Whether you are a landlord or a tenant in Singapore, you may have come across the term LOI which refers to the Letter of Intent. An LOI is a document that outlines the key terms and conditions that the tenant and landlord have agreed upon before formalizing the rental agreement in a Tenancy Agreement (TA).
Who issues the LOI?
An LOI is issued by the tenant or tenant’s agent.
In the event that the tenant doesn’t have an agent, the LOI can also be prepared by the landlord’s agent, with terms verified and endorsed by the tenant, then eventually presented to the landlord for acceptance.
What are the advantages of having an LOI?
An LOI is used to express the tenant’s serious interest in renting a property and outlines the basic terms of the rental arrangement.
It clarifies the expectations of both parties and reduces the likelihood of misunderstandings during the Tenancy Agreement (TA) finalisation process.
With the LOI, the landlord has the assurance to stop looking for prospective tenants and viewings, prior to entering into the TA process.
Once both parties agree on the terms outlined in the LOI, a formal TA is drafted. The terms from the LOI are incorporated into the TA, which is the legally binding document that governs the rental relationship.
Especially for whole house rentals in Singapore, landlords prefer not to skip the LOI in the rental process.
Do tenants need to pay a deposit along with the LOI?
Yes, in Singapore, typically a good faith deposit equivalent to a one or two-month rental amount is paid by the tenant to the landlord, along with the LOI.
When the TA is signed and endorsed, this deposit typically will be used to off-set the first month’s or first two months’ rental.