The complete guide for tenants and landlords for everything you need to know about breaking lease of tenancy agreements in Singapore.
Under the law in Singapore, the minimum stay duration for leasing a private property is three consecutive months, and six months for public housing (HDB), where the most common lease period is between one to two years. During this period, the tenant and the landlord are legally bound by the terms agreed in the Tenancy Agreement (TA).
However, due to unforeseen circumstances, there could be a need for either party to break the lease. In this guide, I will share in what circumstances this may take place and the consequences of doing so. Hopefully, this will help landlords and tenants know what to do in such an event. If unsure, please feel free to reach out to me anytime.
Understanding of the Tenancy Agreement (TA)
As mentioned in my guide on common clauses found in Tenancy Agreements, the basic understanding is that although CEA and Estate Agencies such as ERA provide TA templates, ultimately, Tenancy Agreements can and often include custom clauses subject to mutual agreement between both parties. Always remember to read them carefully and make sure that you understand each clause (especially around early termination) before you sign.
A few clauses and terms in the TA which are relevant to termination are:
- Start/end date for the lease.
- Diplomatic Clause for foreigners on a two-year lease.
- Enbloc Sale.
- Sale of the Property.
- Default in payments (rent/maintenance).
- Extensive damage such as fire, natural disasters, etc.
- Illegal and vice activities.
- Immigration offenses.
- Occupancy offenses such as breach of occupancy cap.
- Other tenancy-related disputes.
As you can tell, there are quite a few reasons why a tenancy can be terminated abruptly. In this guide, I will try to cover as many of them as possible. I will explain it from both the tenant’s and landlord’s perspective where possible.
As a general rule of thumb, it is in all parties best interest not to commit to a legally binding agreement if either side has hidden agendas or intention to terminate prematurely.
The Diplomatic Clause
The diplomatic clause only applies to foreigners and can be found in two-year lease agreements. This clause allows the lease to be terminated before it expires, normally within a two-month notice and after the first year (known as the 12+2). The Diplomatic clause can only be used in the event the tenant’s employer will be relocating the tenant’s role to another country. The tenant will need to provide documentary evidence from their employer’s HR.
En bloc Sale
A collective sale, or en bloc, is a sale of two or more units to a single common purchaser. In most cases, the entire condo/estate. Older developments will have a higher chance of en bloc sale, especially when developers see a good potential for investing in the redevelopment of the land.
Although this process may take 18-24 months or longer to complete, in most tenancy agreements, the notice period to the tenants is usually three months in case of a successful en bloc sale. If the current lease is still in force, an en bloc sale will not constitute an early termination/breaking of the lease and will normally have no claims from either tenant or landlord.
Sale of the property
Should your landlord be looking to sell their property, you will likely be from the first few to know as they will ask you to accommodate potential buyers for viewings. When it comes to the TA, a clause on this will likely appear even when the tenancy started, the owners had no intention to sell.
When this clause is included, it will state the notice period (normally two months) and whether the property is to be sold with the tenancy or vacant.
Tip: Read and pay attention to such a clause to understand exactly what you agree to. Although the most common practice is to sell with tenancy, there are many variations to it. Remember, people’s plans change, and it’s the owner’s legal right to sell their property should they wish to do so.
Default in payments
In the event tenants are late in paying their rent in accordance with the schedule agreed in the TA. The Landlord can apply in court for eviction. The court will give the tenant four weeks to pay all the rent owed. If the tenant fails to do so, the court will grant the application for the enforcement order for possession of the property.
On the other end, if the landlord fails to pay the maintenance fees to the MCST in some serious cases and as a last resort, the MCST can force the sale of the property to cover any unpaid fees, interest, and penalties incurred.
Illegal and vice activities
Tenants are advised to comply with their tenancy agreement and only permit authorized occupiers (as listed in their tenancy agreement) to reside at the premises to ensure that their rented premises are not being misused for any illegal activities.
Landlords and/or the agent are advised to conduct due diligence checks for the identification documents, job(s), and place(s) of employment of the would-be tenant(s). If caught in such a situation, the tenancy will be terminated, and criminal charges will likely be imposed.
Immigration offenses
Harboring illegal immigrants and overstaying your visa are all criminal offenses that carry fines, jail terms, or both. If you are found to have given shelter to an immigration offender, you will be presumed to have done so recklessly or negligently unless you can prove the contrary. If you let others stay in your house, please remember to perform due diligence and that they are permitted to stay in Singapore.
Occupancy offenses
All residential properties are subjected to an occupancy cap of six unrelated persons per property. Unrelated persons refer to anyone who is not part of the same family unit. Domestic helpers are considered part of the same family unit.
The occupancy cap also applies to tenants who sublet the property. As the property owner, you must ensure your tenants follow the rules. Tenancy Agreements will state who the permitted tenants and occupants are. In most cases, you’re allowed to have visitors stay unless your TA says otherwise.
If found to be in breach of the occupancy cap, this will likely lead to the immediate termination of your lease and legal actions to follow suit.
Other tenancy-related disputes
One common scenario relates to tenancies, where the tenants and landlords share the same roof. This is more frequent in-room, dual-key rentals where the proximity to one another can lead to higher friction and disputes.
If you don’t get along with each other for whatever reasons, this alone is not grounds for breaking the lease early legally. Alternative ways to resolve such disputes must be based on mutual agreement. If such agreements can’t be reached, no one side will take action without facing the legal and financial consequences of their actions.
Ending a Tenancy Agreement early / Breaking Lease
Whether you’re a tenant or landlord, do your best to be civil about this process and try to relate to each other’s situation. When things are done with emotional charge and disrespect, it will only worsen the situation.
Do take note that breaking of lease is not something that happens out of the blue as the TA will stipulate conditions and notice periods for when such events can occur. If you ended up being thrown/locked out of your apartment without any notice, you should likely alert the authorities to assist you.
Security Deposit
In Singapore, the common practice is for the Landlord to retain one month’s worth of rent for every year of tenancy. This is known as the security deposit, and it is usually collected when the TA is signed and/or before the actual move-in date.
One mechanism and likely the first line of defense to deter tenants from early termination is the risk of the security deposit being forfeited by the Landlord.
The deposit might also be used to offset against damages caused by the tenant if the property wasn’t returned in a similar condition as received at the beginning of the lease. Given the high price of properties in Singapore and high labor/material costs, it is often not enough to cover everything, depending on the extent of the damage.
Balance Lease
Some agreements go to the extent of specifically stating that upon early termination, any unused balance of the lease should be paid, as well as the security deposit forfeited. Such conditions are often harder to impose as they involve larger sums and the help of the courts to retrieve, especially with foreigners who might have already left the country.
Lease Takeover
A lease takeover occurs when a new tenant takes over the remaining term of a departing tenant’s lease with the landlord’s approval.
To tenants, the concept of lease takeover may sound like a viable option vs. losing their deposit and having other financial penalties imposed due to early termination. Still, the process of finding someone to take over your lease is often a lot more complicated, risky, and potentially costly affair.
To Landlord, it may serve as a good opportunity to avoid re-marketing costs such as agent commission and any downtime (the property remaining vacant) to get a continuation in rental income.
To the new incoming tenant, they may inherit problems or difficult landlords to deal with as normally exiting tenants will tend to sugarcoat and cover up on bad situations not to scare incoming tenants from proceeding. If no agent is involved, the handover process may lack certain due diligence checks, which can land all involved parties in trouble.
Tip: Lease takeover scams are one of the most commonly used methods by scammers to cheat people into making depositing for fake listings.
Agent Commission
When landlords engage the service of Real Estate agents in the marketing and handling of rental transactions, the most common service fee will be the equivalent of half a month’s worth of rent for every year of the lease duration.
As such, when a lease is terminated prematurely, in most cases, the Landlord will seek compensation from the tenant for the commission they paid pro-rated to the balance remaining on the lease. You will find a clause about it in nearly every TA, and it is applicable even in the event you, as a tenant, paid your own agent commission when you engaged their services.
Tip: When you engage with agents asking you to pay them commission as this is a break-lease situation. Do report them to CEA, as no such thing exist. Agents are paid in full upon successful transactions and are not required to return their fees should the tenant break the lease early.
Other Obligations
All other obligations agreed in the TA under normal conditions will still apply in the event of early termination. Things like Air con maintenance, dry cleaning of the curtains, a deep cleaning (known as professional cleaning), and closing and paying off your utility account (water, gas, electricity) all will be required subject to what was stated and agreed.
As a tenant, please do not leave your accounts in a state of arrears, as it may lead to legal action by creditors and further increase your financial penalties beyond the tenancy itself.
Summary
The above article reflects my experience, opinions, thorough research, and adherence to common practices. If you find it valuable, that’s fantastic. However, if you come across any errors, I appreciate your feedback.
As you can tell, breaking lease is a sensitive and highly complicated topic. It is highly recommended to seek peaceful resolutions for disputes, exhausting other options like courts and law enforcement as a last resort. If you have any inquiries, please don’t hesitate to contact me or consult a qualified legal professional.
Lastly, take note. The police don’t get involved in tenancy disputes unless a crime is committed. If you’re being threatened by such actions or considering such a route, you may be disappointed to find out they can’t take any action.
