In Singapore, a business tenant has no general legal right to renew a commercial lease at the old rent. Unless the lease contains an option to renew, the landlord is free to ask for any rent it likes when the term ends, and the tenant’s choice is to negotiate, accept, or move out. If there is an option to renew, the renewal rent is set by what that clause says: often “prevailing market rent”, sometimes with a cap, a fixed percentage, or a valuer to decide if the parties cannot agree. For qualifying retail premises, the mandatory Code of Conduct for Leasing of Retail Premises also governs some terms. So the first step is to read the lease, then build your negotiating position with evidence.
This guide is for owners and directors of shops, restaurants, clinics, offices and other businesses renting premises in Singapore.
Step 1: Read the lease before replying
Pull out the signed tenancy agreement and any side letters, and answer these questions:
| Question | Where to look | Why it matters |
|---|---|---|
| Is there an option to renew? | “Option to renew” or “further term” clause | Without one, renewal is a fresh negotiation |
| How must the option be exercised? | Notice period, written form, address for notices | Options are usually strictly construed: miss the window and it may be lost |
| Are there conditions? | “Provided that the tenant has paid rent and observed the covenants” | Late payments or unapproved works can let the landlord refuse |
| How is the renewal rent fixed? | “Prevailing market rent”, fixed increase, cap, or formula | Decides how much room the landlord has |
| What if the parties cannot agree? | Valuer or expert clause | An independent valuer may settle the figure |
| What happens at expiry? | Holding over, reinstatement, deposit | Affects the cost of leaving |
If the lease says the option rent will be “agreed” with no fallback mechanism, the option may be difficult to enforce, because the court will not usually fix a rent the parties never agreed how to fix. In practice, that leaves you negotiating.
Step 2: Check whether the retail leasing code applies
The Lease Agreements for Retail Premises Act 2023 makes compliance with the Code of Conduct for Leasing of Retail Premises in Singapore mandatory for “qualifying leases”. Under the Act, these are leases of retail premises (premises used mainly for retail sale of goods or supply of services, excluding premises used mainly for administrative work), including an extension or renewal, where the agreement is signed after the relevant part of the Act came into force and the period is at least one year. The Code sets leasing principles on matters such as rental structures and how terms are negotiated, and the Act provides a mediation and adjudication process for complaints of non-compliance. It does not cap rent or give a right to renew. Check with your lawyer whether your renewal is a qualifying lease and what the Code says about the rental structure being proposed.
Office, industrial and warehouse leases are outside this regime and are governed by the lease and general contract law.
Step 3: Build your negotiating position
- Market evidence. Collect asking and transacted rents for comparable units nearby. URA publishes rental statistics for commercial property, and agents can give recent deals. A landlord’s figure is a proposal, not the market.
- Your value as a tenant. A long, clean payment record, a stable business and a low vacancy risk are worth money to a landlord. Re-letting a unit involves rent-free periods, agent fees and downtime.
- Your fit-out. If you have invested in renovation, moving means writing that off and paying for reinstatement. The landlord knows this too, so quantify your real moving cost and decide your walk-away rent in advance.
- Trade-offs. Ask for a staggered increase, a longer term with fixed steps, a rent-free fit-out period, a cap on service charge increases, a break clause, or a reduced security deposit instead of a lower headline rent.
- Timing. Start talks well before the option deadline and the lease expiry. Exercise the option in time if you need to keep it alive, even while negotiating, if the clause allows that.
When a valuer decides
If the lease refers disputes about market rent to a valuer acting as an expert, the valuer’s decision is usually binding except in limited circumstances such as fraud or a departure from the instructions in the lease. Prepare a written submission with comparables and the lease terms the valuer must assume, and agree who pays the valuer’s fee.
Step 4: Decide, then document properly
- Get the board’s or owners’ agreement on the maximum rent and the fallback plan (another unit, downsizing, or closing an outlet).
- Put the agreed renewal in writing: a renewal letter or new tenancy agreement signed by both parties. Do not rely on WhatsApp messages with the landlord’s agent.
- Stamp the renewal within the deadline. A new or renewed lease is a dutiable document; see our guide to stamping tenancy agreements.
- Check GST on rent if the landlord is GST-registered, and budget for the higher cash outflow.
- If you are leaving, diarise reinstatement works and the deposit refund. See getting the security deposit back after a commercial lease.
What if you stay without agreeing a new rent?
If the lease expires and the tenant stays on while talks continue, the position depends on the holding-over clause. Many leases charge a higher rent, sometimes double, for holding over, and the landlord may treat the tenant as a monthly tenant who can be given notice. If rent falls into arrears, the landlord may pursue a writ of distress or seek forfeiture of the lease. Do not drift into holding over without a written arrangement.
Is a director personally exposed?
Only if a director signed a personal guarantee or indemnity. Many landlords ask for one on renewal. Read it carefully: a guarantee may cover the whole renewed term and all arrears, not just a few months’ rent. Negotiate a cap or time limit if you can.
Example
Example only, not a client case. A café company pays S$9,000 a month for a ground-floor unit. Three months before expiry, the landlord proposes S$12,500. The lease has an option to renew at “prevailing market rent” with a valuer if the parties disagree, exercisable by written notice at least two months before expiry. The company serves its notice on time, collects five comparable transactions averaging S$10,400, and offers S$10,200 with a three-year term. The landlord counters at S$11,000 with two months rent-free for a refreshed fit-out. The parties settle at S$10,800, with the second and third years fixed, and sign and stamp a renewal letter.
Frequently asked questions
Can the landlord refuse to renew even if we always paid on time?
Yes, if there is no option to renew. With an option, the landlord can usually refuse only if the conditions for exercising it were not met.
Is there a legal maximum rent increase?
No. Singapore does not have rent control for commercial premises. Limits come only from the lease itself.
Can we complain to a government agency about the rent?
For qualifying retail leases, complaints of non-compliance with the Code’s leasing principles go through the process under the Lease Agreements for Retail Premises Act. A high rent alone is not a breach.
The landlord’s agent says the offer expires tomorrow. Should we sign?
Not without reading the full document. Ask for the terms in writing and a reasonable time to review them.
Need help with a lease renewal or rent dispute?
If your company, or you as a director or shareholder, is dealing with a landlord’s rent increase or a renewal dispute, contact the Raffles Corporate Services team at [email protected] or on WhatsApp at +65 8501 7133 or +65 9018 0072. We will help you understand the documents and deadlines and prepare the board approvals and stamping. Where your matter needs a lawyer, we will refer you to a firm on our panel of Singapore law firms that regularly handles commercial leases and landlord and tenant disputes. Raffles Corporate Services is a corporate services provider, not a law firm, and this article is general information, not legal advice.
Rachel Sim, Raffles Corporate Services