The FTIC Code: What Retailers Need to Know Before Signing a Lease

For retail businesses in Singapore, signing a lease is one of the most critical decisions affecting financial sustainability and long-term success. To promote fair leasing practices, the Fair Tenancy Industry Committee (FTIC) has introduced the FTIC Code of Conduct for Leasing of Retail Premises. This guide will help retailers understand the FTIC Code and how to apply its principles before committing to a lease agreement.

1. What Is the FTIC Code?

The FTIC Code is a set of leasing guidelines developed to create transparency and fairness in landlord-tenant relationships. The Code establishes clear leasing principles and dispute resolution processes to protect SMEs and retail businesses from unfair terms.

Key Objectives:

Ensure rental negotiations are conducted fairly.
Standardize lease agreement terms.
Reduce disputes between landlords and tenants.

2. Key Provisions of the FTIC Code

Before signing a lease, retailers should familiarize themselves with the key provisions outlined in the Code:

a. Rent Structure Transparency

Landlords must clearly outline how rent is calculated, including any fixed components, variable components (such as turnover-based rent), and additional fees.

Example: If a landlord proposes a turnover-based rent, the lease must specify the formula for computation, the frequency of reporting, and any applicable caps.

b. Security Deposit Limits

The Code sets guidelines on reasonable security deposit amounts, generally not exceeding three months’ rent for standard leases.

Example: A small retailer renting a 500 sqft unit with a $5,000/month rental should not be asked for a security deposit exceeding $15,000.

c. Early Termination & Exit Clauses

Tenants should be allowed exit clauses under reasonable conditions, such as business downturns or regulatory changes.

Example: If a new government regulation forces a retailer to close down, the tenant should be allowed to terminate the lease without excessive penalties.

d. Dispute Resolution Mechanism

The FTIC Code requires mediation as the first step in resolving disputes between landlords and tenants. The Singapore Mediation Centre (SMC) offers structured mediation services.

Example: If a landlord imposes an unexpected rent hike mid-lease, tenants can seek mediation before considering legal action.

3. How to Apply the FTIC Code Before Signing a Lease

Retailers should take proactive steps to ensure compliance with the FTIC Code before finalizing their lease agreements.

Step 1: Request a Lease Based on the FTIC Code

Ask the landlord to provide a lease agreement that adheres to the FTIC Code. If any clauses contradict the Code, request amendments.

Step 2: Consult with a Legal Expert

Engage a Council for Estate Agencies (CEA) registered property advisor or lawyer to review the lease terms and identify potential risks.

Step 3: Negotiate Key Lease Terms

Use the Code as a reference during lease negotiations. Ensure that security deposits, rent structures, and renewal clauses align with the recommended guidelines.

Step 4: Document All Agreements in Writing

All negotiated terms should be documented in writing within the lease contract. Avoid relying on verbal assurances.

4. Common Pitfalls to Avoid

Even with the FTIC Code in place, retailers should be cautious of the following common pitfalls:

Hidden Costs: Ensure all operating expenses, maintenance fees, and marketing contributions are explicitly stated.
Vague Exit Clauses: Avoid leases that impose excessive penalties for early termination.
Unfair Renewal Terms: Ensure that renewal options and rental adjustments are predefined.

5. Conclusion

The FTIC Code is designed to protect retail tenants by promoting fair leasing practices. By understanding and applying its principles, SMEs can negotiate better lease agreements that support business sustainability. Before signing a lease, retailers should always review the Code, seek professional advice, and document all negotiated terms to avoid future disputes.

Empowering Businesses with SGTUFF

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Learn More: Gain practical insights into fair tenancy practices with our guide: Master the Code of Conduct for Retail Leasing.