_Fair Tenancy Framework Reshaping Landlord-Tenant Relationship for a Brighter Future
If there is a silver lining to the Covid-19 pandemic for the retail sector in Singapore, it will be the industry-led Code of Conduct for Leasing of Retail Premises in Singapore. Borne out of sheer necessity during the height of the pandemic outbreak, the Fair Tenancy Pro Tem Committee was formed on 26 June 2020 under the auspices of the Singapore Business Federation to strengthen collaboration and increase the vibrancy and competitiveness of the local retail, dining and lifestyle sectors. Comprising representatives from both the landlord and tenant communities, the government, industry experts and academia, the Fair Tenancy Pro Tem Committee developed a set of comprehensive guidelines that laid out specific fair tenancy practises based on the principles of transparency, reciprocity and sustainability.
Some would remember that this was not the first attempt at improving fair tenancy practices in Singapore. In 2015, the Singapore Business Federation had published a Fair Tenancy Framework listing best practices for key legal provisions in lease agreements of retail premises. However, that effort was mostly driven by the tenant community and had little impact without the participation of the landlords. Therefore, the formation of the Fair Tenancy Pro Tem Committee and the consequent Fair Tenancy Industry Committee (FTIC) to act as custodian of the new Code of Conduct, represent major breakthroughs. For the first time, we see industry stakeholders coming together to push for a collective change in mindset, values and behaviours in the common hope for a better future for the local retail landscape.
The new Code of Conduct that was created out of those discussions addressed far-reaching concerns across 11 categories of lease negotiations including rent structure and computation, early termination provisions and third-party fees, many of which are seen to be longstanding points of contention between landlords and tenants.
While it is still early days in its implementation, and adoption of the Code remains voluntary until it is mandated through legislation, members of the Fair Tenancy Pro Tem Committee have publicly pledged to adopt and abide by the Code from 1 June 2021. These include major corporate landlords such as CapitaLand, Frasers Property Retail and City Development Ltd. Various trade associations such as the Restaurant Association of Singapore, Singapore Retailers Association, Association of Small & Medium Enterprises, Reit Association of Singapore, and Real Estate Developers’ Association of Singapore have also been encouraging their members to adopt the Code. The sizeable commitment to the new Code paves the way towards bringing about much-needed change to strengthen the local retail industry’s resilience and competitiveness in a rapidly evolving market environment.
These changes were long overdue even in the pre-Covid world, evidenced by an increasingly lacklustre retail sector challenged by e-commerce and shifts in consumer behaviours. The balance of power between landlords and tenants has been lopsided in favour of the former and the costs of failure were deemed too high for entrepreneurs to experiment and innovate.
Still, the move is no less welcome than for it to be delayed. Hopefully, with the fair tenancy framework enforced through imminent regulation and reinforced by a shift in the industry mindset, we can see true transformation of the retail industry materialise in the post-Covid era. One that will be enduring and well-supported by a shared and united desire to grow the retail ecosystem in Singapore.
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