Case
study in 1998 :
Perseverance is a factor for success.
Closing on a tough Dutchman tenant.
July 8, 1998
"The Landlord said no"
was the feedback from the co-broking agent after 5 weeks of protracted
negotiations and the persistent calls from a an associate to both the
prospective Tenant and Landlord to agree to the lease. The Landlady had just
given birth and was more interested in getting rest and the newborn.
Issue: Lease
terms and conditions originally from Asia USA Realty had some amendments
from the Landlord but all were "unacceptable" to the Tenant's lawyers.
- The Tenant's lawyer
re-wrote terms proposed by landlord's without a single clause being
accepted and this must have upset the landlord who is a lawyer by
profession.
- The Landlord wanted
Mr K to be the Tenant even though it is a corporate lease and Mr K is the
Tenant's employee. (Most Singapore Landlords prefer corporate lease
though).
- Assignment of lease
had to be the Landlord's privilege which was not acceptable. The use of
"permitted assigns" from the Tenant's lawyer was not satisfactory as who
was to give permission - the Landlord or Tenant?
- Landlord wanted a
2-year lease with one year extension option at market rent, but Tenant
wanted 3 in order to plan properly for a start-up company.
- UE Square Condo has
only 6 units with balconies and of the six, not all are 4-bedrooms and
none is available except this unit!
Many Singapore Owners
think that the recession will be over in 2 years. In Asia USA's opinion,
they do not want to pay the 3rd month agency commission, hoping
the Tenant will renew direct. This is typical of non-investment minded
Singaporean landlords, saving pennies and not realizing that the Tenant may
shift to a newer cheaper condo 2 years later.
It is unlikely that the rental market will recover in 2 years as a new condo
is released every month. The Blossomvale Condo is released this July 1998
and there will be the Aspen Heights and so many others, leading to a great
glut of supply.
(Update: Nov 8 2000. Rentals have gone up compared to the recession
1998 years, but suburban condos have great difficulty in getting good
rentals as there are a greater supply of downtown condos).
- Landlord said that
2-month security deposit for 3-year lease as proposed by Asia USA should
be 3-month but the Tenant wanted to give 2 months.
- Landlord wanted the
12-month occupancy period for a 3-year lease as proposed by Asia USA to be
18-month. The Tenant agrees.
- Landlord gave a
furnishing budget of $5,800 which would be insufficient to cover the cost
of refrigerator, washing machine, dryer, curtains (quotation came in at
$6,500 for curtains of Tenant's choice!) and lighting. $11,600 was asked.
Result: No deal.
Tenant Client of Asia
USA: A Dutch couple wants a low floor condo with balconies, not cooped
up in high rise. 4-bedroom, over 2,000 sq. ft, $6,000 partially furnished.
No need to take transport to supermarket and near Suntec City. Ground floor
preferred. The wife likes the UE Square Condo which has a supermarket within
2-minute walk and it would be easy to get food for her yet to be born baby.
Lease & rental:
corporate & S$6,000/month partially furnished.
Type: Dutch Caucasian
couple. Age: around 40-year old.
Job: husband -
starting up a Company. Wife will be having a baby in a few months' time.
The tenancy agreement from the Landlord was completely re-written by the
Tenant's Lawyer as Singapore does not have a standard residential rental
lease and most foreign corporations refer the lease to their lawyers.
" Does it mean that
the Landlord has rejected the offer?"
" Yes" was the curt
answer of the co-broking agent. Her calls to the Landlord were
usually not returned. She worked long hours, like most active residential
housing agents, almost 7 days a week and had grown weary. However, so
much time had been spent by both agents.
There was a need to
re-think how to close this case since a protracted negotiation indicated
that both the prospective landlord and tenant had some interest in each
other. Where was the missing link?
The Asia USA associate
spent more than 100 hours house hunting with the prospect, his boss on
another day and Internet correspondences and faxes (see one example of
Internet correspondence below).
Email
correspondence with Dutch client.
From May 25 until and including May 29 I will be visiting Singapore again
with my wife. This time it is for real and we really have to find a house
this time. Also a colleague will join us and he and his girlfriend will also
be looking for a house in the same week. Please inform me of May 25 is good
for you because we like to start as soon as possible and have decided on a
house latest on Friday May 29.
For myself I am
looking for a 4 bedroom condo or (terrace/garden) house with at least a
floor space of 1800 sq. ft. A maid's room is not really needed. Features
like fully air-conditioned and partially furnished (with washer/dryer) are
important for us. Because it is not clear if I will have a car or not it
should be rather easy to get to Suntec Tower by subway or Bus.
Our office will most
likely be in Suntec Tower. Anyhow when I have a car my wife will most
probably use it the most so I have to get to work by public transportation
of taxi anyhow.
The areas were we
really want to look are: Holland village, East Coast and Pebble Bay/Costa
Rhu area, but maybe you have some other ideas. A location near the Dutch
school/club is no longer required. Usage of facilities like swimming pool,
gym and squash/tennis would be very convenient.
My wife and I had a
discussion about the floor which would be most suitable. Ground-level sounds
interesting for the kids when a terrace is available but we heard it might
be unsafe and more problems with insects. Can you give us some advice? View
is not that important for us but nice when available.
Is it possible to send
me the list of viewing in advance so I can look on the map where they are
located and prepare a bit on what we are going to see.
The budget I have is
between S$5000 and S$6000. Do you think that is feasible with the above wish
list?
My colleagues want to
look at two bedroom condo's. Also in the same neighborhoods as account for
myself but maybe added the Orchard road area. Their budget is between $3500
and $4500. Cars and public transportation is for him the same as for me.
As mentioned before,
we all like to have found a nice place to live by the end of that week so I
hope you can support us fully. For us it is fine to go all together with
you. For instance go Tuesday and look specifically for my place and
Wednesday go an look for the place of my colleague. Thursday and Friday can
then be used for maybe some more viewing or repeat viewing. Maybe you have a
colleague/partner that support us on the last two days? Well probably you
have more experience with this than we do so maybe there is a better way of
doing it.
Well I hope that this
is enough information and I am looking forward to your response. If you need
more info do not hesitate to contact me (e-mail or phone.)
Best regards,
Tenant
Comments:
Knowledge about Singapore rental housing: Some info from friends and had
inspected few condos in 2 earlier visits to check out market rentals by
himself and with boss. Knows what is happening in Singapore's declining
rental market.
A prospect who knows
what he wants, has Type A personality (wants things done quick and
efficiently) and has done good knowledge of Singapore housing.
Solutions:
1. Go look for another unit in the UE Square condo but none was
available.
2. Look for other condos. There were few other 4-bedrooms in the
vicinity of the River Valley/Orchard Road area but they are usually high
rise.
The Client would not
have his first choice - low floor, balcony, convenient to supermarket and a
free shuttle bus to the City Hall subway.
The best solution for the housing agent representing the Tenant is to find
out what the Landlord wants, since the Landlord's agent had surrendered.
Give up now and you
would really lose a lot of time. You would need to spend more time sourcing
the other alternatives. Your client might lose confidence in you and go for
an outside realtor.
Closing was effected
by Asia USA associate asking the co-broking agent to connect with the
Landlord and asked her to state her terms.
The Landlord (being a
lawyer), produced her own lease agreement with essentially the same terms
she wanted, viz. 3-months' deposit for 3-year lease and gave $11,600
furnishing allowance and relented by agreeing to a corporate lease (Most
landlords in Singapore love corporate lease but this was an exception).
The co-broking agent
had an excellent relationship with the Landlord. She had done an excellent
job but had given up as she was exhausted too. The Tenant was back in the
Netherlands. He accepted the terms and closing was done around July 1,
1998, nearly 5 weeks later.
Corporate lawyers can be a main source of delays in closure. The
letting agent can only persevere and hope that the Landlord had no better
offers. Time is of the essence but corporate lawyers may or may not
find that time is of the essence as they still get paid whether the case is
closed successfully or not. Sometimes, it is the Landlord who does not
give priority to the early reply from the Lawyer. Once, a tenancy
agreement takes more than 3 weeks to be returned to the prospective Tenant
for approval, the Tenant may have changed his mind and the Landlord has lost
a lot of rental. Do not assume that a good faith deposit means that the
tenancy is going to close.
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July
21, 2011 For Rent