0720 Singapore real este law, diplomatic clause published by Asiahomes Internet classified agency

From - Sat Nov 27 07:53:23 1999
From: "M"
Subject: Diplomatic Clause

I am an expat who has been working in Singapore for 16 months. The company signed a 2 year lease on apartment with 1 year diplomatic clause. They gave notice on the apartment six weeks ago. I have now found another job in Singapore and wish to stay in the same apartment.

The new company will sign the new lease. The owner wishes to up the rent substantially so I will probably have to move unless there is a legal provision that can help me. What exactly does the diplomatic clause mean? If I change companies, and do not leave Singapore can I still claim a right to the original lease terms or does the diplomatic clause not provide for change of company

Thanks
Regards

In Singapore residential leasing, the industry's diplomatic clause favours the Tenant in that the Tenant can unilaterally terminate the tenancy agreement after 12 months' occupancy by giving the Landlord 2 months' notice or rent in lieu of notice for a 2-year lease. Common reasons are that the employee is no longer working for the Company or allowed to reside in Singapore.

In the above case, the Tenant (i.e. the Company) has exercised the diplomatic clause. The writer was the Occupant and had no legal standing in this tenancy agreement between the Landlord and the Tenant.

If the first company has assigned the lease to the second company and the Landlord's agrees, the writer could have retained her existing apartment though.

As rent has gone up generally, most Landlords will take advantage and hope there will be better returns on investments.

However, Landlords must know that the market is still flush with vacant investment units. The rents have bottomed out but the beneficiaries are those downtown condos and those new ones near the subway.

Other Landlords in prime areas like the UE Square Condos are still having great difficulty finding tenants if their units face an office block or have no views.

First-time landlord to note:

Therefore, it may be best to continue with the existing tenant such as the one above as there is no loss of income. There will be no expenses such as advertisement, payment of agency commissions and time spent showing the units with no guarantee of getting a Tenant in the low season.

November and December are not the house-hunting months as most expats have either gone home or have found their accommodations.

We all dream of higher returns on investment, but with the glut of investment condos, it is best to aim for high occupancy rate (renewal or assignment) rather than higher rentals.

Please note also that some companies exercise the diplomatic clause to save on rentals in a declining market and therefore boost their profitability or stem their business losses.

If you really want to go all the way, you may need a lawyer to demand written proof and cancellation of the employment pass or repatriation of the expatriate occupant. Money will need to be spent and the apartment cannot be rented out for the time being. Is it worth it? I leave you to decide.