Diplomatic Clause Singapore: How does it work?
-
Sean
- June 1, 2018
- 5 min read
5 min read
Renting in Singapore as a foreigner can sometimes be a bit daunting as there have been many complaints from tenants that rental in Singapore is generally more pro landlord.
Annoying aspects of renting in Singapore from r/singapore
Not to mention, if this is your first time renting you are bound to come across a list of unfamiliar terms in your Tenancy Agreement (TA). So if you have already viewed a property and managed to secure a price you are comfortable with, it is now time to go through all the rental clauses in the TA (or make sure that your needs are adequately protected). One of the most important terms that you will have to take note of is the diplomatic clause.
So what is the diplomatic clause exactly?
As you would know, no job in the world is completely secure or permanent. So if you managed to secure a job in Singapore, there is every possibility as well that you might get transferred out or worse yet, fired! In such circumstances, having to cover the rest of your rental contract will surely be a pain that you would not want to deal with. Thus the importance of the diplomatic clause!
Most tenancy agreements of two years will include a diplomatic clause as a safety net for you, so in the unfortunate event that such cases do occur, at the very least you will not have to worry about unpaid rent. Let us look at what a typical diplomatic clause would appear as:
Provided the Tenant has occupied the premises for a minimum period of TWELVE (12) months, the Tenant may exercise the diplomatic clause by notifying the Landlord TWO (02) calendar month notice in writing of the Tenant’s intention to terminate the Tenancy or TWO (02) month rent in lieu of such notice if the occupier of the premises and employee of the Tenant shall be required by the Tenant to leave Singapore permanently on a job transfer or if the said occupier’s employment with the said Tenant is terminated for any reason whatsoever. Provided always that the documentary evidence shall accompany the written notice providing the event relied up by the Tenant in the said written notice. Any pre-mature termination that does not satisfy the conditions to exercise the Diplomatic Clause will result in forfeiture of the Security Deposit, and the Landlord will reserve the rights for further compensation.
If that is too many words for you to handle, let us break it down.
- If you are have to leave Singapore due to a job transfer or terminated employment, you are able to exercise the diplomatic clause
- You have to give at least 2 months notice or you will have to pay the 2 months notice in rent
- You will have to stay for a minimum of 12 months in order for the diplomatic clause to kick in
- You will need to provide evidence to prove the reason for relocation/termination
So the important point you will have to take note here is the minimum stay of 12 months. Most tenancy agreements will have this minimum stay as this is of course to protect the landlords interest as well. This basically means you can only give notice after 12 months coupled with the 2 months notice so 14 months in all. So the timeline would be something like:
Signed tenancy agreement: 10th January 2018
Notice of termination: Before 10th December 2018
Handover: Before 10th February 2019
There is also usually an additional clause inserted along with a diplomatic clause called the reimbursement clause. This just means that you as the tenant would be liable to reimburse the landlord of the agent fees on a pro-rata basis. Again, depending on how desperate the landlord is to rent out the unit, you can always try to negotiate on this.
What other variations of the diplomatic clause are there?
It is also worth pointing out here that there are cases where a landlord will accept a diplomatic clause on a 1 year lease (or even 2). This means a minimum of 6 month stay instead of 12. The best case scenario would be a 6+2 month diplomatic clause on a 2 year lease. Of course not every landlord will accept this, but it is always worth trying to negotiate for better terms!
Another point that you should take note of is during the negotiation of the TA and if you discover that there is no diplomatic clause included from the beginning, it might be a warning sign of a landlord that is not completely forthcoming or reasonable in any dealings. Of course, it could always be a genuine lapse but chances are if the landlord is trying to squeeze you from the beginning it can only get worse in any negotiations at the end. So choose wisely!
As always, feel free to leave a comment below or you can always reach us at hello@stackedhomes.com! Check out our rental guide if you want to make your rental journey in Singapore as fuss free as possible! If you are worried about your rental deposit here is our take on it!
[…] of the Security Deposit, and the Landlord will reserve the rights for further compensation. ーhttps://stackedhomes.com/editorial/diplomatic-clause-singapore/ […]
Hi! I was wondering if the diplomatic clause would cover the situation where the tenant voluntarily resigns, instead of having his employment terminated by the employer?
Hi Ian, will drop you an email about it as we’ll need to see the clause. Thanks!
Hi Ian, I would like to get the answer for the same question. Please let me know. Thank you.
Hi Jayaraj, it depends on the clause. If it states that the relationship between the employer and the tenant is ceased, or terminated, it shouldn’t matter how – voluntary or not, unless stated otherwise
Hi My friend had contracted which denoting the tenant shall compensate 3 months rental fee at least regardless of the stay duration. Now he need to leave Singapore and relocate to China soon and having trouble due to this clause. is there any legal protection to protect tenant against those unfair contract?
Hi Park, will drop you an email about this. Thank you.
Hi!
I’ve purchased a unit with tenancy, and the tenants would like to terminate the tenancy early based on the diplomatic clause.
There is also a reimbursement agent fee clause in the tenancy agreement. May I check if the tenants are required to pay us the commission fees on a pro-rated basis, please?
Thanks so much!
Hi Casina, thanks for your question. It wouldn’t make sense to collect the agent fees or marketing-related costs here because you didn’t incur them to begin with – this was incurred by the previous landlord/owner.
I have had an initial 2 year lease and then two extensions of one year each on the same property. The Landlord now wants to issue another 2 year lease when it is renewed and insist on the minimum 12 months before the Diplomatic Clause kicks in. Can the Landlord insist on this ?
Hey Michael, this is really negotiable. The landlord can insist on it, but you can also reject the terms and find another place to stay. Generally it’s acceptable for tenants to stay a minimum of 12 months, but considering that this is an extension, you can argue not to have this. This clause is set up to protect the landlord from having to pay so much in initial cost to procure you as a tenant. It is also set up so that you can break the lease after 12 months due to unforeseen circumstances. If this is on a rolling yearly basis, you could argue that that point is moot, and hence unnecessary. So this would just depend on your relationship with the landlord. If you’ve been paying on time and treating the place well, you should have more leverage – landlords are deathly afraid of tenants that don’t pay on time, or treat the place badly.
Hi, if there will be 2 tenants who signed the Letter of Intent, would that mean the diplomatic clause will only be applicable if both the signatories needs to relocate?
Hi Sean,
The diplomatic clause in my lease agreement is worded as under.
“Provided the Tenant has occupied the premises for a period of Six (06) months, the Tenant may exercise the diplomatic clause by giving the Landlord One (01) month notice of the Tenant’s intention to terminate the Tenancy or One (01) month’s rent in lieu of such notice if the Tenant shall be required to leave Singapore permanently or the Tenant’s employment is terminated for any reason whatsoever. The said notice must be accompanied by documentary evidence providing the event relied upon by the Tenant in the notice.”
If the lease was signed on 10-Jan-22 , then the 6th month would fall on 10-Jul-22. The tenant wishes to depart permanently Singapore on 10-May-22 and he has served me notice on 02-March-22.
Does this mean that,
(1) the rent would be payable till 10-May-22 and he will forfeit the security deposit ( equal to one month rent) only?
OR
(2) rent would be payable till 10-Jul-22 (6th month) even though he vacates on 10-May-22, but the security deposit can be offset from the rent in his favour if there is no dispute on the same.
Thanks
Hi Ian, question on the diplomatic clause applicability. We have been in the same property for nearly 5 years, we renewed just under 3 years ago, and at the end of the 2 year period requested an extension for 1 further year. Now we are being moved back to Australia and whilst its 1 month shy of the year, requested to invoke the diplomatic clause. I am being told by the landlord this doesn’t apply because we haven’t done a year, but I would have thought our 2 years previously would count?
Hi Janice! Just a disclaimer – we’re not lawyers nor can I respond in the capacity of a legal professional by any means, this is just sharing my experience. The diplomatic clause is meant to protect the landlord in the event that you cancel too early, and also gives you the option to leave before the agreement expires. Landlords typically incur costs to procure a tenant. Some agreements are done such that the subsequent agreements are more of a renewal rather than a new tenancy agreement. The landlord can argue that you have signed a new agreement, and so agreed to a new diplomatic clause. However, in substance, it’s essentially a renewal. You could check if the landlord incurred any cost in extending your stay and offer to pay for that cost, assuming the landlord paid the agent renewal fees.
How does the diplomatic clause work for foreign students? What are the relevant proofs they should be showing the landlord if they have decided to invoke diplomatic clause?
Hey Ian, perhaps the boilerplate clause could be edited to reflect their circumstances, as the diplomatic clause usually relates to termination of employment. It’s to protect them in the event that somehow, they aren’t able to continue your studies here after they have stayed for a minimum period specified in the contract. The proof really depends on the reason for exiting the rental arrangement.