Singapore Office Rental Explained in 10 Mins!
Finding a leased premise for your business need not be a daunting task. Follow this Singapore office rental guide to secure your business space.
Is it your first time renting an office in Singapore for your firm or business? You have to understand the standard leasing procedure and what to look out for.
Or are you a foreigner opening a branch in Singapore or relocating your business here? Commercial leasing practices may vary from country to country.
You can familiarise yourself with the process using this guide.
How to determine your perfect office rental?
Your office location will depend on many factors. Ranging from public transport access, company image to visibility. It will also differ for a premise located close to customers and one used as inventory space or back office.
Should you opt for a small office for rent or a larger space? Three things – current staff, short-term business plans, and long-term goals will play a role.
Factor in lease period which can be a year or more. If you currently have an office lease, plan your move based on the expiry terms and the time needed to shift.
Come up with an affordable rental figure, especially when you have limited funds. Set aside money for furniture and fittings for a bare shell office.
Do you need ample parking space for management and employees? Expect higher charges at prominent locations. If you need leased parking slots for transporting goods, this can limit your options.
As your business contains valuable assets, choose an office with adequate security options. These include alarm systems, CCTV, door and portable equipment locks, and effective lighting.
IT and Communication
If your business is dependent on tech, make sure there are enough power points in the server room and work areas.
Intangibles to consider
While looking a commercial property for rent, here are some points often overlooked:
- Amenities – Availability of good food options and other amenities. Such as hawker centres and 7-11 stores.
- Travel – Easy commute options like taxi availability. Or located close to shelter, train stations or bus stops.
- Storage – Temporary storage space for your furniture and equipment in case of renovations.
Common Singapore office rental terms explained
Now that you have a fair idea of how to choose your next office space, let’s look at some of the terms used.
Most commercial properties are often rented out for a period of two to three years. Longer leases of five to six years are available for larger spaces.
The gross rent paid to the landlord usually includes base rent x psf (per square feet) x 7% GST (Goods and Service Tax). GST is only applicable if registered companies double up as landlords.
Service charges are often included. It covers air conditioning, management fees, building repairs, security, and maintenance.
Deposit & Other Fees
- Refundable Security Deposit (Rental Deposit) – 3 months of gross rent is usually needed. And you pay it in 2 installments. You pay one month’s rent as a deposit on exchanging Intent and Offer letters. And pay the remaining on signing Tenancy Agreement or moving into rented premises.
- Refundable Renovation Deposit (Fit-Out Deposit) – Required if doing renovations or fitting-out works. This cover any damages to common areas during the renovation of your rented office. Have your contractor fund this deposit.
- Stamp Duty – Singapore’s leasing laws need you to pay for this. It is about 0.4% of the total rental amount for the entire lease duration. This is payable within 14 days of signing Tenancy Agreements. Overseas-based tenants have 30 days to pay up.
- Property Tax – The landlord will incur this, but some will add a clause to recover any increased tax from you. Negotiate these terms in advance.
Utility & Maintenance
You are responsible for office related expenses, except centralised air-conditioning. Most commercial buildings in Singapore offer this service. But after-hours air-conditioning are chargeable.
Public or third-party liability insurance during the lease term is a need. But you can negotiate terms of minimal coverage with your landlord.
Insure your office furniture and fittings as well. Get a Fire and Special Perils insurance policy before you undertake renovations.
How to rent an office in Singapore?
You’ve identified a suitable office spot and are eager to move in. Before you do that, follow this 4-step process of renting a property.
1. Letter of Intent (LOI)
Start by submitting the Letter of Intent to the landlord or their representatives. Either by yourself or through a property agent. The short LOI states your interest in leasing the place and basic lease terms you seek. Include these key details:
- Date of lease commencement
- Duration of the term
- Date of possession
- Gross rent
2. Letter of Offer
After receiving your LOI, they will perform a background and company check. If satisfied and agreeable to your lease terms, they will send the following:
- Letter of Offer
- Copy of Tenancy Agreement
You will secure the place when you complete the following:
- Send the signed Letter of Offer
- Pay Security Deposit within 7 days of receipt
Note: Some landlords may insist on an advance payment of one-month rent.
The landlord will get the Letter of Offer stamped. And send you a copy along with the Tenancy Agreement for signing.
3. Tenancy Agreement
This is a simple legal document provided by landlords. And it has all the standard clauses applicable to office leases in Singapore.
You can also get a lawyer to create your version of the agreement based on the sample copy.
As a tenant, you will be footing the legal fees for drawing up this lease deed. Feel free to negotiate a two-way split of fees with your new landlord.
After both parties accept and sign the Tenancy Agreement, you can move in.
4. Taking Possession and Fitting-Out
With the legal formalities settled, focus your attention on furniture, fittings, and renovations. And here are some key points to take note before you start:
- If you rented a property with existing fixtures, you are likely expected to maintain them. And repair any damages/defects. For bare units, leave them in original state at the end of your lease.
- You will need written approval before you proceed with any office alternations/modifications. Get it from the landlord and relevant authorities.
- The landlord takes care of security and common areas like lobbies and toilets. So tenants may have to maintain and renovate this area.
What do you need to include in your Fitting Cost estimate?
- Electrician costs
- Electrical wiring
- False ceilings
- Internet access/Phone lines
- Partition walls
Hidden costs of renting office building in Singapore
You can avoid nasty surprises in the form of hidden costs. Remember to budget for some of these possible one time or monthly expenses.
- Utilities including phone bills and electricity charges
- Housekeeping charges
- Fire extinguishers
- Water dispenser and piping charges
- Pantry expenses
- Moving costs
- Furnishing expenses
Finalising office rental in Singapore
Before you sign on the dotted line, follow this rule of three.
1. Read termination clause in agreement
Ensure that the lease deed spells out Notice Period for early termination. And forfeiture terms for Security Deposit. Most agreements settle for one month’s notice while others need two to three months.
2. Check all clauses with extra fees
Go through all the clauses. And look for variable fee component in the lease deed that may increase your operating costs. For example, increased property tax and after-hours air-conditioning.
3. Test-fit shortlisted offices
Unable to choose between two shortlisted offices? Perform a ‘test-fit’ with a workspace designer. And then choose the premise based on efficiency, finance, and other aspects.
When should you hire a property agent?
Hunting for a suitable office property can a frustrating experience. Instead, use property agents to do the groundwork.
A local expert can tackle all issues relating to your office rental. They will locate the right property within your budget, negotiate the best deal. And complete paperwork and other formalities.
Property agents in Singapore don’t charge tenants any fees for office rentals above S$3500/month (and 2-year lease). Your landlord is the one who pays one month’s gross rent as commission.
For rental value below S$3500/month (and 2-year lease), tenants pay one month’s rent as commission.
By navigating you through Singapore office rental process, I hope it will help you to save time and money. Are there any other things that we should look out for when searching for a suitable business space? Let us know in the comments below!
If you need quick cash flow for your office rental or renovations, you can consider our business loan.