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Why Paid Up Capital May be Important When it Comes to Renting Office Spaces

Posted by on June 30, 2022

Whenever you are looking out for an office space for rent in Singapore, you may come across requirements such as paid up capital and may wonder why paid up capital is important.

Landlord’s Consideration

While every tenant’s goal is probably to source for the the most suitable office unit at a reasonable price, the landlord’s goal would probably be to source for the most suitable tenant at the best possible rental rate.

While the objectives of the tenants and landlords tend to differ, it is important to note that the profile of the tenant is usually one of the landlord’s consideration. While the landlord has little information about the tenant, the landlord will still be able to find out some basic information such as the paid up capital of the tenant, when the company was incorporated etc from the ACRA business profile of the tenant.

Likewise, the prospective office space tenant may also consider to take up the lease based on the profile of the landlord.

Initial Impression Counts

With some basic information such as paid up capital, when the company was incorporated etc, the landlord would be able to form an impression of the prospective tenant to see if the prospective tenant’s profile matches with the landlord’s requirements. For example if the paid up capital of the prospective tenant is above one hundred thousand or two hundred thousand, a landlord would be more assured than if the paid up capital is a dollar or two. The higher the paid up capital, the more assured the landlord will be. If the proposed terms and tenant’s profile are deemed favourable by the landlord, only then will a deal be concluded and both parties will proceed to sign the rental documents.

Landlord’s Consideration & Decision

Besides, it is only natural that there will be competition from other prospective tenants and when there is competition, the paid up capital of a prospective tenant can be the difference between a deal or no deal since there is only so much information that is known to the landlord unless the landlord has leased to the tenant before.

Top Up Security Deposit May Be Required

In some instances, when paid up capital falls below a certain range, the landlord may request for a top up security deposit if the landlord deems necessary. This acts as additional assurance to the landlord unless the paid up capital of the prospective tenant can be increased to justify that the company has enough business capital to fund the monthly rents.

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