In this chapter of Eugene Koh’s Property Guide, I want to talk about the importance of a Letter of intent (LOI) and why it is crucial for all tenants to produce one when deciding to rent a property.
Letter of intent
Basically, a formal letter that states your intention generally in the context of renting a property. Before signing the Tenancy Agreement (TA), the LOI is prepared by the prospective tenant to state their offer and specify considerations such as,
- Lease period
- Rental price
- Security deposit amount
- Additional requests by the tenant
You may use this LOI template to fill in all the details and upon signing, the tenant will have to put down a good faith deposit (usually 1-month rental) to make it official.
The purpose of an LOI is to signal to the landlord that you have serious considerations to rent a property. Usually, it will come together with a good faith deposit placed by the tenant which upon acceptance, the landlord shall cease to look for prospective tenants and focus entirely on closing the deal with you. The initial good faith deposit will then make up the security deposit once everything is sorted and lease starts so for example,
Before the TA is prepared, certain special requirements can be stated by the tenant such as the rent-free period to facilitate the moving in of tenant’s belongings, addition/removal of furniture, cleaning of the entire house and problem-free period. Remember, these requirements can be verbally discussed initially so the landlord can have a general feel of what is required by the tenant. However, it becomes more clear when it is stated in the LOI.
Do take note to set an expiration date (usually a few days) on the LOI in case the landlord decides to wait out longer for a better offer from other prospective tenants.
💡 Pro tip: Be as specific as you can. As a tenant, you will be in a less advantaged position as your deposit is withheld by landlord. You also might not want to waste time negotiating terms which landlord may not be able to fulfil.
Tenancy agreement consideration stage
Now that LOI is mutually agreed upon and signed. We can go to TA consideration stage. This is prepared by the landlord and it will include a more detailed outline of the tenant’s specified requirements.
The Tenancy Agreement (TA) is a must include details such as,
- Landlord’s particulars
- Your Full Name
- NRIC/Passport Number
- Current Address
- Tenant’s particulars
- Tenant’s full name
- Tenant’s NRIC/passport number
- Tenant’s current address
- Registered occupier name(s)
- Registered occupier NRIC/passport number(s)
- Lease details
- Address of property for rental
- Date of Lease Commencement
- Duration of Rental
- Monthly rent amount and its mode of payment
- Security deposit amount
- Inventory list and defects
- Who pays for the utilities and phone bills
- Who pays for repairs and ceiling amount
- Who maintains the air-conditioner and minor repairs
- Other house rules to be observed
- When the landlord can start property viewings as the lease is approaching its end
- An agreement that the landlord continues to pay property tax and insurance
- What is the interest payable for late rental payments
- Can the tenant renew before the lease is up?
Are you tenant an expat?
You could throw in a clause that allows you to terminate the lease after 12 months by giving 2 months of notice. This applies to a situation where you are let go from your job in Singapore or get transferred out of the country.
If this happens, produce proof of employment termination or transfer.
Most landlords will only include this clause for a lease longer than a year.
“Problem-free period” Clause
During the first month of your stay, everything in the property will have a 1-month warranty period which means, the appliances and infrastructure of the house have to be in tenantable condition. In the event that anything breaks down, it is landlords responsibility to fix or replace it. Do note that this is only applicable during the problem-free period stated in the contract, it can be extended depending on your negotiations with the landlord.
Minor Repair Clause
After the problem-free period is over, the minor repair clause will take effect. This basically means if there is any repair required, the tenant will fork out up to $150-200 (depending what amount is negotiated) and the balance will be borne by the landlord. So for instance, if the refrigerator breaks down due to normal fair wear and tear,
💡 Pro tip: The minor repair clause is for per item. This means that if the repair cost is below the stated amount, the tenant has to bear the cost. So be sure to point out any flaws you see before moving in.
Security deposit refund
The biggest fear that any tenant will have, is that their deposit will be deducted or forfeited. This is why it is so important that everything has to be examined before you sign the dotted line. One way to ensure that your security deposit will not be wrongfully deducted for any reason is to take as many photos and videos of the entire house during handover. Be sure to attach the photos along with the inventory list so the condition of the particular item is remarked.
Having an inventory list to keep track of furniture and appliances is useful to ensure that at the end of the lease, everything is accounted for. The photos are used for comparison so there will not be any dispute on the condition when returned to the landlord.
Thinking about renting a property but do not wish to put down a hefty security deposit? Contact our team at Lovelyhomes. We have a solution for you !
If you still have unanswered questions or want to know how to recover your security deposit, feel free to contact us. Our team at Lovelyhomes is committed to assisting homeowners with all their real estate needs, we are dedicated to providing you with the highest level of service as we value you, our lovely clients!
Eugene Koh +65 90405508