Landlords' Asymmetrical Advantage over SMEs in Negotiating Rent Hikes

48 Mr Shawn Loh asked the Deputy Prime Minister and Minister for Trade and Industry (a) whether the Government has considered the negative impact of landlords' asymmetrical advantage in negotiating rent hikes during tenancy renewals against SME tenants, due to factors such as tenants' sunk costs from renovation, on SMEs' ability and willingness to grow their businesses and generate employment; and (b) if so, what mitigating measures has the Government considered.

Mr Gan Kim Yong: The Fair Tenancy Industry Committee's (FTIC's) Code of Conduct for Leasing of Retail Premises in Singapore details key leasing principles to facilitate fair and balanced lease negotiations between tenants and landlords. For example, it prohibits landlords from charging tenants a mark-up for electricity costs, or from including clauses that provide landlords with the discretion to switch to a rental pricing formula which results in higher rent during the lease term.

The Code is mandatory for all retail leases of one year or longer under the Lease Agreements for Retail Premises Act 2023.

The Government played a key role alongside industry to develop the Code. We will continue to work closely with FTIC to monitor industry practices and update the Code as needed to ensure lease negotiations are conducted in a fair and balanced way.