Saktiandi Supaat on Lease Agreements for Retail Premises Bill
Retail and commercial leases have long been a special class of tenancies that are protected by legislation in other countries, and despite the rise of online shopping and transactions, the retail shops in the neighbourhoods and shopping malls are still an invaluable part of Singapore life, said MP Saktiandi Supaat. Speaking in Parliament on Thursday (Aug 3), he noted that the Bill is significant as it seeks to regulate the negotiation of private leases between landlords and tenants and represents an “exception” to Singapore’s reluctance to interfere with the free market of private commercial transactions. He pointed out that one main aspect of the Bill is to elevate parts of the Code of Conduct for Leasing of Retail Premises into law. The Code, he said, was co-created at a time when COVID-19 significantly affected retail businesses. He wanted to know if the principles are suitable for permanent adoption with the pandemic days over. He also noted that the Bill, which introduces the Code into legislation, provides that it can only be modified with the Minister’s approval. He asked if such a requirement would introduce bureaucratic “red tape” and make the Code less nimble and ready to adapt to changing market conditions. Mr Saktiandi also highlighted an area that he said is not dealt with by the Code of Conduct or the Bill. He said in most longer-term leases, including those that are renewable for further periods, there are usually terms providing for a rent review exercise to “refresh” the rent payable after a certain period of time. This recognises that rent amounts are susceptible to market changes and fluctuations over time, he said. Mr Saktiandi said rent review is an area which is regulated in other jurisdictions. In France, the law provides for a legal mechanism where the rent will be revised every three years based on an index without recourse to the courts, following a request from the landlord or the tenant. In Belgium, a party may apply to the court to obtain an adjustment of the rent where there are new circumstances affecting the normal rental value of the leased building. Mr Saktiandi said this may be an area that could be looked into for Singapore.
Retail and commercial leases have long been a special class of tenancies that are protected by legislation in other countries, and despite the rise of online shopping and transactions, the retail shops in the neighbourhoods and shopping malls are still an invaluable part of Singapore life, said MP Saktiandi Supaat. Speaking in Parliament on Thursday (Aug 3), he noted that the Bill is significant as it seeks to regulate the negotiation of private leases between landlords and tenants and represents an “exception” to Singapore’s reluctance to interfere with the free market of private commercial transactions. He pointed out that one main aspect of the Bill is to elevate parts of the Code of Conduct for Leasing of Retail Premises into law. The Code, he said, was co-created at a time when COVID-19 significantly affected retail businesses. He wanted to know if the principles are suitable for permanent adoption with the pandemic days over. He also noted that the Bill, which introduces the Code into legislation, provides that it can only be modified with the Minister’s approval. He asked if such a requirement would introduce bureaucratic “red tape” and make the Code less nimble and ready to adapt to changing market conditions. Mr Saktiandi also highlighted an area that he said is not dealt with by the Code of Conduct or the Bill. He said in most longer-term leases, including those that are renewable for further periods, there are usually terms providing for a rent review exercise to “refresh” the rent payable after a certain period of time. This recognises that rent amounts are susceptible to market changes and fluctuations over time, he said. Mr Saktiandi said rent review is an area which is regulated in other jurisdictions. In France, the law provides for a legal mechanism where the rent will be revised every three years based on an index without recourse to the courts, following a request from the landlord or the tenant. In Belgium, a party may apply to the court to obtain an adjustment of the rent where there are new circumstances affecting the normal rental value of the leased building. Mr Saktiandi said this may be an area that could be looked into for Singapore.
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