Landlord’s know-it-all guide to Security Deposit and Damage Recovery

Landlord security deposit management and damage recovery

You own a house and want to rent it out. A landlord’s position and responsibilities are no less complex than that of a tenant. By that virtue having a property to rent in Singapore or finding a suitable tenant for your house comes with its own set of hiccups.

One of the most common sources of the tenant-landlord dispute is calculating or quantifying the rental property damage and its recovery from the tenant at the end of the tenancy.

Although “Renters Insurance” will shield you from most disputes, in this article we share best practices, possible scenarios of damages and applicable charges to help you landlords have no tenant horror stories or unpleasant experiences.

Be Professional

Being professional is the first step in being a good landlord.

To have good tenants, you need to ensure that you are professional in your approach; And this starts at an early stage of your Tenant-landlord relationship.

  • Showcasing actual premise pictures while advertising your house to your prospective tenants,
  • Including reasonable yet through and clear terms and conditions in the tenancy agreement,
  • Doing your due diligence and perform a detailed background check to pre-empt any legal hassles. Ensuring a smooth move-in process and
  • Most importantly engaging and initiating a personal connection with your tenants can go a long way!

Dependable and trusted tenants would ensure that you have minimum disputes and even if you do have them, they are amicably solved.

Tenancy Agreement Clauses and inclusions to safeguard and set precedence over most disputes

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1. Digital Proof of all items in your property

Ideally, take pictures and/or video of the property, including all white goods. Convert these into an inventory list of items allowed to use during the tenancy period and get it signed off by the tenants during the hand over process.

In case of unforeseen circumstances, these photos and videos will come in handy to initiate or mitigate legal proceedings in property damage recovery disputes.

Typically physical or digital evidence as such helps answer some of the standard legal questions such as:

  1. Are you able to show the condition of the premises when the tenancy started and how it compares when the tenancy ended?
  2. Do you have evidence that the damages were caused by the Tenant?
  3. If there were damaged or missing items, do you have evidence to show that the rectification/replacement cost is reasonable?
  4. Have you taken into account fair wear and tear when claiming compensation for the damage to the property?

Here is a list of items and their probable maintenance costs that you can claim from your tenants in case of more than the usual wear and tear:

  1. General cleaning of the house (S$300-S$400)
  2. Furniture Maintenance and Repair (S$200-S$300)
  3. Electrical Items (S$100 and above – depends on how old or new was your appliance)
  4. House painting (S$1500 and above – depends on the size of your unit)
  5. Floor cleaning (S$4 per square feet)
  6. Removing abandoned furniture (S$100-S$300)

The prices given are indicative in nature and should be validated by your preferred contractor to estimate the damage.

In most cases as a landlord and going by the standard agreement and tenancy law, you can use the tenant security deposit to recover the property damage costs.

2. Minor Repair & Other Maintenance Clause

This clause mentions the minor damages to the rental property that occurs due to the usual wear and tear over a period of the tenant occupation of the property including any replacements to the premises or furniture up to a certain limit

The existing expense range is between S$150 to S$300 and states any expense above and beyond this needs a landlord’s approval.

Depending on how detailed is your clause, as a landlord, you can reserve the right not to pay to repair the damage which was caused due to the tenant’s own negligence and also include your preferred vendors for repair if any.

Do make sure you define or mutually agree with your tenant on what constitutes “normal wear & tear and beyond” before filing your claims.

Having said that, it is always advisable to be humane and prompt in dealing with repairs or replacements of any quantum within a reasonable limit thus maintaining a healthy relationship and avoid disputes.

3. Clear Rent (or Utilities, if applicable), miscellaneous fees payment schedule.

A typical rental agreement states clearly “when” in terms of number of days (usually first 7 days of the month) and how much rent is due each month.

The tenant is obligated to fulfil these conditions stipulated in the contract.

However, there might be certain exceptions where the tenant may fail to meet the time deadline due to personal or business reasons.

While it is advisable to be considerate in lieu of a genuine cause, a clause stating a penalty charge or interest on recurring instances always helps.

The standard interest rate is 12% to 20% per annum of the outstanding amount.

Do note as a landlord you are liable to give written notice to your tenant as a best practice and keep your tenant informed about any bank account number change for all payments immediately.

4. Access to your premise Clause.

A standard agreement always has several “Access to Premises” clauses, allowing you to enter the premises for a minor repair, viewing arrangements especially at the end of the tenancy tenure or selling of property.

Best practice will be to agree on a mutual time for viewing arrangements and/or keep an open communication and respect each others time and judge the need of the hour to execute your stated purpose.

5. En-Bloc Clause

The En-Bloc clause can only be exercised by you as a landlord. Unlike most other clauses, this one serves to protect your interest when your development (the whole condominium) go on sale and you need to end the lease prematurely without having to compensate the tenant.

Although as always, the best practice is to include a notice period and be considerate in your approach. 

6. Diplomatic Clause and Reimbursement Clause (Early Termination of Lease)

With Diplomatic clause be sure to include a Reimbursement Clause.

Let’s start with definitions.

A typical Diplomatic clause states “Provided the Tenant has occupied the premises for a minimum period of TWELVE (12) months, the Tenant may exercise the diplomatic clause by notifying the Landlord TWO (02) calendar month notice in writing of the Tenant’s intention to terminate the Tenancy or TWO (02) month rent in lieu of such notice if the occupier of the premises and employee of the Tenant shall be required by the Tenant to leave Singapore permanently on a job transfer or if the said occupier’s employment with the said Tenant is terminated for any reason whatsoever. Provided always that the documentary evidence shall accompany the written notice providing the event relayed up by the Tenant in the said written notice. Any pre-mature termination that does not satisfy the conditions to exercise the Diplomatic Clause will result in forfeiture of the Security Deposit, and the Landlord will reserve the rights for further compensation.”

This simply put protects your tenant in case they lose their job or need to terminate the tenancy agreement mid-term.

Reimbursement Clause allows you as a landlord to share the loss of mid-term tenancy termination by recovering the agent’s (in case you have engaged one) commission in prorated value.

We are Truuue charge the lowest fee in the industry (S$99/successful transaction) if you close your tenancy with us. We reckon this will be your biggest salvage in eventful circumstances of early lease termination.

7. Tenancy Renewal Clause

This is an important one, especially if you have found a keeper!

Add it to your TA to enable your tenant to extend the lease for another term (usually a year) with a two-month prior notice.

Once mutually agreed, you can prepare a contract for extension based on the prior clauses. Grounds of negotiations always exist in any case with respect to rent as well as other conditions.

8. Dispute settlement

In situations, when a decent conversation, mediation or Alternative Dispute Resolution does not solve your difference, you may want to involve the Singapore Ministry of Law and its various associations to help parties like you in troubled times.

Consumer Association of Singapore (CASE), Singapore Mediation Center (SMC) and Community Mediation Centre (CMC) are some of the groups that help resolve landlord/tenancy disputes. You can always approach the SMALL CLAIMS TRIBUNALS if you are planning legal action.

Under the Ministry of law CSC is a less formal conflict resolution body and it only costs $5 from the complainant, while SMC needs each party to pay a non-refundable filing fee of $267.50 (inclusive of GST) for administrative and support services alone, above and beyond the mediation fees (Starts from S$963 to S$4601).

We at Truuue believe transparency and mutual trust are key to ensuring a hassle-free and pleasant experience and encourage all to be safe yet cautious when renting your apartment.

Of course, you can always “Don’t Worry – Rent Happy” with Truuue and benefit from our excellent customer service, home service facilities and insurance which comes along without any extra cost.

We are Truuue-ly about U, U and Only U!

Looking to rent? Truuue Tenant (also known as TRUrental Tenant) is a new generation prop-tech platform which can help you find a property on rent in Singapore as easily and painlessly as possible. Download our Truuue Tenant App here! Best of all, NO AGENT FEES! Same for the landlord!

 

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