear the cost of normal wear and tear of the items in the flat. But if they get damaged, you will need to pay compensation. At the end of the lease period, the landlord may hold back your security deposit if any of the items have deteriorated or have become unusable.

 

Using a property agency

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As expats would be unfamiliar with how the local property market functions, it is highly advisable to use the services of a property agent. Remember that the same agent cannot represent you as well as the landlord. This rule has been implemented to prevent a conflict of interest from arising.

The rule also means that the agent will exclusively look after your interests. What are the services that an agent will provide? After understanding your requirements and your budget, the agent will recommend properties that are suitable.

Your property agent will also coordinate with the landlord and help you negotiate the rent.

How much should you pay for these services? There are no government rules specifying a minimum amount and neither is there a cap on what you can be charged. You would have to arrive at the commission amount in consultation with the agent. In most cases, an amount ranging from half a month’s rent to a full month’s rent will be payable.

Every property agent is authorised by the Council of Estate Agencies (CEA), a statutory body under the ministry of national development. The CEA maintains a Public Register which contains the particulars of the agents who have been licensed by it. It is advisable that you confirm that your agent’s particulars appear on this register.

 

Finding the perfect home in Singapore

Regardless of the time and effort that you put in, it is practically impossible to find a property that meets all your requirements. If it is large enough or in an upmarket location, the rent is bound to be high. A place with lower rent may be cramped or located at a distance from your place of work.

The best way to choose between the various options is to stick to the basics. Is it located close to public transport? Is your office nearby? Will your children be able to gain admission to a school in the vicinity?

If you are able to answer these questions and a few others in the affirmative, you have probably found your new home.

 

(By Ravinder Kapur)

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