Key takeaways
- Check the unit is approved for your F&B use before you sign anything. URA and HDB have separate processes.
- Qualifying retail leases signed from 1 February 2024 must follow the Code of Conduct for Leasing of Retail Premises in Singapore, which covers deposits, rent formulas, costs and early termination.
- Gross rent usually means base rent plus service charge plus A&P charge. Under the Code, adjustments to service charge or A&P must not raise the overall gross rent.
- Stamp duty is generally 0.4% of total rent for a lease of 4 years or less, and must be paid within 14 days of signing in Singapore.
- Inspect grease trap, exhaust, power, gas and water points before you commit. They drive renovation cost. Our guide to grease traps for F&B outlets explains what PUB requires.
This guide is general information, not legal advice. Lease terms are binding contracts. Consult a lawyer before you sign a letter of offer or lease, and check the latest rules with each agency.
Types of F&B space in Singapore
Whether you are looking at a café shop for rent or a coffee shop for lease, the kind of space you rent decides who your landlord is, what approvals apply and how much negotiating room you have.
| Space | Typical landlord | What to watch |
|---|---|---|
| Mall unit | Mall owner or REIT | Gross rent with service and A&P charges, GTO rent, fit-out manual, daily sales reporting |
| Shophouse | Private owner | Approved use for the specific floor, exhaust routing, condition of the building |
| HDB shop | HDB or a private owner of an HDB shop | HDB approval for your trade, HDB renovation rules and working hours |
| Coffee-shop stall | Coffee-shop operator | Shared facilities, operator’s rules on drinks and opening hours, rental terms |
| Food court stall | Food court operator | Operator’s POS and payment rules, sales-based rent, fixed stall layout |
The Code of Conduct lists F&B examples within its scope, including restaurants, cafés, coffee shops, eating houses, snack bars, food courts, fast-food restaurants, outdoor refreshment areas, push carts and food kiosks. Whether a particular arrangement is a qualifying lease depends on the Code’s tests below.
Check the approved use before you sign
A lease does not make a unit legal for F&B. The approved use comes from the planning authority.
- Private units and shophouses. URA’s change of use guidance says changing a unit’s approved use may need planning permission, assessed case by case, with a $500 processing fee and about 10 working days. URA’s criteria for restaurant use set out where new eating houses are unlikely to be approved. You can check a unit’s approved uses on URA SPACE.
- HDB shops. HDB’s change of use page says trades in HDB commercial units need HDB’s approval, and publishes a list of permissible trades.
If approval is not yet in place, ask for the lease to be conditional on it, so you are not paying rent on a unit you cannot use. Our guide to opening a shop in Singapore covers the change of use steps in more detail.
Key lease terms explained
Tenure and renewal option
Many retail leases run for a fixed term with an option to renew. Look at whether the renewal rent is fixed, capped or “at market”, and when you must give notice to exercise the option. Match the term to how long you need to recover your fit-out cost. Retailers comparing unit types can read our guide to mall, HDB and shophouse shop rentals.
Rent-free fit-out period
Some landlords give a rent-free or reduced-rent period for renovation. Check whether service charge and A&P are still payable during it, and what happens if approvals delay your opening.
Security deposit
The deposit is held against your obligations and returned at the end, less any deductions. The Code sets a general cap for smaller, shorter leases (see below). Ask whether part can be given as a bank guarantee.
Gross rent, service charge and A&P
The Code describes gross rent as typically base rent, service charge and an advertising and promotion (A&P) charge. Compare units on gross rent per month, not base rent alone. Then check it against projected sales with our guide to occupancy cost.
GTO rent
In a GTO lease, part or all of the rent is a percentage of your sales. The lease defines gross turnover, how you report it and how often. Your POS needs clean daily sales reports. See our guide to mall GTO sales reporting.
Reinstatement
Many leases require you to return the unit to its original or bare condition at the end. For an F&B unit, that can mean removing exhaust ducts, kitchen fittings and grease trap works. Ask for a photographic record of the handover condition, and try to agree what “reinstatement” means before you sign.
Assignment and subletting
Most leases restrict assigning the lease or subletting without the landlord’s consent. If you are taking over a business with its lease, see our guide to buying an existing F&B business. If you may sell the business or bring in a partner operator, negotiate the consent conditions now.
Early termination
Leases rarely let a tenant walk away early. If you are planning to stop trading, see how to close a restaurant properly. Read the termination clauses for both sides, including any landlord right to terminate for redevelopment, and what compensation applies.
The Code of Conduct for Leasing of Retail Premises
The Code of Conduct for Leasing of Retail Premises in Singapore is maintained by the Fair Tenancy Industry Committee (FTIC). The current third edition took effect on 1 February 2024 and is read together with the Lease Agreements for Retail Premises Act 2023. MTI’s announcement of the Bill explains that the law mandates compliance with the Code for qualifying leases.
Who it applies to
A qualifying lease is a lease, extension or renewal of retail premises signed on or after 1 February 2024, for a period of one year or more. Option periods are ignored when counting the year. “Lease” includes a licence, sub-lease and sub-licence. The Code lists locations including shopping centres, office buildings, mixed-use developments, shophouses and shop flats, hotels, community centres, MRT stations, bus interchanges and airports.
What it covers
- Good faith. Part A requires both parties to negotiate honestly and fairly.
- Security deposit. As a general rule, no more than 3 months’ gross rent for units of up to 5,000 sq ft on leases of up to 3 years. Up to 50% can be provided in a non-cash form, such as a bank guarantee, if you tell the landlord before signing. The cap does not apply where 3 months’ gross rent is $500 or less.
- No cover-all personal guarantee. The lease must not include a cover-all clause making directors, shareholders or employees personally liable for the tenant’s default.
- Service charge and A&P. The landlord may adjust them during the term only if overall gross rent does not increase.
- Rent formula. Generally a single rental computation, such as base rent, a percentage of GTO, or base rent plus a percentage of GTO. “Whichever is higher” formulas need a declared, mutually agreed exception.
- Costs. Each party can appoint its own lawyers, and the landlord must not require a panel. There must be no catch-all clause for unspecified third-party costs. Sales audits can only be required where rent includes GTO rent. Public liability insurance cannot be required above S$3 million or the landlord’s own limit, whichever is lower, for units up to 15,000 sq ft.
- POS integration. Where the landlord requires POS integration, the Code sets 50:50 cost-sharing rules in several cases.
- Landlord pre-termination for redevelopment. At least 6 months’ notice, compensation based on the agreed value of your fit-out less straight-line depreciation, and no reinstatement.
- Tenant pre-termination. Allowed in two exceptional conditions: your brand principal becomes insolvent, or you lose distributorship or franchise rights through no fault of your own. Six months’ notice (or gross rent in lieu) and compensation equal to the security deposit apply.
- Floor area. For new lettings, the landlord provides a registered surveyor’s certificate of the area before handover (not required for 300 sq ft or less), with rent adjusted if the area differs.
- Exclusivity and sales targets. Exclusivity clauses and sales performance penalties are generally not allowed unless both parties agree an exception.
- Data transparency. Landlords collecting sales data for GTO rent must share trade-category sales metrics.
The landlord must give you a checklist with the first draft of the lease, flagging any clauses that deviate from the Code. The Code also says the tenant must do its own due diligence. Agreed deviations must be declared to FTIC within 14 days of signing, and FTIC’s page says disputes escalate to the Singapore Mediation Centre.
Stamp duty on your lease
Lease agreements in Singapore attract stamp duty. According to IRAS’s renting a property page:
- Leases with an average annual rent of $1,000 or less are exempt.
- For a lease of 4 years or less, duty is 0.4% of the total rent for the period of the lease.
- For a lease of more than 4 years, or an indefinite term, duty is 0.4% of four times the average annual rent.
- Rent includes advertising and promotion charges, furniture and fittings charges, maintenance charges, service charges and other charges, excluding GST. Duty is based on the higher of contractual and market rent.
- For a GTO lease, you estimate the GTO and include the additional rent in the calculation.
IRAS’s who should pay page says to check the agreement first; where it is silent, the Stamp Duties Act names the lessee or tenant for lease documents. Its basics page says documents signed in Singapore must be stamped within 14 days.
Hypothetical example: a 3-year lease at a gross rent of $12,000 a month has total rent of $432,000, so duty would be $1,728.
The “stamping fee” is stamp duty. When agents or landlords mention a stamping fee for a tenancy agreement in Singapore, they usually mean this duty. IRAS’s stamp duty basics page says you can stamp documents through the myTax Portal or at the e-kiosks at the Taxpayer & Business Service Centre, and that a penalty of up to 4 times may be imposed on documents that are unstamped, stamped late or insufficiently stamped. The renting a property page adds that the Stamp Certificate proves your tenancy agreement has been duly stamped, so keep it with the lease.
Site due diligence for F&B premises
Check the building before the paperwork. These items decide whether your kitchen works and what renovation will cost:
- Grease trap. PUB’s grease trap page says all food establishments need one, with NEA and PUB approval before installation. Is there one, and is it sized for your menu?
- Exhaust. NEA’s Code of Practice on Environmental Health requires kitchen exhaust to discharge above the roof, or at an outdoor point not facing adjacent buildings where that is not practical. Is there an existing duct route?
- Power load. Ask for the unit’s electrical capacity and compare it with your equipment list. Upgrades can be slow and costly.
- Gas. Is piped gas available, or will you use cylinders or go electric? Our guide to piped gas versus LPG covers approvals and costs to ask about. Tabletop burners raise the same question; see opening a hotpot or Korean BBQ restaurant. Confirm with the landlord and a licensed gas contractor.
- Water points and drainage. Count sinks, floor traps and water points your layout needs.
- Fire safety. SCDF’s plan approval page says fire safety works need approved plans from a qualified person.
- Landlord fit-out rules. Get the fit-out manual, approved contractor list, fees and working hours.
Our restaurant renovation checklist goes through each approval and contractor question.
Negotiation tips
- Compare gross rent. Two units with the same base rent can differ widely once service charge, A&P and GTO are added.
- Ask for the Code checklist early. It shows where the draft deviates from the Code before you spend on legal review.
- Ask for trade-category sales data. For GTO leases, landlords must share it before signing, which helps you test your sales forecast.
- Negotiate the fit-out period. Tie it to realistic approval and renovation timelines.
- Define reinstatement now. Agree in writing what must be removed, and consider leaving useful kitchen works for the next tenant.
- Plan your exit. Negotiate assignment consent terms in case you sell the business.
- Model the rent against sales. Use our restaurant cost guide and break-even guide before you commit.
Before you sign: checklist
- Confirm approved use with URA or HDB, or make the lease conditional on it.
- Get the landlord’s Code checklist and read every flagged deviation.
- Write down gross rent: base rent, service charge, A&P and any GTO percentage.
- Check the security deposit against the Code cap, and ask about a bank guarantee.
- Agree the fit-out period, handover condition and reinstatement scope.
- Read renewal, assignment and termination clauses.
- Calculate stamp duty and diarise the 14-day stamping deadline.
- Inspect grease trap, exhaust, power, gas and water points with your contractor.
- For GTO leases, confirm the sales reporting format and how your POS will provide it.
- Have a lawyer review the letter of offer and lease before you sign.
Moving into a mall with GTO reporting? ChaChaCha’s restaurant POS includes sales reports you can use for turnover figures. Mall reporting formats vary, so ask us to confirm how your specific mall’s requirements would be handled before you sign. Get in touch.
