806011- tips for expatriates & landlords

SURFER’S MUMMY
TIPS FOR FIRST-TIME TENANTS

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Real life common encounters on property problems and some possible solutions are shared to benefit all international surfers to www.asiahomes.com.

Ref: 806011
Expats working from home

Subject: Setting up a home office in Singapore
Comments: Need to have an emploment pass

Subject: Re: Relocation to Singapore
Date: Mon, 01 Jun 1998 05:23:20 +0000
From: David Sing drsing@asiahomes.com
Organization: Affordable homes for expats - www.asiahomes.com for tips/Singapore rentals/pets. Asia USA Realty Tel: (65) 9668 6468, (65) 254 2728, 254 3326, Fax: (65) 256 0501

To: XXX xxx@iohk.com
June 1, 1998

Thank you for interesting email and detailed queries. Pl read reply below.

XXX wrote:

Hello,
We (myself and my wife, both British Citizens) will be relocating to Singapore from Hong Kong later this year and would like to hear from you if you can help find and negotiate accommodation. First some information about our requirements and then some questions about your operation and estate agent practice in Singapore.

My company is based in the UK and has had an office in HK for five years. We are a small consulting company and I will be the only representative in Singapore to start up. It is likely that the apartment will be a part time office until a more permanent company office is set up.

Legally, you will need an employment pass (salary over S$2,000/month) or work permit or set up a Singapore company to do any business in Singapore.

Because this is the first assignment to Singapore there is not yet a declared budget and this will probably be determined based on information from our initial survey. The budget will also be affected by whether it is necessary to use a car. The work will involve calling on client organisations rather than sitting behind an office desk and so transport to and from meetings at business locations (major organisations, mainly government organisations) will affect choice of location. The company will be setting up an office in Singapore but this will not exist until after we have arrived(since I will have to organise that). The office location will probably be central with the same factors determining its location as the factors for accommodation.

REQUIREMENTS
Location: Probably central close to CBD, or perhaps Orchard Road or Tangling area.
Near to MRT: yes since a car may not be available.
No of Bedrooms: Three with one of these being used as a Home Office.
Size: After Hong Kong anything would be bigger! Around 2,000 sq.ft.
Budget: Difficult since there are no rules yet. Could vary over a large range depending on the need for car. Assume that accommodation and car lease together would be S$8,500, suggesting that a Central location not requiring car could be at the top of this range and outlying location around S$5,500, assuming a car to be around S$3,000 per month to run (is this a reasonable estimate?).

Car lease varies. From bigger car companies, a Toyota Corona will lease around S$2,200 - $2,500/month.. I know of a smaller company which will lease a BMW 7 series (drinks petrol like water) but is impressive for around S$2,200.

$5,500 rental budget should be able to get you an older but renovated 3-bedroom (2100 sq. ft) in Orchard Road location, such as Elizabeth Towers (5 minute walk to Orchard MRT and Orchard Road). I have brand new 3-bedroom (1565 sq. ft) in UE Square for around S$5000/month partially furnished at the moment and some other units. A 4-bedroom maisonette in UE Square (2100 sq ft) at $5,900/month.

This figure is subject to change when the company gets involved in the final decision about budget.

Commencement Date: Provisionally 1st August 1998.
Duration: 1 year to 18 months, not fixed. See questions.
Other facilities: Partly furnished. We will move home office furniture (desks filing and bookcases etc), and King Size bed, but expect other furniture to be provided. Built in or alternative storage/wardrobe space essential. Kitchen to be modern with clothes washer and dryer, hob/ovenfridge/freezer as minimum. Dish washer desirable. Quiet Air con important.

Amenities: require Balcony/Roof/Garden space according to style of accommodation. View not critical but privacy important. Convenient for local shopping (provisions, supermarket etc).

Difficult to get good units with balcony and/or roof garden for budget around S$5,000/month but will try.

QUESTIONS
1) The company will require a lease arrangement that allows a flexible term. We expect to be in Singapore from August 1998 until December 1999 but in this business climate things can change and so it must be possible to limit the lease commitment. A one year break clause would probably be sufficient. Can you confirm that this kind of arrangement is available.

Yes. It is called the "diplomatic clause". After 12 months' occupancy, the Tenant gives 2 months' notice or rent if the Tenant (if it is a corporation) or its employee (the occupant) is repatriated or no longer residing in Singapore. Documentary evidence from the company is needed.

2) As in the first instance all payments will be by Bank Transfer from UK or HK accounts it is important to know what deposits and advance payments are customary or expected. Please advise the items required and at what time in the transaction. Include any government fees such as stamp duty.

Before commencement of lease, the Tenant needs to pay the following:

1. Utilities deposit. $150 (if payment of utilities is by electronic means). $250 if payment is by cheque as is commonly practised by companies.

2. Telephone deposit. No need if the corporation certifies they will be getting an employment pass for you. If you do not have or will not get an employment pass, there may be difficulties getting a phone installed unless a local is willing to subscribe and you pay the bills.

3. Stamp fees payment for lease. The Tenant pays the fees for the stamping of the lease agreement. Formula is (monthly rental x 12)/250 x 2 if it is a 1 to 3-year lease.

4. One month's rent in advance.

5. One or 2 months' security deposit for one or 2-year lease.

3) What is the relationship of the agent in Singapore? Do you act for the buyer or the seller? How are the agent fees split? What are the fees based on and therefore what is the amount of agent fees payable?

I assume you are referring to Singapore rental housing. The industry's practice is as follows:

1. Agent acting for both the Landlord and Tenant gets paid the agency commission by the Landlord only. The fee is one month's rent for a 2-year lease and pro-rated according to the number of years.

2. If the Agent acts for the Tenant, he does not get paid by the Tenant unless the Tenant wants to pay him for securing the lease.

It is very rare but I have encountered one smart practice whereby the Tenant "covers" the agent for securing the rental below market rate. For example, I have this Dutch boss who promised to compensate the agents (myself and the co-broking agent) if we achieve the target of less than $6,000 for a brand new 4-bedroom condo in UE Square. We managed to get for him $5,800 and therefore he will compensate for the difference of $200 if it is a 2-year lease or pro-rated accordingly. Obviously, he saves $2400 x 3 years since it is a 3-year lease.

The Landlord can also motivate the Agent for securing a higher rental by payment of extra cash.

A common complaint is that the Agent says every house seen rents for $6,000 And this indicates that the Agent is not honest. Obviously, the Agent tries to earn as much as he can while the Landlords appreciates higher rent. Once you have seen several units, you will be able to judge as there is no "market rent" in a declining market. Many units rent lower than advertised if the Landlord is shrewd and knows that rent declines over the next few months till the new condo is filled.

Much depends on the integrity of the housing agent as in this case, I acted for the Tenant and the co-broking agent acted for the Landlord. An agent going for the long haul should be honest with the other agent and landlord and will ensure that the Tenant gets the lowest rental or value for money.

3. The Tenant does not pay any amount to the Agent for securing private housing but pays an amount for public housing called HDB (Housing Development Board) apartment.

4) What are the customary legal processes in a property transaction. What are typical charges?

It is best to consult a good lawyer on legal matters. From my experiences With expatriates and assuming you are referring to Singapore rental housing, the legal processes involve the proper set up of the office legally and getting an employment pass for you. I can get for you a "serviced office" (commonly used by start-ups), representative office or an office space.

If you work from home, you should have an employment pass. Residences are not meant to be offices, esp HDB apartments. Since you do not conduct business at home, it should be all right.

I doubt there are typical charges. Charges include your lawyer's fee for advising on the lease contract, setting up of office and employment matters. If your lawyer has to write the lease, he will charge you according to a scale of fees. Include the accountant's fees. Payment of stamping fees to the Commissioner of Stamp Duties.

5) What extra costs are there over the rental (government rates or rent, management fees, etc.) These will all have to be included in the budget estimate.

Utilities bill monthly amounts to more than $300 if your air condtioners Are switched on 24 hours.

Car parking fees of S$110/month payable by the Tenant (usually) in some Condos such as the UE Square. Usually free of charge in almost all condos.

Television licence (I think it is $100/year)and cable TV subscription

Bills payable by the Tenant. Amount varies.

Minor repairs of S$100/occurrence if repair is less than $100 is payable by the Tenant in many agreements.

Air-conditioning maintenance service to be the Tenant's expense in many cases. Charges are usually $50/compressor/quarterly.

Condo maintenance fees are usually payable by the Landlord.

6) In the event of a company set budget limit it is to my advantage to negotiate other items such as water, electricity charges etc to be included in the rental figure. Can this be done?

Yes. Get a good realtor to negotiate inclusion of utilities bill, capped e.g. at $300/month for you. Sometimes, the maid's services and other services such as car rental can be included in the rental offered.

ACTION PLAN
We propose to visit Singapore during the weekend 12th to 14 June and to spend some of the time on Friday and Saturday investigating locations and associated costs, advantages and difficulties. We would then return around the 7th to 10th July to view with a definite intention to decide and commence the process to start the lease on or around the 1st August. Please confirm that you could help with arrangements during these times. In the event that we are only able to be in Singapore for 13th and 14^th June will it still be possible to do some preliminary viewing only on Saturday (or Sunday) to determine suitable locations and budget range.

June 12-14 is OK with me.

However, please give me 7 days' notice to plan. Sometimes, my schedule with other expats mean that I cannot be available for the whole period of time. June is a peak house hunting season. Will ask my colleague to assist but I prefer to handle the case.

Pl let me know if you have more queries.

A (FAQ) Frequently Asked Question from newcomer
expatriates surfers. Most answers given in letter below.

To: Ms …

General Admin Executive

LLL. By fax.

Ref: Procedures to open accounts for Mr P and to seal lease agreement.

Cheque for 3 months' deposit. ($25,500), being a 3-year lease. The one month's advance payment has been received and a receipt given to Mrs Simmonds. One month's deposit for one-year lease. 2 months for 2 years. Accepted practice but can vary if Landlord agrees.
Cheque of S$250, payable to "Power Supply Limited". If you wish to pay by electronic means, a cheque of S$150 will do. Companies prefer $250 as they issue cheques rather than pay electronically.
Cheque of S$818, payable to the "Commissioner of Stamp Duties" as stamp fees for the tenancy agreement.. For 3 years and below, the stamp fees are calculated as follows: ($8,500 x 12)/250 x 2 = $816. $2 more for the duplicate copy being stamped. Tenant pays the stamp fees although there are some who refuse to do so. Usually the Landlord will pay or both parties will agree not to do so.
Mrs Simmonds will give you Power Supply & Singapore Telecoms forms to chop and sign as account is opened by the Company.
Please give her the following:
To open a utilities account on behalf of the Tenant:
1. The Company's business registration certificate (photocopy) for Power Supply.
2. A letter saying that he will be leasing the Parisian apartment, for Power Supply since the tenancy agreement is not signed by the Landlord who is in Indonesia.
3. A copy of the tenancy agreement since the original ones are being couriered to Indonesia. For Power Supply. Normally, 5.1 and 5.3 will do if the Landlord is in Singapore and has signed.
4. To open a telephone account on behalf of the Tenant:
5. Mr Pr's passport (photocopy) needed by Singapore Telecoms.
6. A letter with the Company's letterhead stating that his employment pass is being processed, needed by Singapore Telecoms since he has no employment pass yet and if he does not want to pay a deposit. Photocopy of the employment pass will do, if there is one. Work permit holders and others have differing requirements of deposit. Expats without any documentation may need a local Singaporean sponsor. See www.asiahomes.com "Affordable homes for expats" - The Telephone for expats not working in Singapore. May need to make arrangements with phone companies to top up from credit cards. One successful case agreed to by M1 (see article in Affordable homes for expats" - the Telephone for expats not working in Singapore but still needs local sponsor.

It takes 3 days to open a utilities account and 5 days to get the phone line, unless a fee is paid for express service of 24 hours. New condos without gas meters need prior appointment with the Gas Department to connect the gas meters. The Tenant must be present during the appointment times with the Power Supply, esp. when installing gas. The Tenant must buy his own telephone equipment as this is not usually supplied by the Landlord.