FAQs

This is subjected to negotiation between tenants and landlords. If the tenants and landlords agree to integrate their POS systems, the cost of integration is to be shared equally between both parties.

In the event when both parties agree to the integration, but tenant is an existing tenant with existing POS system which is not compatible with landlord’s, the cost to purchase a new POS system and the cost for integration are also to be shared equally between both parties.

Landlords and tenants are strongly encouraged to negotiate in the spirit of forming a symbiotic and collaborative relationship, and seek to see how each party’s requirements can be addressed.

Yes, tenants will have to bear the cost (either in the form of legal fee or admin fee, but not both) for both the landlord and tenant, if they make request to make changes to a lease agreement that is already CoC compliant.

All third-party costs which are to be borne by tenants must be clearly communicated upfront to tenants. Where the actual cost quantum is not known upfront, landlords can communicate an estimated quantum or a range of the expected quantum, and follow-up subsequently with the actual cost quantum when determined.

No. Submission of audited sales report is only required for tenants that have rent structures that includes GTO (i.e. only applicable when rent structure is percentage GTO rent or base rent + percentage GTO rent).

Landlords will provide tenants with a panel of auditors to choose from and must inform tenants the fees upfront when the request for the audit is made. These fees are to be shared on a 50:50 basis.

This is when the landlords have obtained consent of all the tenants to purchase electricity for the entire premises. The selection of the electricity retailer and negotiation for the rates is done on behalf of all the tenants.

The landlords will be the master-metered account holders and will provide electricity to the tenants who are the sub-metered account holders. For more information on the En-bloc Contestability Scheme please refer to the Open Electricity Market website.

Tenants may procure their own electricity from their preferred electricity retailer if the premises they are leasing is not on the En-bloc Contestability Scheme, as long as the existing physical infrastructure of the building can support this.

If the premises is on the En-bloc Contestability Scheme, tenants are unable to procure their own electricity from retailers.

Landlords are required to abide by the guiding principles to all chargeable costs, including electricity charges:

• There must be transparency, for example an upfront disclosure of chargeable third-party costs to the tenants must be made.
• The fees must be legitimate and justifiable in order to cover real costs (e.g. labour costs in coordinating work).
• There must not be profiteering. The landlords must be able to justify the rates charged to tenants in cases of disputes.

There is no cap on the administrative fees charged by landlords. However, the administrative fees must be legitimate and reasonable. The spirit of the CoC is that there should be no attempts to unfairly profit or take unfair advantage of the other party. Dated 29 April 2021 The administrative fee must also be communicated upfront and tenants may negotiate with the landlords for a reasonable administrative fee.

Reasonable administrative costs are legitimate and justifiable costs incurred by the landlord in the administration of the bulk electricity purchase agreement (e.g accounting for conversion of high tension to low tension supply, billing etc). Such administrative costs will need to be communicated upfront to tenants.

The administrative fee charged should be the same for all tenants within the same building under the En-bloc Contestability Scheme, unless additional administration is required for the purpose of conversion between high and low tensile electricity. In such instances, all tenants that requires conversion between high and low tensile electricity should be charged the same administrative fee.

For leases with longer tenure where escalating cost over time could be a concern, landlords and tenants may negotiate and provide for rental escalation over time in the lease agreement.

No. Tenants will not be required to do so, and also will not be required to make any payment in lieu of reinstatement.

Landlords are only entitled to pre-terminate the lease of any premises if the intention is to carry out substantial redevelopment, asset enhancement or reconfiguration works under the following conditions:

• If they intend to carry out substantial redevelopment works and requires
  vacant possession of tenant’s premises. Not when it is for minor works
• Give no less than 6 months’ prior written notice to tenant.
• Pay compensation sum based on the Agreed Declared Value of the Tenant’s Fit Out Capex Works.
• Inform tenant of proposed works when written permission from URA to carry out the redevelopment works is obtained prior to signing of lease.

Tenants are allowed to pre-terminate under the conditions when:

• Business principal (i.e. the originator of the goods and/or services that the tenant has obtained the rights to sell the goods and/or provide the services which is being retailed at the premises) is insolvent; or loss of distributorship or franchise rights not due to non-performance or breach.
• Give no less than 6 months’ prior written notice to landlord and pay landlord a compensation sum equivalent to the security deposit amount.
• Tenant may request to assign the lease to a replacement tenant, subject to landlord’s approval.

When the landlord accepts the estimated cost of Tenant’s Fit Out Capex Works as the Agreed Declared Value, the tenant need not be required to submit to the landlord the fit-out invoices for verification of actual expenses incurred. Compensation shall be based on the estimated cost as the Agreed Declared Value.

Sales performance clause that penalises the tenant for not fulfilling stipulated sales target in any form, such as pre-termination of lease agreement by the landlords, are not permitted in standard lease agreements.

While not mandatory, tenants and landlords are encouraged to re-negotiate the lease agreement in cases where the tenant is prevented, obstructed or hindered from performing its typical business activity at the leased premises due to events beyond tenant’s control.

For escalating rental structures, as long as the security deposit collected does not exceed three months gross rent of the highest rent amount of the lease term, it will be CoC compliant. Example: First year rent is $3,000, second year is $3,500 and third year is $4,000. As long as the security deposit collected does not exceed three months gross rent of $12,000, it is compliant.

An exception will be made when the security deposit collected is $500 or less but exceeds the sum of three months’ gross rent. The need to file for deviation will be waived for such instances.

Landlord and tenant may mutually agree to forego the need to have a surveyed area certificate for floor area of premises 300 square feet and below.

The clause on building maintenance applies for cases where the landlord is responsible for the maintenance of the building and there is gross negligence or wilful default on the part of the landlord. For cases where the landlord is not responsible for the maintenance of the building, the clause would not apply.

The CoC’s guiding principle of reciprocity when applied to rent structure, would mean the sharing of both upside gains and downside risks of tenant’s monthly sales, if the rent structure contains any turnover element. In the example given, the landlord benefits from increased sales from the tenant but does not share in the downside risks when sales drop. Therefore, it is not CoC compliant, and deviation will have to be filed if this is the mutually agreed rent structure.

In general, the following types of rent structure are CoC compliant:

• Fixed rental with no GTO – e.g. $X psf, or $Y per month.
• Rental with GTO component that applies from the first dollar of GTO – e.g. Y% of GTO, or $X psf + Y% of GTO.

Any rent structure that requires tenants to pay a higher total rent on account of a higher GTO, but not a lower total rent when GTO is lower, is not CoC compliant as these are effectively “whichever is higher” rent structures. Mutual agreement and declaration to FTIC would be required for non-CoC compliant rent structures.

Landlords who collect sales data from tenants to compute rental based on Gross Turnover must share sales data by trade category on a one-on-one basis before new lease is signed. For existing tenants, the data must also be shared on a bi-annual basis. For reasons of confidentiality, sales data will not be shared where the number of tenants for the relevant trade category is less than 3.

An example of the type of data to be shared can be seen in the table on page 27, para 1 of the CoC – trade category, no of units, total monthly sales turnover, etc.