The new Code of Conduct for Leasing of Retail Premises
On 26 March 2021, the Singapore Business Federation (SBF) introduced a new Code of Conduct for Leasing of Retail Premises (the Code) which aims to provide landlords and tenants a clear set of guidelines on fair retail tenancy negotiations.
Prior to the introduction of this new Code, the tenancy practices in Singapore were guided by the Fair Tenancy Framework developed by the SBF in 2015. However, the Framework was not widely embraced as the adoption was voluntary and lacked support from the private landlord. The long-standing tensions on tenancy issues were further exacerbated during the COVID-19 crisis. This prompted the formation of the Fair Tenancy Pro Term Committee, comprising members from the landlords and tenants, government, industry experts and academia, which drafted the Code.
The Code will be effective from 1 June 2021 and applies to lease agreements involving Qualifying Retail Premises entered into on or after 1 June 2021 with a tenure of at least one year. It comprises 11 Leasing principles (Principles) which include best practices and mandatory requirements.
While the Code provides a documented framework as a basis for lease negotiations, there may potentially be discrepancies in the interpretations of the Code, particularly at the beginning stage of the adoption. Furthermore, there are some Principles which allow certain exceptions to be made with mutual agreements by both parties. It is anticipated that the government may turn the Code into legislation in the future. The Fair Tenancy Industry Committee (FTIC) will also conduct a close monitoring of the incidence of non-compliance by the landlords or tenants.
It is important for organisations to familiarise themselves with the Code and assess the impact of new scenarios that may arise as a result of the latest Code. This will help avoid potential disputes and future complications between landlords and tenants.
We highlight several key changes brought about by the Code and puts into perspective how landlords and tenants can navigate through the Code.