7 FTIC’s Key Principles and How They Benefit Retailers

The Fair Tenancy Industry Committee (FTIC) plays a pivotal role in promoting equitable leasing practices within Singapore’s retail sector. Through its Code of Conduct for Leasing of Retail Premises, the FTIC ensures that both landlords and tenants operate within a framework of fairness, transparency, and mutual respect. This guide explores the key principles of the FTIC Code and how they benefit retailers by fostering sustainable landlord-tenant relationships, reducing disputes, and enhancing business confidence.

1. Transparency in Rent Structures

A cornerstone of the FTIC Code is the requirement for landlords to provide clear, transparent rent structures. This clarity helps retailers understand their financial commitments upfront and avoid unexpected costs.

What Retailers Can Do:

• Request Detailed Rent Breakdowns: When negotiating leases, ask landlords to provide a full breakdown of rent components, including fixed rent, turnover rent, and any additional charges such as maintenance fees or marketing levies.
• Clarify Turnover Rent Calculations: If your rent includes a turnover-based component, seek clarity on how it is calculated, how often it is reviewed, and whether there are any caps or thresholds. This helps you budget more accurately.
• Use Market Data: Leverage publicly available market rental data or consult industry reports to benchmark rent levels and negotiate fair terms based on market realities.

Benefits for Retailers

• Enables accurate budgeting and financial planning.
• Reduces surprises and potential conflicts over hidden or misunderstood fees.

2. Security Deposit Limits

The FTIC Code caps security deposits at three months’ gross rent for standard leases, protecting tenants from excessive upfront financial burdens.

What Retailers Can Do:

• Negotiate Deposit Amounts: If a landlord requests a deposit exceeding the cap, reference the FTIC Code to negotiate it down to the three-month limit.
• Request Payment Flexibility: Where cash flow is tight, ask if the deposit can be paid in installments or partially offset against other fees.
• Document Agreements: Ensure all deposit terms are clearly documented in the lease to avoid future disputes.

Benefits for Retailers

• Frees up working capital for business operations or growth initiatives.
• Provides financial predictability and reduces stress over cash flow management.

3. Early Termination and Exit Clauses

The Code provides tenants with reasonable exit rights under material adverse changes, such as government-imposed closures or significant business downturns.

What Retailers Can Do:

• Include Flexible Exit Clauses: When negotiating leases, request clauses that allow early termination without heavy penalties in cases of unforeseen events like regulatory shutdowns or natural disasters.
• Define “Material Adverse Change”: Clearly define what circumstances qualify for early termination to avoid ambiguity.
• Plan for Contingencies: Develop contingency plans that incorporate potential lease exit scenarios, so your business can adapt quickly if needed.

Benefits for Retailers

• Provides operational agility during crises.
• Minimizes financial losses when continuing the lease is untenable.

4. Dispute Resolution Mechanism

The FTIC emphasizes resolving disputes amicably through mediation before escalating to adjudication or court.

What Retailers Can Do:

• Engage Early: If a dispute arises, approach the landlord promptly to discuss the issue and explore mediation as a first step.
• Prepare Documentation: Gather all relevant lease documents, correspondence, and evidence to support your position during mediation or adjudication.
• Utilize Mediation Services: Take advantage of services offered by the Singapore Mediation Centre (SMC) to resolve disputes efficiently and cost-effectively.

Benefits for Retailers

• Saves time and legal costs compared to litigation.
• Helps preserve business relationships by fostering collaborative solutions.

5. Data Transparency for Market Insights

Landlords are encouraged to share relevant data such as foot traffic and sales benchmarks, enabling retailers to make informed leasing decisions.

What Retailers Can Do:

• Request Relevant Data: Ask landlords for data on mall foot traffic, sales performance of similar tenants, or demographic profiles of shoppers.
• Use Data in Negotiations: Leverage this information to negotiate rent adjustments or marketing support, especially if foot traffic or sales fall below expected levels.
• Monitor Trends: Use data to evaluate the ongoing viability of your location and make strategic decisions about lease renewals or expansions.

Benefits for Retailers

• Empowers informed decision-making.
• Enhances ability to negotiate fairer lease terms based on actual market conditions.

6. Educational Support from FTIC

The FTIC organizes workshops and training to educate retailers about their rights and best leasing practices.

What Retailers Can Do:

• Attend Workshops: Participate in FTIC-endorsed or related training programs to deepen your understanding of fair tenancy laws and negotiation strategies.
• Stay Updated: Keep abreast of changes in leasing regulations and industry best practices through newsletters, seminars, or online resources.
• Apply Learnings: Use knowledge gained to proactively manage lease agreements and relationships with landlords.

Benefits for Retailers

• Builds confidence and negotiation skills.
• Reduces risk of entering into unfair or unfavorable lease agreements.

7. Strengthening Landlord-Tenant Relationships

The FTIC fosters a collaborative leasing environment, reducing misunderstandings and encouraging mutual respect.

What Retailers Can Do:

• Communicate Openly: Maintain regular, transparent communication with landlords about business performance, maintenance needs, or concerns.
• Be Proactive: Address potential issues early before they escalate into disputes.
• Seek Win-Win Solutions: Approach negotiations and problem-solving with the goal of mutual benefit, which helps build long-term partnerships.

Benefits for Retailers

• Creates a supportive leasing environment.
• Encourages lease renewals and business stability.

Conclusion

The FTIC’s key principles—transparency, fairness, reasonable financial terms, flexible exit rights, and structured dispute resolution—are designed to protect retailers and promote a healthy retail leasing environment. By understanding and applying these principles, retailers can negotiate better leases, manage risks effectively, and resolve disputes amicably. This not only safeguards their business interests but also contributes to a more equitable and resilient retail sector in Singapore.

Learn more:

• FTIC Code of Conduct
• SGTUFF Fair Tenancy Guide
• Today Online on Fair Tenancy

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Empowering Businesses with SGTUFF

At SGTUFF, we believe in creating a level playing field for businesses in Singapore. Whether you’re a tenant navigating leasing challenges or an SME striving for growth, we provide resources and insights to help you succeed.

Here’s how you can get started:

• Become a Member: Unlock exclusive tools and networking opportunities with our Membership Plans.
• Learn More: Gain practical insights into fair tenancy practices with our guide: Master the Code of Conduct for Retail Leasing.