New Laws to Protect Tenants Against Landlords with Unfair Agreement Will be Introduced Soon

Ah yes, landlords, the bane of every tenants’ existence. With the terrible economic situation that COVID-19 has unceremoniously dumped us all into, some landlords seem to be downright evil.

Goody Feed Office Landlord: It’s unfair to make such a sweeping statement. Be glad we’ve not chased you away for not paying seven months worth of-

Thankfully, the government will be introducing new laws to protect tenants from such landlords.

The new legislation will be based on a set of guidelines, termed as a code of conduct for the leasing of retail premises, which were put forth by a committee made up of landlords, tenants, government representatives and industry experts.

The government will continue to work with landlords and tenants to work out the details of the legislation.

The new code will come into effect from 1 June 2021 for those who do decide to adopt it. It will also apply to lease agreements that were signed on or after 1 June this year with a tenure of more than one year.

Ssome of the leasing principles set out in the code are:

• Landlords can collect rent from tenants based only on a single rental computation.
• Currently, the monthly rent is generally derived from two formulae, and the final amount paid depends on whichever is higher. One formula consists of a base rent dependent on the size of the shop space in addition to a percentage of total gross sales, while the other formula computes rent based on a percentage of total gross sales.
• Landlords can terminate rental agreements before their leases are up only for substantial redevelopment works, and tenants can terminate if they have become insolvent or lost franchise rights.
• Currently, landlords can terminate the lease for whatever reason without compensating the tenants even before the lease term is up. Leases are usually three years. Tenants, however, are not able to do the same.
• Landlords must bear the costs of preparing the lease agreement unless there are terms that are not compliant with this code that the tenants asked to be added.

A fair tenancy industry committee will also be set up to review the code and update it when necessary.

Landlords or tenants who do not comply with the leasing guidelines may be taken to task by the committee by having the particular company’s name published through a media statement or on its website.

However, until the code becomes law, landlords do not need to adhere to the guidelines.

Where Did It All Begin?

It’s no surprise that the pandemic has thrown many businesses into turmoil, from retail to food-and-beverage outlets. TODAYonline notes that reports of landlords not passing down savings from the government property tax rebates to their tenants had been uncovered.

In fact, last year, five business groups had called for landlord-tenant legislation to be adopted to address a “growing imbalance” of power that has brewed years of unfair leasing practices, according to CNA.

These new guidelines came about after nine months of negotiations between landlords and tenants.

The government will be a lead adopter of the code, said Minister of State for Trade and Industry, Ms Low Yen Ling.

“[A]ll government landlords will lead by complying with the code, unless there are other statutory obligations that we need to abide by.”

She also noted that major trade associations have committed to the code of conduct and hopes that more parties will observe the leasing practices even before the legislation comes into play.

Tenants Welcome the Announcement

Of course, many tenants who were approached by TODAYonline were happy with the new code of conduct.

Many had bad experiences with landlords, some had their lease terminated before it expired and were not compensated, others had to even pay their landlord unrealised rent when they terminated their lease.

All agreed that the introduction of fair tenancy laws would allow tenants to protect their rights and level the playing field between landlords and tenants.

Featured Image: Sorbis / Shutterstock.com (Image for illustration purpose only)