Minister Lim Hng Kiang's Written Reply to Parliament Question on Retail Mall Landlords Pegging Rentals to Tenants’ Sales Volume

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Question

Er Dr Lee Bee Wah: To ask the Minister for Trade and Industry whether the Government will consider introducing measures to help small retailers in shopping malls by (i) disallowing the practice of landlords pegging the rental charge to the tenant retailers' sales volume when renewing their leases; and (ii) introducing a platform by which tenants can take reference on what should be the fair market rates for the shop rent.

Written Answer (attributed to Mr Lim Hng Kiang, Minister for Trade and Industry)

Rental leases are decided based on commercial considerations, with the rates determined by supply and demand. As a general principle, we should allow the market to operate without the Government prescribing how landlords and tenants structure their leases. This would lead to inefficient outcomes and make all parties worse off.

 There are other ways to help our companies manage their rental costs. In consultation with key stakeholders and with support from the Ministry of Trade and Industry, the Singapore Business Federation released the Business Leasing Guide in January 2015, which provides information and shares best practices to guide companies when they negotiate lease contracts with their landlords.

Information on retail rental rates is also publicly available on the Urban Redevelopment Authority’s website. The data is updated every quarter. The user is able to access statistics on monthly rents at the postal district level, broken down by the 25th percentile, median and 75th percentile for a range of floor areas and floor levels. This provides useful information for companies when they are making leasing decisions and negotiating with their landlords.