Bill introduced to mandate compliance with Code of Conduct for Leasing of Retail Premises for qualifying retail premises in Singapore: Allen & Gledhill

18 July 2023

On 4 July 2023, the Lease Agreements for Retail Premises Bill (“Bill”), which mandates compliance with the Code of Conduct for Leasing of Retail Premises in Singapore (“Code”) for qualifying retail premises, was introduced in Parliament. In a press release, the Ministry of Trade and Industry (“MTI”) said that the legislation is expected to come into effect about six months after the Bill is passed.

Background

On 26 March 2021, the Fair Tenancy Pro Tem Committee (“Committee”) introduced the Code, which sets out leasing and negotiating principles to ensure fair and balanced bargaining positions between landlords and tenants in the negotiation of qualifying leases. The Committee recommended that compliance with the Code be made mandatory for all qualifying leases via legislation. The Code has since been voluntarily adopted by major private sector landlords and all Government landlords.

The Fair Tenancy Industry Committee (“FTIC”), which comprises landlord and tenant representatives, as well as industry experts, was formed on 3 May 2021 to be the custodian of the Code. The FTIC issued an updated version of the Code on 15 March 2022 to better cater to industry needs.

From 18 July 2022 to 5 August 2022, MTI conducted a public consultation and sought feedback on proposed legislation to mandate compliance with the Code.

The following is an overview of the key provisions of the Bill.

Compliance with the Code

Under the Bill, the landlord and tenant of a qualifying lease must ensure that the lease agreement for that qualifying lease complies with the leasing principles in the Code which are in force at the time the lease agreement is signed.

A “qualifying lease” refers to a lease for retail premises with a tenure of one year or more where the agreement for the lease, or extension or renewal thereof, is signed on or after the date of commencement of Part 3 of the legislation. Premises are retail premises if they are used primarily for the sale of goods by way of retail and the supply of services.

Where there is a permitted deviation in the lease agreement, the landlord must, if required by the leasing principle in question, submit to the FTIC within the prescribed period a declaration of permitted deviation for the permitted deviation. Failure to do so may render the permitted deviation void in certain situations.

Facilitated dispute resolution process

The Bill provides for the appointment of an authorised dispute resolution body and a dispute resolution process comprising mediation and adjudication. On receipt of a complaint of non-compliance with any leasing principle in the Code, the authorised dispute resolution body must appoint a mediator from its panel of mediators to mediate between the parties and help them settle the dispute, including any variation to the lease agreement. If the mediation does not result in a settlement agreement, the complainant may apply to the authorised dispute resolution body to appoint an adjudicator from its panel of adjudicators to hear and determine the dispute.

A mediated settlement agreement or an adjudicator’s determination may be enforced in the same manner as an order of court provided certain condition are met.

Role of the Fair Tenancy Industry Committee

The Bill sets out the requirements relating to the composition of the FTIC and its decision-making process. The membership of the FTIC must comprise individuals representing the interests of landlords and tenants of retail premises as well as industry experts. The Bill also sets out the functions of the FTIC, which includes reviewing and modifying the Code from time and time, monitoring and promoting compliance with the Code, and keeping a register of permitted deviations.