Changing the Nasty Property Rental Market | Singapore Property News

Changing the Nasty Property Rental Market

30 Apr 2015
How To

The Nasty Rental Market

The rental property market can be nasty.

The very nature of the contractual relationship, in which one party owns the property and the other lives in it, means that there’s a built-in, existential tension between the landlord and the tenant.

The typical landlord is distrustful of the tenant.  There’s no innocent until proven guilty here.  The landlord reasons that since the tenant does not own the property, he or she will abuse it. 

Guilty until proven innocent. 

Believing this, the landlord seeks to protect the property by insisting on a draconian lease agreement that protects the landlord at the expense of the tenant.

For example, these contracts introduce high deductibles for things that can break, even if they are old and have suffered from normal wear and tear.   Also, they include security deposits that usually translate to three months’ rent, which, in Singapore, is real money.

Whenever contracts and lawyers are involved, the relationship, by definition, is an adversarial one that pits one party against the other.

The typical lease agreement is a source of anger for the tenant.  The security deposit causes outright outrage.

First, most tenants find it painful to write a cheque for three month’s rent that doesn't go towards rent.  Young tenants, in particular, are likely spending most of their income on housing.  Having to pay the equivalent of three month’s rent is the one thin mint that is the difference between a pleasant meal and one that leads to vomiting.

Second, some tenants view the security deposit as a sort of usury fee in which the landlord has extorted out of them.  Yes, the landlord’s agent claims three months is “market practice,” but that doesn't lessen the feeling of extortion.

As a result, the tenant takes the same approach as the landlord of guilty until proven innocent.  Most tenants distrust their landlords, believing they are greedy, money-grubbing owners whose sole purpose in life is to extract as much rent as possible out of the backside of the renter. 

Tenants are convinced that they are powerless against the landlord and the tenancy agreement, and, as a result, they believe that they will see little of the security deposit returned.

The ubiquitous and rampant distrust between a landlord and a tenant is by no means the foundation of a good relationship.

So how can landlords and tenants overcome the inherent nastiness of their relationships?

First, start with SRX Property’s rental X-ValueTM.  By using X-Value to set the rent, the two sides can finalize the price by using facts.  These facts help break down distrust. 

Before X-Value, the landlord worried about charging too little and the tenant worried about getting ripped off.  Now that pricing is transparent, it doesn’t have to be a source of mistrust or distrust.

Second, while legal contracts can cause distrust, they are necessary as they are based on experience.  Yes, there are cases in which tenants have impaired property.  Yes, some landlords have been extortionists.  Therefore, there’s no point in arguing to do away with contracts.  However, there are things that can be done to make contracts less adversarial. 

For example, both the landlord and tenant should agree on the condition of the home as part of the tenancy agreement.  Include pictures and documentation of the home’s condition in the contract. 

Also, in writing, agree when the landlord can use the security deposit to pay expenses.  For example, will the security deposit be used to repainting walls or refurbishing floors or will those repairs be borne by the landlord?

Finally, both parties to a rental agreement should do the right thing and live up to the spirit of the relationship.  Tenants should treat the home as if they owned it.  Landlords should treat their tenants with the respect of a client paying for a service. 

In any relationship, no piece of legal paper can substitute for mutual respect.  

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