By POSTED: 20 Jan 2015 12:11 | UPDATED: 20 Jan 2015 22:54 | CNA

SINGAPORE: The Singapore Business Federation (SBF) has launched a set of guidelines to promote sound practices in the rental market.

Called the Fair Tenancy Framework, it sets down key reference points to help tenants and landlords work out rental agreements under three initiatives.

  1. To work with the Government to provide rental data information for businesses for greater transparency, so businesses can make informed decisions related to the tenancy market.
  2. The introduction of a guide to help small businesses understand typical terms and conditions in lease agreements, as well as a basic reference containing common obligations found in tenancy deals.
  3. To tap on the Singapore Mediation Centre to resolve tenant-landlord disputes, should they arise.

The framework was developed in consultation with the Government, private sector landlords and various trade associations. A key thrust is to provide transparent information to stakeholders for them to make decisions, with soaring rental rates being a common complaint among businesses.

“It avoids undue advantage taken by another party in any business. So I welcome this move, said Mr R Dhinakaran, Vice President of the Singapore Retailers Association. “But most importantly, the landlords need to follow the guidelines or adopt the guidelines. If they do that, this framework will help businesses to continue in the long term.”

When it comes to renewing leases, the guide recommends landlords and tenants consider three options.

“One is a market rental with a cap. And the second option is a valuation, a fair valuation of each party and maybe you take a average of it, or a third valuation. And the last option that we have actually recommended is to adopt available market indicators,” said Ms Cynthia Phua, Chairman of the Singapore Business Federation’s Rental Practices Working Group.

However, being a guide, the framework does not have legislative teeth as leasing practices in Singapore currently operate on a free-market principle. SBF said legislation in this area would require greater in-depth study on the implications.

Said Minister of State for Trade and Industry Teo Ser Luck: “If we don’t have to legislate, we don’t want to do that. Because (at the) end of the day, it doesn’t mean that using the law, you will solve every problem. Because what you want is the community to self-help and self-rely, the best is community can self-govern, without necessary using a sledgehammer, you know, just for a smaller issue.”

The framework has the support of major landlords CapitaMall Trust and Ascendas.