Renting an office or business premises is a big step for business. Finding the right place is important and yet a complicated process, some basic information about leasing property that need to consider:

(1) Permitted usage of the properties
(2) Facility requirements for business
(3) Size of the office premises
(4) Location
(5) Proximity to your target customers
(6) Affordable rental range

A Tenancy Agreement or Lease is a binding legal document which has important implications on the committed rights and obligations on the part of both landlord and tenant. The contents of a Tenancy Agreement will normally include the period/length of the tenancy, rent, payment period, deposit, use, renewal terms, termination terms and other usual terms. The terms of a Tenancy Agreement must be considered the following things before signing.

(1)      Capacities  of the parties

The capacities of the parties entering into the Lease/Tenancy Agreement also affect the formalities of execution. If the party to a Tenancy Agreement is a sole proprietorship, a partnership or a limited company, the chop or common seal of the signing party also has to be affixed onto the Tenancy Agreement together with the signature of the signatory, also has to be executed in accordance with requirements stipulated under the company's Articles of Association.

 
(2)      Primary use

A tenancy document may contain a clause which specifies that the property is only to be used for domestic or non-domestic purposes (or in accordance with the uses permitted by law/regulations). If the tenant runs a shop in a residential property, the use may constitute a breach of such covenant.

(3)      Rates and Management Fees

A lease or tenancy agreement shall deal with the issues as to whether the tenant shall be responsible for payment of management fees, rates, government rent or other charges (such as utilities and telecommunication services).

If existing utility accounts are maintained by the landlord in respect of the unit, the landlord should arrange as to whether such accounts shall be transferred or replaced by another account under the tenant’s name. The tenancy agreement should also state as to upon termination of the lease how outstanding amounts due should be paid, such as deduction from the rental deposit; and if the tenant has paid any ‘deposit’ to such accounts maintained by the landlord, when and how such deposit shall be returned.

(4)      Repair and Maintenance Obligations

The obligation to repair/maintain the subject property is mainly a matter of private contract between the landlord and the tenant. This means, in the absence of any express agreement between the parties with the obligation to repair/maintenance, there is generally no implied duty under a tenancy agreement to compel either the landlord or the tenant to carry out repairs or maintain the property in a fit and habitable state.

(5)      Stamp Duty

A signed tenancy document is usually executed in counterparts, both of which are forwarded to the Stamp Office of the Inland Revenue Department for stamping within 30 days after the date of execution.

The rate of stamp duty varies with the term/period of the tenancy. No law specifies whether the landlord or the tenant should pay the stamp duty. Therefore, the parties to a Tenancy Agreement can freely agree between themselves on their respective shares of stamp duty. In most cases, the parties will pay the stamp duty in equal shares.