Question on Clause on lease

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brian_singapore
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Question on Clause on lease

Post by brian_singapore » Thu, 28 Apr 2016 9:30 am

Hi,

Someone at work showed me the following in a lease he was given by an agent. The agent works directly for the property company renting units, they are not an independent agent working on his behalf.

When he and I read this, it sounds like it gives the company the right to increase the rent at any time just be sending him a letter. The agent insists it's only related to increases in GST/Taxes. I was hoping someone here could validate which interpretation is correct.

------------------------------------------------------

SPECIAL COVENANTS AND CONDITIONS

TENANT'S COVENANTS

2. The Tenant hereby covenants with the Landlord as follows:

i. Payment of monthly rent and GST

(a) To pay the Gross Monthly Rent, hereby reserved at the times and in the manner aforesaid at such office as the Landlord may designate PROVIDED THAT the Landlord may revise, on prior written notice to the Tenant, the Monthly Rent from time to time to take into account any increase in costs;

(b) (i) The Tenant shall pay and indemnify the Landlord against GST or any tax of a similar nature that may be substituted for it or levied in addition to it (by whatever name called) chargeable in respect of any of the terms of or in connection with this Agreement or in respect of any payment made by the Landlord for such payment including GST levied on any legal costs;

(ii) In the event of any increase in the GST to pay and indemnify the Landlord equal to so much of the extra tax as may be imposed at the same time and in the same manner as hereinbefore provided for payment of the said GST specified in the Landlord's notice of such increase. The amount of GST specified in the Landlord's notice of such increase shall be accepted by the Tenant as final and conclusive.

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Re: Question on Clause on lease

Post by x9200 » Thu, 28 Apr 2016 10:03 am

It seems to be only related to the taxes/GST but I would made it more clear with a direct reference to (b) and unless I am very desperate I would never agree to this part:
The amount of GST specified in the Landlord's notice of such increase shall be accepted by the Tenant as final and conclusive.

Having said that, if the LL is a corporation like FEO, they will never agree to any change. At the same time, the risk of them doing something wrong with this clause is probably very low.

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Re: Question on Clause on lease

Post by brian_singapore » Thu, 28 Apr 2016 10:09 am

Thanks for the reply. It's a corporate lease. I don't know which company but they refused to amend the lease under any circumstances

What's the concern over the 'final and conclusive' part?

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Re: Question on Clause on lease

Post by x9200 » Thu, 28 Apr 2016 10:39 am

The concern is that they can put anything there and the tenant has to accept it as it is without any right to question the numbers, so theoretically they may say, our tax related costs increased by 10k, please pay, and you have to pay and they have no obligation to justify this specific increase to you.
In a practical sense this probably mean that if you want to question the amount the only way would be to sue the LL, because only then the LL will have to justify it proving the increase is related to what is defined under the Clause.

But again, for a big renting company, I don't think there is a significant risk involved to accept something like this. They just want to shift the burden of initiating possible legal action to the tenant (and have the money paid on time).

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Re: Question on Clause on lease

Post by brian_singapore » Thu, 28 Apr 2016 2:07 pm

Thanks x9200. Your responses are really appreciated.

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Re: Question on Clause on lease

Post by JR8 » Thu, 28 Apr 2016 3:59 pm

What kind of property is it? As you don't pay GST on a 'normal' residential tenancy.
---
'Goods and Services Tax (Abbreviation: GST; Chinese: 消费税) in Singapore is a broad-based value added tax levied on import of goods, as well as nearly all supplies of goods and services. The only exemptions are for the sales and leases of residential properties and most financial services.
Goods and Services Tax (Singapore) - Wikipedia, the free ...
https://en.wikipedia.org/wiki/Goods_and ... Singapore)'
----

But then on the flipside, you don't tend to stay in a hotel long enough to fret about the potential for GST costs to change vs the room rate.
.... is this re: a Serviced Apartment?
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Re: Question on Clause on lease

Post by brian_singapore » Thu, 28 Apr 2016 4:02 pm

It's a 2 bedroom hdb flat.

It's not a Serviced Apartment.

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Re: Question on Clause on lease

Post by JR8 » Thu, 28 Apr 2016 4:10 pm

But GST isn't due on residential rent. And there's no way I'd sign an agreement like that giving a LL latitude to hike rent for pretty much any reason he feels like.

SGn LLs have a bad enough reputation as it is, even with proper TA's, never mind inviting them to savage you with an agreement like that one.
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Re: Question on Clause on lease

Post by x9200 » Thu, 28 Apr 2016 5:21 pm

brian_singapore wrote:It's a 2 bedroom hdb flat.

It's not a Serviced Apartment.
If the LL is an individual, then I agree with JR8, don't sign it. GST is IMHO irrelevant, but for an individual LL as a private person, the risk would be very high.

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Re: Question on Clause on lease

Post by JR8 » Thu, 28 Apr 2016 5:27 pm

x9200 wrote:
brian_singapore wrote:It's a 2 bedroom hdb flat.
It's not a Serviced Apartment.
If the LL is an individual, then I agree with JR8, don't sign it. GST is IMHO irrelevant, but for an individual LL as a private person, the risk would be very high.
Oh it's an HDB! I don't know whether to be :o or :lol:
If a potential LL is trying to tie in all of that irrelevant stuff that doesn't even apply, then it's all the warning you need. Don't touch it [IMO]
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Re: Question on Clause on lease

Post by x9200 » Thu, 28 Apr 2016 5:41 pm

Brian, you said earlier:
It's a corporate lease. I don't know which company but they refused to amend the lease under any circumstances

Could you please clarify this point? I believe hdb can not be a corporate lease.

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Re: Question on Clause on lease

Post by brian_singapore » Thu, 28 Apr 2016 5:48 pm

I was mistaken, it's an apartment in a block managed by a large property management firm. I don't know if they also own / developed the block. Apparently they have a number of almost identical units they are renting out.

I don't know the name of the firm

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Re: Question on Clause on lease

Post by x9200 » Thu, 28 Apr 2016 7:01 pm

My wife rents her office from one of the biggest developers company in Singapore. The agreement is full of BS much more severe and absurd than the clause you quoted. Nothing was possible to negotiate. She's been renting from them for several years already and they were always reasonably fair.

This is about understanding the mentality of different LLs. While a typical individual LL in Singapore is often of the worst, greedy and opportunistic kind, the guys behind the corporate leases just don't care, don't take a risk but also don't want any troubles. They will not pay their lawyer to negotiate individual contracts, They don't care if you don't accept the conditions and go away, but they also won't do anything gross to bring to their company and most of all, them, into some undesired attention. Comparing to the individual LLs, they have no private incentive to take any advantage over you abusing some ambiguous clauses in the agreement. That's why renting from such companies is in that respect generally pretty safe.
IMHO at least.

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Re: Question on Clause on lease

Post by PNGMK » Thu, 28 Apr 2016 9:59 pm

x9200 has a good point. I'd be leary of that clause though (if from an individual LL) as tax rates in Singapore are generally trending upwards (GST and income tax rates which will be levied in the income from the rental plus new levies and taxes all the time).
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Re: Question on Clause on lease

Post by BBCWatcher » Fri, 29 Apr 2016 11:38 pm

Especially now, when it's a tenant's market, if you don't like the lease terms, and if the landlord refuses to negotiate, then simply inform the landlord that you're walking away and why. Their loss, not yours.

If the landlord wants you to bear the cost of a hypothetical future GST increase (from the current rate of zero) then the lease doesn't need 3+ paragraphs of badly written language (at best) to address that point. One concise sentence would do, actually -- something like "Tenant agrees to bear the cost of any future Goods and Services Tax increase levied on the rental payment."

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