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mr funny
15-04-07, 06:20
April 15, 2007

Know your rights before renting out your home

Tenancy contract should be watertight to avoid ambiguity when disputes arise

By Lorna Tan


MOST Singaporeans aspire to own the roof over their head but those with spare cash can go a step further - buy an extra property and become a landlord.

These investors hope to get a steady stream of rental income while waiting for their properties to rise in value in the rebounding market.

It sounds simple enough but as they always say, 'the devil is in the details'.

Any experienced landlord will tell you that it pays to do some homework before leasing out your property. This includes knowing your responsibilities and rights as a landlord and drawing on the experiences of others when it comes to picking the 'perfect' tenant.

Disputes between landlords and tenants can be very frustrating with most revolving around repair and rental payment matters. Unlike countries such as Britain, where there are tenancy tribunals to assist in such disputes, Singapore does not have such a body and engaging a lawyer is invariably costly.

So it pays to have a watertight tenancy agreement that spells out both parties' obligations and ensures there is little or no ambiguity when disputes arise.

TIPS FOR LANDLORDS

Letter of intent

THIS is usually prepared by the housing agent and should contain certain key details. Check for the correct address of your rental property, the term of the lease, notice period, rent and deposit amounts.

It should be signed by the landlord and the tenant. The rental deposit is collected at this point. The agreement is typically signed a fortnight from the date of the letter of intent. If not, the landlord stands to retain the deposit.

In Singapore, the letter of intent is not mandatory and there are parties that choose to enter into tenancy agreements directly.

Tenancy agreement

AS THE tenancy agreement is a legal contract, it will include all terms and conditions necessary to protect the rights of both the landlord and tenant.

If the rental property is mortgaged to a bank, the landlord must get the bank's nod for leasing the property.

The agreement should include the names and identification numbers of the landlord and tenant and, if relevant, the name and address of any company paying the tenant's rent directly.

It should be clear on the rental amount, when it is due and how it can be paid - say, through a Giro arrangement.

A tenancy usually runs for one to three years with renewal options for an extended period and that should be stated. The notice period for renewal or termination is typically three months before the tenure expires.

The agreement should also spell out the respective responsibilities of the landlord and tenants.

There should be an 'escape' clause allowing the landlord to sell the property during the tenancy to a buyer who may want to purchase without tenancy.

The landlord should reserve the right to bring prospective buyers to view the property at reasonable hours and by prior appointment.

Like the letter of intent, both the landlord and the tenant sign the tenancy agreement and the document is stamped at a lawyer's office.

Depending on the tenure and rental amount, the stamp duty - payable by the tenant - may cost a few hundred dollars. It must be paid within 14 days of the date of agreement, after which a penalty is payable to the Inland Revenue Authority of Singapore.

Sizing up prospective tenants

WHEN asked what constitutes a 'perfect' tenant, most landlords agree on two criteria - paying rent promptly and keeping the property clean.

Try to assess the financial standing of the tenant by inquiring about his profession. Get his business card and verify if he is really an employee of the firm indicated. Find out where he is moving from and the reasons for the change.

If the tenant is a company, the landlord should run a check on it. If it is a two-dollar firm, then he should insist that the tenant provide a guarantor, or guarantors, or ask for a larger deposit.

It is harder to verify if the tenant has the ability to look after your property.

Still, it is useful to pay attention to the tenant's general grooming and, if he owns a car, how well kept it is.

Check employment status

LANDLORDS should also ensure the premises are not rented to illegal immigrants.

If tenants are work permit or employment pass holders, they should check with the authorities that the permits and passes are valid and not forged, said Ms Lie Chin Chin, the managing director of law firm Characterist LLC.

Take snapshots

MS LIE also recommends that landlords take photographs of the premises before the tenancy starts. 'In case the tenant fails to return the premises in tenantable condition at the end of the tenancy, these will serve as evidence to claim for damages for rectification works,' she said.

Ask for references

DO NOT hesitate to ask for a few references just to check if there are people who are willing to vouch for the tenant.

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mr funny
15-04-07, 06:21
April 15, 2007

'They were monster tenants, the worst I ever had'


MISSING floor tiles, cracked drainage pipes, a broken portion of the ceiling, a hole in the wall...

The horrendous damage caused to Madam Josephine Ng's terrace house at Opera Estate left her no choice but to initiate a lawsuit against her tenant in 1997.

During the six months of legal proceedings, Madam Ng, 68, tried to claim $18,000 from her tenant to cover the costs incurred to reinstate her 2,181 sq ft three-bedroom property to its pre-rental condition. Her tenant was declared a bankrupt by the Subordinate Courts when he could not pay up.

The terrace house was rented out for almost three years to the same family - a couple with parents and two young children, before Madam Ng knew of its dilapidated state.

She was unaware of the damage because she would collect the monthly rental cheque of $1,500 at the gate of the house. Not wanting to be intrusive, she did not go into the house. But she decided to pay a surprise visit after her maid went into the house on one occasion to collect the rental cheque and told her about the grim state of her property.

'The house was so dirty and untidy...The curtains were black and torn. The grandchildren had drawn on the walls, and my white oven had become oily and stained. It was like a junk store,' she recalled.

That was when she made up her mind to end the tenancy agreement that was expiring soon anyway. This was despite the family's wish to extend the agreement - and their willingness to pay a higher rent. Spurned by her insistence to end the tenancy and evict them, the tenants caused more damage to the house in the three months before they had to move out, recalled Madam Ng.

On the day the rental property was handed over to Madam Ng, she was shocked at what she saw. 'I was very angry and depressed. Were they animals or human beings? They broke my door and left only the frame. They made a hole in the ceiling with a sharp instrument. The bathroom tiles were hacked and broken.

'They were monster tenants, the worst I ever had.'

She immediately contacted property consultancy firm Colliers Jardine, now known as Colliers International, which conducted a survey and took several photographs.

The lawsuit cost Madam Ng $3,600 in legal fees but it was not in vain. After five years under bankruptcy, the tenant finally paid $18,000, the amount Madam Ng had sued him for.

She got lucky with her next tenant. A young couple from Shanghai with a child rented her terrace house for two years at a higher monthly rent of $2,000 and even paid the entire two years' rent upfront - as the tenant was travelling and did not want to miss payments.

Madam Ng has since sold the house for $950,000, which translates to a neat profit, considering she bought it 40 years ago at only $13,000.