Singapore’s Retail Leasing Code of Conduct: What You Need to Know

In Singapore, the retail sector has long been a key driver of the economy, and as such, fostering a fair and transparent leasing process is crucial for its continued success. To ensure that both landlords and tenants can enter into agreements that are equitable and uphold the interests of both parties, the Code of Conduct for Leasing Retail Premises was introduced. Initially launched in March 2021, this Code serves as a comprehensive guide that shapes the retail leasing landscape by setting clear and balanced terms for both landlords and tenants.

Background and Objectives of the Code

The Code of Conduct for Leasing of Retail Premises was established to create a fair framework that promotes transparent, honest, and reasonable negotiations between landlords and tenants. It is aimed at reducing potential disputes and ensuring the leasing process is smoother for both parties.

The main objectives of the Code are:

Fair Negotiation: To ensure that both landlords and tenants negotiate fairly.
Governance Framework: To provide a structure for monitoring adherence to the Code.
Dispute Resolution: To offer a clear process for resolving issues that arise.

Key Components of the Code

The Code is structured into four core sections, each addressing essential components of the leasing process:

Conduct and Spirit of Negotiations: The Code encourages good faith negotiations. Both parties must be honest and transparent. Landlords should not take advantage of tenants’ lack of knowledge. They must work together to reach a balanced agreement.
Leasing Principles for Key Tenancy Terms: The Code defines eleven key tenancy terms that must be followed. These include exclusivity rights, early termination clauses, and rental structures. Practices like “either/or” clauses are not allowed unless both parties agree.
Data Transparency: Landlords must provide sales data to tenants. This includes monthly sales and floor area usage. The data must be shared before the lease is signed. It must also be updated and shared with tenants every six months.
Dispute Resolution and Enforcement: The Fair Tenancy Industry Committee (FTIC) oversees compliance with the Code. If disputes occur, tenants or landlords can report issues to the FTIC. The FTIC helps resolve these disputes through mediation with the Singapore Mediation Centre (SMC).

Additionally, you can explore the key highlights of the updated Code of Conduct (1.11.23) for leasing retail premises in Singapore, which offers insights into the latest changes.

Mandatory Compliance from February 2024

As of February 1, 2024, compliance with the Code will be mandatory for all leases with a duration of at least one year. This change comes after the passing of the Lease Agreements for Retail Premises Bill in August 2023, which legally formalized the guidelines set forth in the Code. The FTIC will continue to monitor adherence to these requirements and ensure that they are updated regularly to stay in line with evolving market trends.

Master the Code of Conduct with SGTUFF

To help businesses comply with the Code, the Singapore General Tenants’ Union Federation (SGTUFF) offers a course called Master the Code of Conduct for Retail Leasing – Enhance Your Business with Fair Tenancy Practices. This course helps both landlords and tenants understand the Code. It provides tools for fair negotiations and transparent practices. Enrolling in this course ensures businesses are prepared for the mandatory compliance by February 2024.

For more details on the course, visit SGTUFF’s course page.

External Resources: FTIC Code of Conduct Document

For further details on the Code of Conduct for Leasing Retail Premises, refer to the official Fair Tenancy Industry Committee (FTIC) document. This document provides additional information on compliance and dispute resolution. You can access the document here on the FTIC’s website.

Conclusion

The Code of Conduct for Leasing Retail Premises creates a fair and transparent environment for landlords and tenants. It promotes balanced negotiations, clear leasing terms, and a dispute resolution process. As compliance becomes mandatory from February 2024, all stakeholders must align with these standards. This will ensure a smoother leasing process for everyone involved.