SBF-led SME Committee reveals Fair Tenancy Framework for Business Premises
- Advocates fair tenancy practices and transparency of data and costs of rental of business premises
- Launch of Business Leasing Guide and a Basic Reference Lease Agreement for Business Space to raise awareness and help landlords and tenants understand fair business lease practices
- Recommends mediation as the preferred mode for dispute resolution between tenants and landlords of business premises
- Resources are available online for easy reference
20 January, 2015 [Singapore] - The Singapore Business Federation (SBF) announced the details of the Fair Tenancy Framework developed by the SME Committee’s (SMEC) Rental Practices Working Group (RPWG) at a press conference today.
Developed on the principle of fairness for all contracting parties, the Framework aims to help tenants and landlords of business premises understand the key terms and conditions of a lease agreement, their respective roles and responsibilities, as well as the implications of prevalent industry lease clauses.
The Framework is a three-pronged initiative by the RPWG:
Part A: Rental Data Transparency – Work with the relevant government agencies to develop rental data information for businesses;Part B: Education and Awareness – Develop a Business Leasing Guide and a Basic Reference Lease Agreement for Business Space to help small businesses understand lease terms and conditions;
Part C: A Preferred Dispute Resolution Channel – Facilitate partnerships between trade associations and chambers (TACs) and the Singapore Mediation Centre (SMC) for mediation to serve as the preferred dispute resolution channel for tenants and landlords.
Rental Data Transparency
In its Budget 2014 Recommendations, the SMEC highlighted the lack of readily available information on rental rates for business space and suggested that the Government publishes rental data on a regular basis to help SMEs make more informed decisions in the tenancy market.
Over the past few months, the RPWG has provided inputs to the Government on the preferred data formats, bearing in mind the need to balance detailed data and protect business confidentiality. The Government has accepted the SMEC’s proposal and the release of rental data for business spaces will be announced by the Government at a subsequent press briefing.
Business Leasing Guide and Basic Reference Lease Agreement for Business Space
The Business Leasing Guide aims to help small businesses understand the typical terms and conditions in a lease agreement and raise awareness on some of the implications. Some common restrictive practices are also highlighted in the Guide.
The Guide would enable tenants and landlords of business premises to decide on mutually agreed terms and a fair lease agreement through open and transparent negotiations. It also provides a checklist covering three main areas: negotiations, financial and contractual.
In addition, a Basic Reference Lease Agreement for Business Space is provided within the Framework. It contains common terms and obligations found in tenancy agreements and serves as a useful reference during negotiations.
Mediation as the preferred mode of dispute resolution
The RPWG recognises that despite best intentions, disputes could arise in the course of a tenancy term. Instead of long-drawn litigation processes that can be costly, mediation can be a cost-efficient and effective means to resolve issues between tenants and landlords of business premises. Under the third initiative of the Fair Tenancy Framework, SMC will partner with the various TACs to promote and provide mediation as the preferred mode of dispute resolution between tenants and landlords.
Rental Practices Working Group
Chaired by Ms Cynthia Phua, the RPWG comprises representatives from the Association of Small and Medium Enterprises (ASME), the Restaurants Association of Singapore (RAS), the Singapore Retailers Association (SRA), industry practitioners and experts from real estate agents, the Singapore Mediation Centre (SMC) and SPRING Singapore.
In developing the Guide and Reference Lease Agreement, RPWG consulted with the Government and some private sector landlords, drawing extensive references from current market practices and existing lease agreements.
Mr Teo Ser Luck, Minister of State for Trade and Industry and Advisor to the SMEC, said “The Government commends SBF and the SMEC for taking the initiative in developing this Framework. I congratulate RPWG for its balanced approach in developing the Business Leasing Guide and the Basic Reference Lease Agreement for Business Space. We are coordinating with various Government agencies to consider using these in their tenancy practices and lease agreements. The feedback has been positive so far and they are supportive of the principles laid out in the Framework.”
Mr S. S. Teo, Chairman of SBF, said “On behalf of the business community, especially the SMEs, I would like to thank the SMEC and RPWG for the hard work in developing this Framework. As the apex business chamber representing both large companies and SMEs, SBF took the approach of developing a Framework that is premised on the principles of fairness and one that will retain its relevance regardless of market conditions. I look forward to the wide acceptance and adoption of the Framework by the business community.”
Mr Lawrence Leow, Chairman of SMEC, said “This Framework will help provide tenants and landlords with information on market data and serve as a guide in their negotiation for fair and transparent tenancy terms for business premises. SMEC is encouraged by the strong support given by Government, trade associations and chambers, practitioners, industry experts and the Singapore Mediation Centre in developing this Framework.”
Private sector landlords have given their thumbs up for the initiative.
Mr Wilson Tan, CEO of CapitalMall Trust Management Ltd, said “CapitaMall Trust congratulates the SBF-led Retail Practice Working Group which has developed the Business Leasing Guide and Basic Reference Lease Agreement for Business Space. The Framework can provide a source of reference for the industry.”
Mr Manohar Khiatani, President and CEO of Ascendas, said “Ascendas is Asia’s leading provider of business space solutions serving a global clientele of some 2,400 customers across 10 countries. This SBF-led Retail Practice Working Group’s development of the voluntary framework is commendable and will serve as a useful platform between landlords and tenants.”
Mr Seah Kian Peng, CEO of NTUC FairPrice, said “NTUC FairPrice applaud the SBF-led Retail Practice Working Group which has developed the Business Leasing Guide and Basic Reference Lease Agreement for Business Space. The Fair Tenancy Framework will provide more transparency of business rental data and establish a reference leasing practice for the industry. "
To raise awareness and encourage greater acceptance of the use of the Guide and reference lease agreement, SBF will be conducting workshops for its members and the Federation will be working closely with partners such as the ASME, RAS, SRA, other relevant TACs, as well as the Singapore Mediation Centre. Outreach activities will also be extended to intermediaries such as real estate agents and legal firms through the respective trade and professional associations.
Ms Cynthia Phua, Chair of RPWG, said “As we were developing the Framework, there was much consultation with tenants, landlords, legal and real estate professionals on their concerns, especially the availability of useful rental data, lease clauses and fair principles of lease negotiation. With the disclosure of the Businesses Rental Data, the Guide and the reference lease agreement, we aim to help both tenants and landlords understand their respective roles and responsibilities, as well as understand the perspectives of each party in order to conduct open, transparent and fair negotiations.”
For more information on the Framework and to download the complete Business Leasing Guide and Basic Reference Lease Agreement for Business Space, interested parties can visit the dedicated web page at www.sbf.org.sg/fairtenancy. Links to Government rental data for business spaces, a feedback channel and a schedule of events and workshops can also be found on the page.
Fair Tenancy Framework Booklet