Option to Renew Clause & How It Works
Whenever we enter into a lease agreement for office spaces, we may come across the option to renew clause within the tenancy agreement.
Depending on the tenancy agreement, this clause may or may not be included in the tenancy agreement and this would usually depend on the type of lease or the landlord’s usual leasing practice.
Option to Continue The Lease
With the option to renew clause in the tenancy agreement, it would mean that the tenant has the option to continue the lease. This is provided that the landlord and the tenant mutually agree on the terms of lease for the renewal and signs a new renewal agreement.
When to Notify for Renewal
The tenant may usually notify the landlord a few months prior to the lease expiry depending on the stipulated number of months stated in the tenancy agreement prior to the lease expiry date. If the tenant does not inform the landlord on the tenant’s intention to renew the lease within the stipulated period, the landlord may choose to look for other suitable tenants and the tenant may need to reinstate the office space to its original condition if the lease is not renewed depending on what was agreed in the tenancy agreement.
Rental Rate and Terms to Be Discussed & Mutually Agreed
As for the rental rate and terms for the renewal such as the lease term, it is to be mutually discussed and agreed between the landlord or the landlord’s agent and the tenant. Stamp duty is also applicable and payable by the tenant to the Inland Revenue of Singapore or IRAS. The stamp duty amount can be calculated by using the stamp duty calculator provided on IRAS website and is usually due within 14 days from the date of agreement.