Month: November 2021

4 Easy Steps to Get Your Food Shop License in Singapore

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food shop license

Are you thinking of opening a restaurant, cafe, pub, bar, or some other F&B business? If you wish to start a business like this, one of the key licenses you’ll need to apply for is a Food Shop License. First-time F&B entrepreneurs may find the process a little confusing, so we wrote this guide to simplify the entire journey for you. We’ll walk you through the 3 steps you’ll need to take to get your Food Shop License, how much it’ll cost you, and answer some frequently asked questions related to the license. Let’s get cracking!

We’ll explain:

  1. What is a Food Shop License?
  2. How does a Food Shop License differ from a Food Shop License?
  3. The 3 steps to apply for a Food Shop License in Singapore
  4. Frequently asked questions on Food Shop Licenses
  5. How to protect your food shop business from food poisoning liability, and other major risks

What is a Food Shop License?

A Food Shop License permits you to operate various kinds of food shops. Examples of food shops include:

  • Cafes
  • Restaurants
  • Drink shops
  • Dessert shops
  • Takeaway food & beverage shops
  • Canteens (meaning an entire canteen, not an individual canteen stall)
  • Food Courts (meaning an entire food court, not an individual food court stall)
  • Coffee shops/Kopitiams (meaning an entire kopitiam, not an individual kopitiam stall)
  • Pubs and bars that serve food
  • Discos/KTVs that serve food

Food Shop Licenses are issued by the Singapore Food Agency.

What’s the difference between a Food Shop License vs a Food Stall License?

Food Shop License

Food Stall License

Type of BusinessCafes, restaurants, drink shops, dessert shops, takeaway F&B shops, pubs, bars, discos, KTVs, etc.Stalls in hawker centres, coffee shops/kopitiams, canteens, etc
Ability to Hire Foreign WorkersAllowed to hire foreign workers.Not allowed to hire foreign workers. Can only hire Singapore Citizens/PRs.
Cost$195/year$32/year

 

Food shops are essentially stand-alone F&B premises. Food shops can either be sit-in establishments like cafes, or takeaway establishments like bubble tea shops. Food stalls are stalls that are located in a larger food establishment, such as stalls within a food court, canteen, or hawker centre.

What are the documents needed to apply for a Food Shop License?

We’ve consolidated all the documents you need in one list, so you can have everything ready before you apply for your Food Shop License:

  1. ACRA profile of your company (if applying for the license under a company), OR personal details of applicant (name, NRIC, date of birth, contact details, etc.). Your ACRA profile must be dated within 3 months from your application date.
  2. Basic Food Hygiene Certificate / Refresher Food Hygiene Certificate of all food handlers.
  3. Personal details of all food handlers (name, NRIC, date of birth, contact details, etc.)
  4. Tenancy agreement/contract with your landlord.
  5. Use of premises approval from relevant land use agencies – URA, HDB, etc.
  6. Layout plan of your food shop premises. Make sure your layout plan complies with COPEH (Code of Practice on Environmental Health).
  7. Letter of authorisation (only if the application for the Food Shop License is not done by the intended licensee/director of company applying for the licence – e.g. if your friend is helping you to apply for the license)
  8. Cleaning programme document
  9. Pest control contract

What are the 4 steps to apply for a Food Shop License in Singapore?

Step 1: Gather all necessary information

To ensure the quickest application experience, it’s advisable to prepare all the required information (listed in the paragraph above) beforehand. This will help you get through the entire process smoothly, so you can start running your business ASAP.

Some key points to note:

It’s highly recommended you set up a company with ACRA first, and then apply for your Food Shop License under your  company: You can only hire foreign workers if your Food Shop License is tagged to a company (e.g. a Private Limited). You cannot hire foreign workers if your Food Shop License is tagged to a personal name (e.g. your own name). Given the nature of food shop manpower requirements, you will likely be setting yourself up for a difficult time if you cannot hire foreign workers.

Therefore, it’s recommended that you set up a company with ACRA first. Here’s a great guide we’ve written about how to set up a Private Limited company in Singapore. Once you’ve registered your company, then go ahead to apply for the Food Shop License.

Choose a renovation contractor who is familiar with COPEH: COPEH stands for the Code of Environmental Practice. These are a set of rules for food-related premises. If you’re renovating your food shop, the premises must comply with COPEH guidelines. When picking your renovation contractor, make sure you verify that they are familiar with the COPEH standards, as you’ll need to submit your food shop layout to SFA to get the Food Shop License. If your layout doesn’t comply with COPEH, SFA may turn down your license application.

Make sure you’ve got your tenancy agreement before applying for the license: You need to submit your tenancy agreement when applying for the Food Shop License. You don’t have to sign the agreement yet until your license is approved, but you need to at least have the agreement in hand. If you’re searching for a place to rent, check out our helpful guide on 10 common commercial lease terms.

Ensure you have premises use approvals from the relevant land use agencies (e.g. URA, HDB) before applying for the license: If you’re renting a space that was not previously a food shop, then you’ll need to seek a Grant of Written Permission from URA. If this space (which was not previously a food shop space)  is within an HDB premises (e.g. HDB shophouse), then you’ll need to seek HDB approval also. Have this done before you start your license application, because SFA will ask for the approval letters from these agencies.

Make sure the food shop’s previous occupant has cancelled their Food Shop License: If the previous occupant was also operating a food shop, and they didn’t cancel their Food Shop License, then SFA will take 2 extra weeks to process your application. This is because SFA will need to contact the previous occupant to cancel their license. Try to contact the previous occupant (e.g. contact them via your landlord, if you can’t reach them directly) to avoid this 2-week delay.

Gather personal details of all workers who will be handling food, and ensure they all have basic food hygiene certificates: You’ll need to submit the personal details of food handlers in your stall, as part of the licensing process. All food handlers must have a valid food hygiene certificate. 

For certain types of food shops, you will need at least one food hygiene officer: The following types of food shops will require a staff member to be a food hygiene officer.

  1. Restaurant
    – Housed in two or more adjacent units in private and HDB shophouses; OR
    – With kitchen area exceeding 16 square metres (172 square feet)
  2. Caterer
  3. Canteen
  4. Food court

A senior member of your staff (e.g. chef, sous chef, manager, assistant manager, etc.) must serve as the food hygiene officer. If your chosen staff member has not worked as a food hygiene officer before, they will need to attend the WSQ Food Safety Course Level 3. Upon completing the course, they will be qualified to work as a food hygiene officer.

Pest control contract: You will need to submit a contract with a Pest Control company during your license application. You don’t have to sign the contract yet – just have one ready for submission. Your contract must have an inspection frequency of at least once a month.

Cleaning programme: You will need to submit a cleaning programme document during your license application. This document should outline your proposed cleaning schedule, state the various areas of your food shop that you will clean, etc.

Step 2: Apply on GoBusiness Licensing Portal

Once you’ve prepared all the necessary documents, log on to the GoBusiness Licensing portal to apply for your Food Shop License. The whole process can be completed online.

How long will SFA take to review my Food Shop License application?

SFA will respond within 5 working days.

Step 3: Arrange for a premises inspection with SFA

Before SFA approves your license, SFA staff will need to go down to your F&B premises, and conduct an inspection. You will need to provide 7 days advance notice for the premises inspection. For instance, if you wish SFA to conduct the inspection on the 7th day of a particular month, then you’ll need to apply by the 1st day of the month at the latest.

How long will SFA take to confirm my inspection date?

SFA will confirm the inspection date within 2 working days, from the time you make the booking.

What will SFA look for during the inspection?

SFA will ensure that the layout plan you submitted is the same as the actual layout of your premises. SFA will also ensure that you have proper food washing facilities, food storage facilities, proper exhaust systems, proper drainage systems, etc.

Step 4: Make payment to SFA

After SFA clears the inspection and approves your license, you’ll need to pay SFA the license fee. A Food Shop License in Singapore costs $195/year (GST included).

Once payment is made, SFA will mail your hardcopy Food Shop License within 7 working days. It should take 2 weeks, at most, for you to receive your license. If you don’t receive your hardcopy license within this 2-week timeframe, reach out to SFA again so they can send you another copy of your license.

Frequently asked questions on Food Shop Licenses

When can I start operating my food shop? Do I have to wait for the hardcopy license?

No, you don’t have to wait for the hardcopy license to arrive.

For businesses with existing GIRO payment arrangements with SFA: You can start immediately after you’ve received email approval for your license from SFA.

For businesses without existing GIRO payment arrangements with SFA: You can start after you’ve made payment to SFA via the GoBusiness portal, or via an AXS machine.

When can I start renovating my food shop? Do I have to wait for my license to be approved?

No, you don’t have to wait for the full Food Shop License to be granted. You can actually begin renovations once you complete Step 1.

Once you’ve submitted your application via the GoBusiness Portal, SFA will respond within 5 working days. If SFA approves your application, they will issue you an In-Principle Approval letter. You can then begin your renovation work.

How do I cancel my Food Shop License?

Log on to the GoBusiness portal. You’ll have an option to cancel your license. There are no refunds for cancellations of licenses.

How do I renew my Food Shop License?

GoBusiness: You can renew your license by logging into GoBusiness, and making payment.

GIRO: If you sign up for GIRO, your Food Shop License will be automatically renewed each year. You won’t need to track your license’s renewal date, which makes it more convenient for you. Just remember to cancel your GIRO payments  if you eventually give up your license.

What happens if my license expires?

You will need to apply for a new license. You cannot renew an expired license. If you’re currently operating a food shop but accidentally let your license expire, you must stop operating your food shop operations while you’re making the application for a new license. This means that you will not be able to run your food shop for at least 5 working days.

Can I apply for a Food Shop License if I don’t have a company?

Yes, you don’t need a company. You can apply as a private individual. However, if your Food Shop License is tied to a private individual, you cannot hire foreign workers. That will make your business difficult to run.

Can I run a food shop without a license?

Under the Environmental Public Health Act, it is illegal to run a food shop without a license. You can be fined up to $10,000 if you operate an unlicensed food shop.

What other licenses might I need?

If you’re selling alcohol in your food shop, then you’ll need a liquor license. We’ve written a great guide on how to get your liquor license in 3 easy steps.

Don’t forget to protect your food shop against food poisoning & major risks

Since you’re selling food, you may accidentally cause food poisoning to your customers. Lawsuits related to food poisoning are not cheap, and can easily cost you tens if not hundreds of thousands of dollars. Food shops are also vulnerable to risks like fire and water damage.

After you’ve gotten your license, make sure that you protect your food stall business. We offer the most affordable and comprehensive business insurance plans in Singapore. Click the links below to get insured online, in just 3 mins!

3 Easy Steps to Get Your Food Stall License in Singapore

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how to get food stall license

Are you thinking of opening a food stall? Under Singapore law, you need to first apply for a Food Stall License. We’ve written this guide to help you along the process of getting your Food Stall License. 

We’ll explain:

  1. What is a Food Stall License?
  2. What’s the difference between a Food Stall License vs a Food Shop License?
  3. The 3 steps to apply for a Food Stall License in Singapore
  4. Frequently asked questions on Food Stall Licenses
  5. How to protect your food stall business from food poisoning liability, and other major risks

What is a Food Stall License?

A food stall license is an official license that allows you to operate various kinds of food stalls. Examples include:

  • Hawker centre stall
  • Coffee shop/kopitiam stall
  • School canteen stall
  • Company canteen stall

What’s the difference between a Food Stall License vs a Food Shop License?

Food Stall License

Food Shop License

Type of BusinessStalls in hawker centres, coffee shops/kopitiams, canteens, etc.Restaurants, cafes, bars, pubs, discos, etc.
Ability to Hire Foreign WorkersNot allowed to hire foreign workers. Can only hire Singapore Citizens/PRs.Allowed to hire foreign workers.
Cost$32/year$195/year

 

What are the documents needed to apply for a Food Stall License?

We’ve consolidated all the documents you need in one list, so you can have everything ready before you apply for your license:

  1. ACRA profile of your company (if applying for the license under a company), OR personal details of applicant (name, NRIC, date of birth, contact details, etc.).
  2. Basic Food Hygiene Certificate / Refresher Food Hygiene Certificate of all food handlers.
  3. Personal details of all food handlers (name, NRIC, date of birth, contact details, etc.)
  4. Tenancy agreement/contract with your landlord.
  5. Layout plan of your food stall premises. Make sure your layout plan complies with COPEH (Code of Practice on Environmental Health).
  6. Letter of authorisation (only if the application for the Food Stall License is not done by the intended licensee/director of company applying for the license – e.g. if your friend is helping you to apply for the license)

What are the 3 steps to apply for a Food Stall License in Singapore?


Step 1: Gather all necessary information

If you want to have a smooth application experience, it’s best to prepare all the information (listed in the paragraph above) beforehand. This will help you get through the entire process more quickly.

Some key points to note are:

If you’re renovating the stall, make sure your contractor is familiar with COPEH: COPEH stands for the Code of Environmental Practice. These are a set of rules for food-related premises. If you’re renovating your food stall, the premises must comply with COPEH. Ensure that your contractor is familiar with the COPEH guidelines, as you’ll need to submit your food stall layout to SFA to get the license. If your layout doesn’t comply with COPEH, SFA may turn down your license application.

Ensure that you’ve got your tenancy agreement before applying for the license: You need to submit your tenancy agreement when applying for the license. You don’t have to sign the agreement yet until your license is approved, but you need to at least have the agreement in hand. We wrote a guide on 10 common commercial lease terms for entrepreneurs who are reviewing tenancy agreements.

Ensure the food stall’s previous occupant has cancelled their Food Stall License: If the previous occupant has not cancelled their Food Stall License, then SFA will take 2 extra weeks to process your application. This is because SFA will need some time to to contact the previous occupant to cancel their license, and then issue you a new license. Try to get in touch with the previous occupant (e.g. contact them via your landlord, if you can’t reach them directly) to handle this task.

Gather personal details of all workers who will be handling food, and ensure they all have basic food hygiene certificates: You’ll need to submit the personal details of food handlers in your stall, as part of the licensing process. All food handlers must have a food hygiene certificate. 

Step 2: Apply on GoBusiness Licensing Portal

Once you’ve got the necessary documents in hand, head to the GoBusiness Licensing portal to apply for your Food Stall License. The entire process is online.

How long will SFA take to review my license application?

It will take up to 5 working days for SFA to process your Food Stall License application

Step 3: Make payment to SFA

After SFA approves your license, you’ll need to pay SFA the license fee before you can start operating your food stall.

A Food Stall License in Singapore costs $32/year (GST included). This license is valid for 1 year. You also have the option of applying for a 2-year license, which will cost $64.

Once payment is made, SFA will mail your hardcopy Food Stall License within 7 working days. It should take at most 2 weeks for you to receive your license. If you don’t get your hardcopy license within this timeframe, make sure to contact SFA again so they can send you another copy of your license.

When can I start operating my food stall? Do I have to wait for the hardcopy license?

No, you don’t have to wait for the hardcopy license to arrive.

For businesses with existing GIRO payment arrangements with SFA: You can start immediately after you’ve received email approval for your license from SFA.

For businesses without existing GIRO payment arrangements with SFA: You can start after you’ve made payment to SFA via the GoBusiness portal, or via an AXS machine.

Frequently asked questions on Food Stall Licenses:

How do I cancel my Food Stall License?

Log on to the GoBusiness portal. You’ll have an option to cancel your license. There are no refunds for cancellations of licenses

How do I renew my Food Stall license?

GoBusiness: You can renew your license by logging into GoBusiness, and making payment.

GIRO: If you sign up for GIRO, your Food Stall License will be automatically renewed each year. You won’t need to track renewal dates, which can be more convenient for license holders. Just remember to cancel your GIRO scheme if you end up cancelling your license.

What happens if my license expires?

You will need to make a fresh application for a new license. If you’re currently operating a food stall but accidentally let your license expire, you cannot operate your food stall while you’re making the application for a new license. This means you’ll have a downtime of at least 5 working days.

Can I apply for a license if I don’t have a company?

Yes, you don’t need a company. You can apply as a private individual.

That being said, you’re better protected against legal liability (e.g. for food poisoning) if you operate your food stall under a Private Limited company. Private Limiteds generally limit liability to the assets of the company, so that your personal assets don’t get exposed in case someone gets sick from your food and files a legal claim against you. Here’s a helpful guide on how to start a Private Limited in Singapore.

Can foreigners apply for a Food Stall License?

Take note that Food Stall Licenses are only available to Singapore Citizens or Permanent Residents. If you’re a foreigner but you want to take part in a Food Stall business, then you will need a business partner who’s a citizen or PR to be named as the licensee.

Can I run a food stall without a license?

Under the Environmental Public Health Act, it is illegal to run a food stall without a license. You can be fined up to $10,000 if you operate an unlicensed food stall.

Don’t forget to protect your food stall against food poisoning & major risks

Since you’re selling food, you may accidentally cause food poisoning to your customers. Lawsuits related to food poisoning are not cheap, and can easily cost you tens if not hundreds of thousands of dollars. Food stalls are also vulnerable to risks like fire and water damage.

After you’ve gotten your license, make sure that you protect your food stall business. We offer the most affordable and comprehensive business insurance plans in Singapore. Click the links below to get insured online, in just 3 mins!

 

 

10 Common Commercial Lease Terms in Singapore: Best Guide

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commercial lease terms

If you’re renting a commercial space, you’ll need to sign a commercial lease agreement. However, lease agreements are often written with a confusing amount of legal jargon. Also, you might not know which important lease terms to look out for, and what they even mean. If it’s your first time renting a commercial space, the whole process might seem overwhelming and confusing. We wrote this guide to help you understand a commercial lease agreement easily. Here are the 10 most common commercial lease terms you’ll find in Singapore, and what they mean for you & your business.

What is a commercial lease agreement?

A commercial lease agreement is a legal contract between a tenant (the business renting a space) and a landlord (the owner of the space). A commercial lease agreement sets out the key terms of the rental agreement, such as the amount of rent, deadlines for rent, who is responsible for fixing damage to the property, and more.

Since they are contracts, commercial lease agreements are legally binding. If one party breaks the terms of the commercial lease agreement (e.g. a tenant breaking the lease early, or a landlord not repairing the building when they were supposed to), the party who suffers a loss can sue the other party for damages.

What are the most common terms in commercial lease agreements?

Most landlords will provide the following terms in their commercial lease agreements:

10 Most Common Commercial Lease Terms in Singapore

No.

Lease Term

Explanation

1Lease durationSpecifies the exact period (e.g. 24 months) that the lease agreement will run for
2RentSpecifies the exact amount (e.g. SGD 10,000/month) that the tenant must pay
3Rent review clauseSpecifies when the landlord can review (i.e. increase) the rent during the lease period
4Deposits and other fees payable Specifies the exact amount of security deposits (e.g. 1 months’ rent)Also specifies any other fees payable, such as agent fees
5Utility and other maintenance feesSpecifies who is responsible for utilities (e.g. water, electricity) and maintenance (e.g. painting the building, maintaining electrical wiring, etc.)
6RenovationsSpecifies the tenant’s responsibilities when carrying out renovation work, to ensure the premises is not damaged
7Sub-leasingSpecifies whether sub-leasing (a tenant renting their space to someone else) is allowed, and if it is allowed what conditions must be fulfilled by the tenant
8ReinstatementSpecifies the responsibilities of the tenant to restore the property to its original condition when the lease expires
9Illegal employment of foreign workersProhibits tenants from engaging in illegal employment practices with foreigners
10Commercial insuranceSpecifies the type of commercial insurance the tenant must purchase (e.g. public liability insurance, commercial property insurance), and the amount (e.g. no less than $500,000)

1. Lease Duration

This term will specify the exact duration of the commercial lease.

Lease terms depend on the nature of your commercial space (e.g. office, F&B, retail, industrial, etc.), and the size of your space. Leases for spaces under 3,000 square feet can run between 1-3 years. Larger spaces above 3,000 square feet generally run longer, from anywhere between 3- 6 years or more. 

Lease renewal option

Landlords will typically grant tenants a renewal option. This is a right, but not an obligation, to extend your lease beyond the initial period. For instance, if you sign a 3-year initial lease with an option for a 3-year renewal, you can lease the space for 6 years, before you have to sign a brand new lease agreement (which may come with different terms than your initial lease agreement).

Lease renewal options benefit both tenants and landlords. A renewal option is good for tenants because it prevents them getting forced out by another business, who could outbid them on rental offers and take over their space. It’s good for landlords because it offers tenants an incentive to stay on, thus maximising rental profits. 

Early lease termination

This clause specifies penalties payable if tenants terminate the lease early. In the vast majority of commercial leases (as with residential leases), the tenant will remain liable to pay the rent for the remainder of the lease, unless they can find another tenant to replace them. Breaking a lease early is a breach of contract, so landlords have the right to sue such tenants for damages.

2. Rent

This will state the exact amount of rent payable to the landlord. This is sometimes also termed “Gross Rent”. Rent is usually payable on a monthly basis.

Rent will usually comprise the following:

  1. Base Rent: This is based off the square footage of your premises, plus
  2. GST: Prevailing Goods and Services tax, plus
  3. Service Charges: These are maintenance charges levied by the landlord, for expenses like maintenance, security, fire prevention, repairs, etc.

Most commercial leases will also have a condition that service charges can vary from time to time during the lease, depending on the exact costs incurred by the landlord. If you’re a tenant, make sure you have sufficient financial cushion to weather any potential increases in service charges.

Rent-Free Fitting Out Period

It’s common for landlords to allow tenants a rent-free period while they renovate their premises. Usually, most lease agreements will provide the tenant with 1 month of free rent during this initial fit-out period.

3. Rent Review Clause

Longer leases (those which last for 4 to 6 years, or more) frequently will contain this clause. This allows the landlord to adjust the rent, according to prevailing market rates. This prevents the landlord being locked into an agreement where tenants pay below-market rent.

4. Security Deposits, and Other Fees

This term will specify the exact amount of security deposit the tenant has to place with the landlord, along with the tenant’s responsibility for other fees. Most lease agreements will ask for between 1-3 months worth of rent as a deposit. Longer-dated leases that will run for many years may ask for 6 months of rent (or more) as a deposit.

Security deposits protect the landlord against tenants who may breach the terms of the lease agreement. For instance, tenants may inadvertently cause damage to their premises. Damage can easily occur during the renovation process, or during the day-to-day running of the business. If there is damage, the landlord can deduct the cost of repairing the property from the security deposit. Also, if the tenant breaks their lease agreement early, the landlord can deduct the security deposit as compensation for lost rental income. 

Other Fees: Stamp Duty

Tenants of commercial properties in Singapore must pay stamp duty. Stamp duty is payable to IRAS.

Average Annual Rent (AAR)Stamp Duty Rate
AAR under $1,000Exempted
AAR over $1,000
Lease shorter than 4 years0.4% of total rent for the duration of the lease
Lease longer than 4 years0.4% of 4 times the AAR for the duration of the lease

 

Example: A restaurant rents a commercial premises for 2 years. The Average Annual Rent (AAR) is $120,000 ($10,000/month, times 12 months). Since the AAR is over $1,000, but the lease is shorter than 4 years, the stamp duty payable is 0.4% of the total rent over the 2-year lease.

Total rent payable over 2-year lease: $240,000 ($120,000 per year, times 2 years)

Stamp duty rate: 0.4%

Stamp duty payable: $960

The restaurant must therefore pay $960 in stamp duty to IRAS.

5. Utility and Maintenance

This term specifies who is responsible for paying utility bills (electricity, water, internet, phone, etc.). Under most commercial lease agreements, the tenant is usually responsible for all these utility costs.

However, maintenance costs are usually borne by the landlord. Maintenance refers to services like ensuring that common areas are kept in proper condition, maintaining the exterior of the building, ensuring that the electrical wiring is working properly, etc.

6. Renovations

Renovations have the potential to cause serious damage to the premises if not carried out properly. As such, commercial lease agreements will specify that renovations are to be done only in compliance with specific contractual requirements. For instance, commercial lease agreements may prohibit tenants from removing or altering basic fittings like pipes, air-conditioning ducts, electrical wiring, structural walls, and other built-in elements.

Renovation deposits

Commercial leases commonly will ask you for a renovation deposit. This is a sum of money held by the landlord while you’re carrying out renovation works. This acts as a form of security in case you damage the landlord’s property during renovation. The deposit will be returned to the tenant after renovations are done, and once the landlord has ascertained that no damage has been inflicted upon the commercial property.

Sometimes, instead of a cash deposit, the landlord may accept an Insurance Security Bond. This frees up cash flow for the tenant, especially if the renovations are extensive and the deposit sum required is large.

7. Sub-Leasing

This term will specify whether or not the tenant is allowed to sub-let their commercial space. For instance, an F&B space might sub-let a portion of their premises to a bakery operated by a 3rd-party. Generally, most commercial lease agreements will prevent the tenant from sub-letting their premises, unless the landlord has given explicit consent.

Sub-letting fees

If your commercial lease allows you to sub-let your space, the lease may also specify sub-letting fees which are chargeable. Read your lease carefully to ascertain the precise sub-letting fees you have to pay, if you sublease your space.

Sub-letting restrictions

Some landlords may restrict the types of tenants that you can sub-let your space to. For instance, some landlords may only allow you to sub-let to companies that you are a majority shareholder of, or another company that is your majority shareholder. There may also be restrictions on the types of businesses that you can sub-let to – for instance, some landlords may not allow you to sub-let to retail or F&B businesses.

8. Reinstatement

This specifies the requirement for tenants to reinstate the premises to its original condition once their lease expires. Most commercial leases will contain this requirement.

The commercial lease agreement will also specify the extent of reinstatement that needs to be performed when handing the property back to the landlord. Usual examples of such requirements include:

  • Tenant must remove all their furniture, equipment, and other personal belongings
  • Tenant must remove all their masonry/carpentry work (e.g. parquet flooring, brick flooring, cabinets) which they installed
  • Tenant must remove all additional plumbing work (e.g. new pipes installed by the tenant)
  • Tenant must remove all additional electrical and data cabling (e.g. new lighting/ethernet/telephone points and cables installed by the tenant)
  • Tenant must repaint all walls and ceilings to their original colour
  • Tenant must repair any damage to the premises that they caused (e.g. cracked walls)
  • Tenant must remove all partitions and false ceilings they installed
  • Tenant must restore all fire safety equipment to their original locations (e.g. moving fire extinguishers to a different location to accommodate office desks)
  • Tenant must remove any additional fire safety equipment they installed (e.g. new fire extinguishers or smoke detectors installed by the tenant)
  • Tenant must clean premises and ensure no refuse is left behind

Also, reinstatement clauses may state that the landlord has the right to appoint a specific reinstatement contractor, at the tenant’s cost. This means that as a tenant, you won’t have control over the exact cost of the reinstatement. Even if you find a cheaper contractor to carry out the reinstatement, you won’t be able to select them. If your lease agreement contains this clause, you may wish to consider negotiating on this point with the landlord. This can avoid nasty surprises later on if you get handed a large reinstatement bill, simply because the contractor knows you have no choice but to accept their prices!

9. Illegal Employment of Foreign Workers

This term is most common in F&B and industrial lease agreements. Landlords will insert this clause to protect themselves from legal liability in case their tenants hire illegal workers. This term prohibits tenants from engaging in unlawful hiring practices for foreigners.

10. Commercial Insurance

In most commercial lease contracts, landlords will ask tenants to carry the following types of insurance:

  • Public Liability Insurance: Coverage amounts requested typically range from $1 million to $2 million, depending on the type and size of the commercial space. Click here to buy this insurance online in 3 minutes, from $9/month.
  • Commercial Property Insurance (a.k.a. Property/Industrial All Risks Insurance): Coverage amounts requested typically range from $100,000 to $500,000. Click here to buy this insurance online in 3 minutes, from $12/month.

Public Liability Insurance protects tenants from lawsuits related to injury or property damage caused to third-parties. For instance, if a customer walks into your retail shop, slips and falls, they can sue you for causing personal injury. Public Liability Insurance would pay for your lawyer’s fees and damages. 

Commercial Property Insurance protects your premises against physical risks like fire, explosions, certain kinds of water damage and other major risks. 

Protecting your commercial premises and your business

After you’ve gotten your commercial space, make sure that you protect your business. Provide is the easiest, quickest, and most affordable platform to get business insurance in Singapore. Click the links below to get insured online, in just 3 mins!