Letter of Intent in Singapore
Once your’ve engaged your a property agent, viewed properties, and found a place you really like, it’s time to get to grips with the Letter of Intent, or LoI. The Letter of Intent in Singapore typically serves as an intermediary between viewing the property and negotiations, and formally signing the Tenancy Agreement.
You might also want to read – Tenant agreements in Singapore
Not all Landlords require a Letter of Intent, but some won’t rent a property without one, so our approach is it’s best to be prepared and understand your obligations.
What does the Letter of Intent do?
The Letter of Intent lays out your intentions to agree to enter into a contractual agreement with the Landlord (the Tenancy Agreement). Although it can seem like an unnecessary and bureaucratic step, it does serve a number of purposes.
Firstly, it shows the Landlord that you are serious about renting the unit. Secondly, to secures the apartment for you, and means the Landlord will cease looking for other prospective tenants.
What’s the process?
As the Tenant, your agent will usually prepare the LoI for you. You need to sign it and then the Landlord must countersign it, and return to you.
Often the signing of a LoI is accompanied by a ‘good faith’ deposit, given for extra assurance. This payment typically goes towards your first months rent. If, for any reason, you are not able to keep to your commitment to rent the property, the good faith deposit is non-refundable.
What does the Letter of Intent need to include?
Though LoI is a short letter, it must contain the following:
Term of lease
In a standard lease agreement, the term of lease is two years, although one year leases are also becoming more and more common. It is typically difficult to take a lease for anything under 12 months.
You must pay at least one month’s pay in advance as security deposit. The security deposit is typically two month’s deposit for a two year lease. This is usually paid upon signing the Tenancy Agreement and is held by the landlords in Singapore. This deposit is refundable at the end at the end of your tenancy.
You might want to read – How to protect your security deposit
Good faith deposit
This is applicable for only those leases of more than 12 months. The diplomatic clause protect your interests in case you become unemployed or have to leave Singapore, during the course of your lease. It typically allows you to give 2 months notice to leave the property, once the initial 12 months have elapsed.
Any specific requests
This is where you pen any specific requests to the landlord, for example, any repairs or extra items, such as dishwasher. Once the Landlord signs the LoI, they are required to fulfil your requests.
Sample Letter of Intent Singapore
We have included a sample letter of Intent here in the blog post below. Note that this may differ between different agencies but all variations should be similar with respect to the major points that we covered above.
If you are renting a property in Singapore or need advice on any other property related issues in Singapore please feel free to get in touch with us.
What happens next?
Once both the Landlord and Tenant have signed the Letter of Intent, and the Tenant has paid the good faith deposit, the usual process is usually to move on to signing your Tenancy Agreement.