Knowledge Highlights 26 November 2024
MTI seeks feedback on proposed legislation to mandate compliance with Code of Conduct for Leasing of Retail Premises in Singapore
From 18 July 2022 to 5 August 2022, the Ministry of Trade and Industry (“MTI”) is conducting a public consultation and seeking feedback on proposed legislation to mandate compliance with the Code of Conduct for Leasing of Retail Premises in Singapore (“Code”).
On 26 March 2021, the Singapore Business Federation announced the completion of the Code by the Fair Tenancy Pro Tem Committee (“Committee”). The Code sets out guidelines and negotiating principles to provide guidance to landlords and tenants of qualifying retail premises to enable fair and balanced lease negotiations. The Committee had also recommended to the Government that compliance with the Code be made mandatory via legislation. The Code has been voluntarily adopted by major private sector landlords and all Government landlords since 1 June 2021.
The proposed legislation aims to mandate compliance with the Code, establish a facilitated dispute resolution process, and specify the roles of the Fair Tenancy Industry Committee (“FTIC”). The following is a summary of the key provisions of the proposed legislation.
Compliance with the Code
Consistent with the Code, the proposed legislation will apply to “qualifying retail premises” which are
(i) held under a lease agreement with a tenure of one year or more; and (ii) permitted to be used by the Urban Redevelopment Authority and other authorities for the specified categories of food and beverage, retail, and lifestyle use. It will be mandatory for landlords and tenants of qualifying retail premises to comply with the leasing principles in force at the time the lease agreement is signed.
Under the proposed legislation, landlords and tenants may, by mutual agreement, deviate from four of the 11 leasing principles in the Code. In such instances, a “declaration of permitted deviation” must be submitted to the FTIC within 14 days of signing the lease, failing which the relevant terms in the lease agreement will be deemed void.
Facilitated dispute resolution process
The proposed legislation will provide for a facilitated dispute resolution process comprising mediation and adjudication, which will be designed to be low-cost and expedient.
In the case of disputes over whether a term in a lease agreement complies with the leasing principles of the Code, or whether a party has breached its obligations, a complaint of non-compliance may be submitted within 14 days to the authorised dispute resolution body. It is stated in the consultation paper that MTI intends to appoint the Singapore Mediation Centre (SMC) as the authorised dispute resolution body.
Under the proposed legislation, parties must first undergo mediation to resolve the dispute, and if the dispute is not resolved, the complainant may request the appointment of an adjudicator to decide the dispute. The adjudicator will be empowered to decide if lease terms comply with the leasing principles in the Code, and to order a variation of the terms to comply with the Code. The adjudicator will also be empowered to determine compensation where the Code so provides.
Parties may apply to the courts to register a mediated settlement agreement or an adjudicator’s determination to be enforced in the same manner as an order of court.
Role of the Fair Tenancy Industry Committee
Under the proposed legislation, the Minister for Trade and Industry will be empowered to appoint the Chairperson and members of the FTIC. The FTIC’s role is to review and may, with the approval of the Minister, update the Code. The FTIC will also establish the process to submit declarations of permitted deviations.
Reference materials
The following materials are available on the MTI website www.mti.gov.sg:
