COMMON COMMERCIAL LEASE TERMS IN SINGAPORE - Code of Conduct Impact on Negotiation

Sep 15, 2026

Uploaded by Aurora

Explains commonly used terms in Singapore commercial leases and how the Retail Premises Leasing Code of Conduct (COC), effective 1 June 2021, shapes lease negotiations for qualifying retail premises. Covers lease agreement scope, qualifying criteria, lease term expectations, renewal options, and limited rights to early termination under exceptional situations. Details use restrictions, alterations limits, and transfer terms, including landlord pre-termination conditions and required notices, plus tenant compensation considerations.

LanguageEnglish

CategoryLetters

FormatPDF

Pages7

Reading Time3 min

AccessFree to download

Introduction

Key Terms Covered

Lease Term

Option to Renew

Early Termination

Managing the Lease Agreement

Transfer of Lease

Restrictions on Use

Alterations

Legal Update Singapore COMMON COMMERCIAL LEASE TERMS IN SINGAPORE Introduction This article will explain some commonly used terms in commercial leases, and how the recently introduced Code of Conduct for Leasing of Retail Premises (“COC”) affects the negotiation of certain key terms. A commercial lease agreement is a contract between a landlord and a tenant to rent a commercial space to the tenant. Commercial spaces include factories, office space, shop space, and warehouse facilities. The COC, which came into effect on 1 June 2021 and applies to all qualifying retail premises (“Qualifying Retail Premises”),1 sets out guidelines for fairer lease negotiations between landlords and retail tenants. While parties are generally free to negotiate and agree on the terms of such agreements, landlords of Qualifying Retail Premises will have to adhere to these new guidelines when negotiating lease agreements. Lease agreement includes sub-lease agreement, licence, agreement for lease and accepted letter of offer. 1 Code of Conduct for Leasing of Retail Premises (“COC”), section 1 Qualifying Retail Premises are premises which are:2 (a) held under a lease agreement3 entered into on or after 1 June 2021 with a tenure of more than one year; and (b) permitted to be used by the Urban Redevelopment Authority and other relevant authorities for any of the uses specified in the COC, which include food and beverage, shop, clinic, pet shop, commercial school, sports and recreation, and place of entertainment. Managing the lease agreement Lease Term Commercial lease agreements will state the lease term, i.e. the duration of the lease. In Singapore, a commercial lease typically lasts 3 years. However, landlords may offer a lease term of 4 to 6 years for tenants which have long-term strategic plans and require a fairly large commercial space. Option to Renew Most commercial leases also provide the tenant with the option to renew for a further term prior to the expiry of the lease term. Generally, the option to renew is for a duration that is similar to that of the lease which is about to expire, and at a rental amount that was agreed on by the parties beforehand or at the market rate prevailing at the time of renewal. Early Termination Tenants are generally given the right to terminate the lease in very limited circumstances. Landlords, however, usually provide for the right to terminate the lease upon the tenant’s breach of a covenant or condition and failure to remedy such breach within a stipulated period. Under the COC, tenants are entitled to terminate leases early in exceptional circumstances, such as if the tenant loses distributorship or franchise rights through no fault of the tenant, or if the tenant’s business principal is insolvent.4 However, the tenant must give at least 6 months’ prior written notice or pay 6 months’ gross rent in lieu of notice to the landlord. 5 Some leases also contain sale and redevelopment clauses which allow the landlord to terminate the lease if the building is to be sold by way of a collective sale. The landlord must typically give the tenant several months’ written notice, and the lease will terminate upon expiry of the notice. 2 COC, section 3 3 A “lease agreement” includes a sub-lease agreement, licence agreement, an agreement for lease and an accepted letter of offer. 4 COC, paragraph 7.1 5 COC, paragraph 7.2 In this regard, the COC provides that the landlord may only pre-terminate the agreement if it intends to carry out substantial redevelopment, asset enhancement or reconfiguration works to the building or part of the building where the premises are situated and requires vacant possession for such works.6 The landlord must provide at least 6 months’ prior written notice to the tenant.7 However, if such works must be carried out to comply with law or authorities’ requirements and the time period given to the landlord does not permit 6 months’ notice, the landlord

FAQs

What is the purpose of the Singapore Retail Premises Leasing Code of Conduct (COC) in commercial lease negotiations?

The COC provides guidelines for fairer lease negotiations between landlords and retail tenants. Landlords of qualifying retail premises must adhere to these guidelines when negotiating lease agreements.

Under what conditions can a tenant terminate a Singapore commercial lease early under the COC?

Tenants may terminate early in exceptional circumstances, such as losing distributorship or franchise rights without tenant fault, or when the business principal becomes insolvent. The tenant must give at least 6 months’ written notice or pay 6 months’ gross rent in lieu.

When may a landlord pre-terminate a lease under the COC, and what obligations apply?

The landlord may pre-terminate only if it intends to carry out substantial redevelopment, asset enhancement, or reconfiguration works requiring vacant possession. The landlord must give at least 6 months’ prior written notice, and provide prompt notice if 6 months is not feasible due to legal or authority requirements, along with compensation based on tenant fit-out costs.

Sep 15, 2026

Uploaded by Aurora