Want to rent out your property? Here are 8 things you need to know
Renting out your property can be a complicated affair. There are various rules and regulations to be followed and it is absolutely essential to ensure that your documentation is flawless. Utilising the services of an experienced and reliable broker is essential.
It is also important to get a fair rent for your property. At times, it is not advisable to enter into an agreement with the first tenant that approaches you. If you hold out, you may find another who is willing to pay more. But remember that keeping your flat empty has a cost as well. If it remains unoccupied for a whole month or more, you will be losing a significant amount.
Here are a few tips for landlords. These could help you during the process of finding a tenant and finalising the lease agreement.
If you need someone reliable to walk you through the process, find the right property agent for you on PropertyAgentsReview.
1. Ensure that you follow the correct procedure
Renting out your property will involve obtaining a letter of intent from your prospective tenant. At this stage, you will also be paid what is referred to as a “good faith” deposit. After you receive this amount, you should not show the property to other tenants.
The arrangement will be finalised upon signing the tenancy agreement. When this is done, you will receive the remaining portion of the deposit that had been negotiated. While your property agent will guide you through the process, it is important that you remain involved and understand it as well.
Bear in mind that the tenancy agreement is the most critical document. You must ensure that it contains all the points that have been agreed to between you and the tenant.
Get your property agent to prepare your tenancy agreement, if you are not confident of doing it yourself. If you don’t have a trustworthy property agent, you can turn to the reviews of other landlords to find a reliable one on PropertyAgentsReview.
2. Are you renting out your HDB flat?
You can rent out your HDB flat only if you are a Singapore citizen. Permanent Residents (PRs) are not given this privilege. There are also various other rules that you must adhere to. The most important condition that you must comply with is the 5-year Minimum Occupation Period (MOP).
The original purchaser or even the person who has subsequently purchased the property must have stayed in the flat for a minimum of five years. Remember that each owner has to meet the 5-year MOP independently.
Additionally, you can finalise the tenancy agreement only after getting approval from HDB.
3. Setting the right rent
This issue is always a dilemma for every landlord. Ask for too much and you will drive the prospective tenant away. But if you settle for a smaller amount, you could lose a substantial sum over the lease period.
How can you arrive at a figure that is just right? For HDB flats, you can use the official data that is available. HDB’s website lists the rent declared in the subletting application form submitted to the Board. The information is available for 1/2/3/4/5 room apartments and Executive Condos in each area. This can be a good starting point for every landlord.
It can be more difficult to arrive at the correct rent for a private property. Of course, having an experienced property agent will help. It is also in their interest to get you a higher rent because the commission that you will have to pay is based on this amount.
However, it would be a good idea to do some checking on your own. You can do that by viewing online listings and speaking to your friends and associates.
For professional advice, seek help from an experienced property agent on PropertyAgentsReview. The portal offers a simple questionnaire to help you find the right agent quickly, based on your property transaction needs and even the location of your property.
4. Verify your tenant’s documents
It is your responsibility to ensure that your tenant has all the required documents. For foreigners, a passport and a work permit or an employment pass is necessary. Verify the originals and retain a copy for your records.
You can also verify the validity of the documents online. The links on this page will allow you to check the National Registration Identity Card (NRIC), Long Term Social Visit Pass, Work Permit, and S Pass or Employment Pass.
5. Who is responsible for maintenance fees and for utilities?
Your tenancy agreement should clearly specify the responsibility for payment of maintenance fees and utilities. These can be borne by you or by your tenant. However, it is important to discuss this issue and explain the relevant clause in the agreement to the tenant.
Of course, as the legal owner of the property, you are responsible for the payment. But if you intend to recover this sum, make sure that the matter is clarified before the lease begins.
Your property agent can help you to clarify the terms of the agreement and ensure the payment processes are done properly.
Unsure if an agent would be able to do a good job? You can rely on the thousands of verified reviews on PropertyAgentsReview to help you select a suitable agent.
6. Renovate your property before showing it to a prospective tenant
A well-maintained property will fetch you a greater rent. But you have to be careful not to spend too much. The increase in rent may not justify the expenditure.
Which are the areas that you should concentrate on? Refurbishing the kitchen and the toilets is important. If the faucets leak or your kitchen looks dilapidated, the prospective tenant will probably reject your property. A fresh cost of paint is another necessary fix, as it makes the property look newer and more inviting.
How much would such renovations cost? An average renovation package for a brand new 5-room 112 sqm HDB flat costs upwards from $15,000, and mostly range from between $30,000 to $50,000.
In contrast, an older flat will require more extensive overhauls to its electrical wiring and plumbing, but makes up for it by not requiring top-of-the-range fixtures or furnishing. So $30,000 might be a good budget to start with. If your property is newer, better maintained, and already comes with furnishing and appliances, you can expect to spend even less than that.
Spending a few thousand dollars to do up your flat before you rent it out is completely justified. If the property needs major repairs, you will have to bear the expenditure. You can’t expect a tenant to agree to live in a flat that is in poor condition.
7. There are government rules, even for private residential properties
Although you don’t need prior approval for renting out your private residential property, there are rules that you need to follow. The Urban Redevelopment Authority has stipulated that you cannot carry out certain types of internal partitioning in your flat.
Private condominiums also need to be rented out for at least 3 consecutive months, a reduction made in June from the earlier regulation of 6 consecutive months. However, short term stays by holiday makers in the style of AirBnB and Roomorama continue to be illegal in Singapore. Additionally, there are a maximum number of occupants that can stay in a property.
It is essential to familiarise yourself with these rules before finalising your tenancy agreement.
The property agents listed in PropertyAgentsReview have been certified by the Council for Estate Agencies(CEA), a statutory board set up in 2010 under the Ministry of National Development. You can be assured that every one of them would be well equipped to assist you with compliance.
8. Comply with IRAS rules
According to Internal Revenue Authority of Singapore (IRAS) rules, you must get the lease documents e-Stamped. This will ensure that IRAS will be directly informed of the rental that you will be receiving. Ignoring this rule can result in a fine that may be as much as S$5,000. Additionally, you would be required to pay interest on the tax remaining unpaid on the rentals that you receive.
Do your homework well
If you are trying to find a tenant for your property, you should go about the exercise very carefully. It is important to understand the entire procedure yourself, and not just rely on your property agent.
Taking out the time to learn the details about the steps to be followed can be of great help. Your research may help you to get a higher rent for your property. Learning about the rules and regulations could also help you to avoid legal problems in the future.
It is important to remember to clarify all the terms and conditions before you actually finalise the lease arrangement. Ensuring that you and the tenant understand your respective duties and responsibilities can save both of you a great deal of trouble and help to prevent misunderstandings.
For all your rental needs, get the right help from PropertyAgentsReview now.
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