New law mandating retail leases comply with code of conduct takes effect in 2024

Published: Feb 02, 2024 by 
PropertyGiant Singapore
The Bill was passed in Parliament in August 2023. PHOTO: ST FILE
The Bill was passed in Parliament in August 2023. PHOTO: ST FILE

A new law that makes it mandatory for all retail leases to comply with an industry-wide code of conduct took effect on Feb 1, paving the way for fairer and more balanced lease negotiations between tenants and landlords.

Under the Lease Agreements for Retail Premises Act 2023, all landlords and tenants must abide by 13 leasing principles in the code of conduct when drawing up contracts for retail premises.

These include prohibiting landlords from pre-terminating leases unless on the grounds of redevelopment works, as well as imposing a gross turnover rent component when rent exceeds a specific amount.

The code will apply to all qualifying retail leases with a tenure of at least one year, whether signed or renewed from Feb 1. It does not cover industrial, office and residential spaces, nor premises used primarily for conducting administrative work in connection with the supply of services.

The Act comes into force nearly three years after the code was introduced in March 2021. It was developed by industry stakeholders in a bid to resolve rising tensions between landlords and tenants, which reached its peak during the Covid-19 pandemic.

The Bill was passed in Parliament in August 2023.

As of last August, all government landlords and nine private-sector landlords had voluntarily adopted the code.

But tenants noted that a number of landlords still had not come on board, due to a lack of awareness and the absence of legal obligations.

Under the code of conduct, deviations in certain leasing principles are permitted if mutually agreed upon by tenants and landlords. Such deviations must be jointly declared and submitted to the Fair Tenancy Industry Committee (FTIC), which maintains the code.

The Act also sets out a dispute resolution framework, where parties can file a complaint of non-compliance with an authorised dispute resolution body. Complaints will be dealt with through mediation; should this be unsuccessful, parties may proceed to adjudication.

New members of the FTIC were formally appointed by Minister for Trade and Industry Gan Kim Yong.

The new FTIC comprises 17 members, including representatives from Singapore’s tenant and landlord communities, business associations and government agencies as well as industry experts. The committee’s first term began on Feb 1 and will end on Jan 31, 2026.

Besides serving as custodian of the code, the FTIC will continue to monitor and promote compliance with the Act as well as periodically review the code’s relevance to the industry.

It will continue to work with trade associations and relevant partners to raise awareness and educate stakeholders on the code of conduct.

Businesses can access the latest version of the code of conduct, frequently asked questions, code-compliant lease agreement templates and user guides on filing permitted deviations on FTIC’s website. THE BUSINESS TIMES


Singapore Retail
Property Rental
Law And Legislation

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