Essential Ingredients of a Tenancy Agreement: Part 2

This article follows from our earlier article published on 15 March 2021, titled “Essential Ingredients of a Tenancy Agreement: Part 1”. There, we discuss the formal requirements of a tenancy agreement. In this Part 2, we shall look at some of the essential terms that should find its way into your tenancy agreement.

Exclusive Possession

Generally, a tenancy is a legal arrangement whereby the landlord grants to the tenant the exclusive right to occupy and use the premises for a specified period. This right of exclusive possession entitles the tenant to exclude other persons – including the landlord – from entering the premises. Flowing from this right of exclusive possession, the landlord is obliged to give the tenant quiet enjoyment of the premises.

A tenancy is to distinguished from a licence. Under a licence, the owner or occupier gives permission to another person to enter or use the premises, whether or not for a fee. For example, if you pay for a movie ticket, you are granted a licence to enter the cinema for the duration of the movie. However, a licensee does not have the right to exclude others from entering or using the premises. In the example, you cannot exclude another person from entering the cinema.

Therefore, if a landlord wishes to enter and inspect the premises during the tenancy, he must reserve his right to do so in the tenancy agreement. It is also typical for landlords to reserve the right to bring other persons to view the premises for the purpose of sale or rent. However, such viewing is usually stipulated to take place at a reasonable time of the day, upon prior appointment with the tenant.

Payment of Rent and Deposit

Another key term of the tenancy agreement is the tenant’s obligation to pay rent to the landlord. In addition, if the landlord is GST-registered, the tenant is obliged to pay the prevailing GST in respect of the rent. Rent is usually stipulated to be payable monthly in advance on the first day of each calendar month, clear of all deductions (such as bank charges).

The tenant’s obligation to pay rent is a fundamental term of the tenancy agreement. A breach of such an obligation will generally entitle the landlord to terminate the tenancy and re-enter the premises to take back possession. Usually, a tenancy agreement will provide that the landlord may exercise the right of termination and re-entry if any portion of the rent becomes unpaid after becoming payable.

In addition to rent, a tenant will usually pay to the landlord a deposit upon entering into the tenancy agreement. The deposit amount is a matter of contractual agreement between the parties. Typically, the deposit can be up to 6 months of rent, depending on the nature of the tenancy. The deposit (or the balance of it) will be refunded to the tenant at the end of the tenancy when the premises are returned to the landlord. The deposit is a security for due performance and observance of the tenant’s obligations under the tenancy agreement. If the tenant fails to perform or observe an obligation, thereby causing the landlord to incur losses or costs, the landlord may be entitled to deduct such losses or costs from the deposit. Payment of rent is one such obligation; we will look at some of the others in the next section.

Tenant’s Obligations

(a) Use of the Premises

It is common for a tenancy agreement to set out restrictions on the use of the premises. For residential properties, there may be a prohibition against the operation of any business or trade at the premises. For commercial properties, certain businesses or trades may be prohibited in the tenancy agreement. Commercial tenants will usually be asked to specify their intended use of the premises, for example, as an office, hostel, etc. Any change of use may require the landlord’s prior written consent and the relevant authorities’ approvals.

Another common prohibition is using the premises for any illegal or improper purpose, such as housing illegal immigrants or employing illegal workers at the premises. Also, the tenant is usually prohibited from doing, or allowing to be done, any act at the premises which may be a nuisance or disturbance to the landlord or the occupiers of neighbouring premises.

(b) Reinstatement of the Premises

At the end of the tenancy, the tenant must return the premises to the landlord, by handing over the keys to the premises. Generally, a tenancy agreement will state that the premises are to be returned in good and tenantable repair and condition, except fair wear and tear. Some tenancy agreements go further to provide for the premises to be returned in the same condition as they were delivered to the tenant. In this case, the parties may wish to take photographs of the premises at the time of handover to the tenant, for subsequent reference. If there is an inventory list including furniture and appliances, the parties (especially the tenant) may wish to record any damaged furniture or appliances at the time of handover. This will minimise any dispute when the premises are later returned to the landlord.

If the tenant fails to reinstate the premises as required, the tenancy agreement may allow the landlord to do so on the tenant’s behalf and seek reimbursement from the tenant for the costs thereby incurred. In this case, the landlord should keep proper invoices and receipts (e.g. from third-party contractors), as proof of the costs incurred. The landlord should also withhold the refund of the rental deposit until it is satisfied that there are no outstanding obligations on the part of the tenant.

Recent Developments

On 26 March 2021, the Fair Tenancy Framework Industry Committee announced the introduction of the Code of Conduct for Leasing of Retail Premises in Singapore (“Code”).

The Code applies to Qualifying Retail Premises, that is, premises which are:

• held under a tenancy agreement or licence agreement entered into on or after 1 June 2021 with a tenure of more than one year; and

• permitted to be used by the Urban Redevelopment Authority (URA) and other relevant authorities for retail uses, including restaurants, bars, retail shops, clinics, commercial schools, and sports and entertainment places.

The Code sets out, among other things, mandatory guidelines and negotiation principles for landlords and tenants of Qualifying Retail Premises, so as to balance the interests between the parties. The Code does not have force of law, but it may form the basis of fair tenancy laws to be introduced in future.

We hope you have enjoyed our articles on tenancy agreements and found them useful.


Lee Chang Yang, Senior Associate, Wee Swee Teow LLP

Jacqueline Teo, Senior Associate, Wee Swee Teow LLP

Disclaimer: While every effort has been made to ensure the accuracy and completeness of the above information, which was prepared on 14 May 2021, no guarantee is given nor responsibility taken for any errors or omissions. The information does not constitute professional advice and should not be relied upon as such.


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