A change in Singapore real estate is impacting some assignments. Similar to the new laws that have gone into effect for US real estate, the latest Singapore change involves a recommendation that each party to a transaction be responsible for paying their real estate representative; it is not a law. As of July 1, 2024, the Singapore Estate Agents Association (SEAA) has introduced a new Best Practice Guideline to enhance transparency and standardize commission practices in rental transactions.
Key Highlights of the SEAA Guidelines
• Commission Collection: Agents are now encouraged to collect commissions solely from the party they represent—landlord agents from landlords and tenant agents from tenants.
• Impact on Tenants: Under these guidelines, tenants may need to pay a commission directly to their agents, particularly for properties under S$6,000 per month. Depending on the landlord’s agent’s policies, this could also apply to specific higher-end properties.
• Co-broking Practices: While the guidelines are not legally binding, they reflect a growing trend where landlord agents may choose not to co-broke (share commissions) with tenant agents. This practice could result in additional costs for tenants, especially in cases where co-broking is not possible.
What This Means for Talent Mobility
• Be Prepared for Commissions: For properties under S$6,000 per month, tenants should anticipate paying a commission, typically one month’s rent for a two-year lease and .5 months for a one-year lease. If the landlord declines to offer the tenant’s agent a commission, .5 months rent will apply for both one- and two-year leases. Discuss with clients if the realtor fee will be covered, is expected to be covered by an ancillary lump sum benefit, or if an exception can be made. Addressing this upfront will save time and the prospect of an assignee losing a desired property over the issue.
• Seek Reputable Guidance: Encourage assignees to work with the Relo Network Asia panel of realtors. Working with a trusted agent will be essential to navigate these changes and potentially minimize costs during your property search.
• Understand the Trade-offs: Clients and assignees need to understand that a decision not to offer a tenant-side realtor fee will narrow the options available and potentially lengthen the home search. It is not always possible to know upfront if a co-broke will be offered on a property.
• Recognize Potential Inconsistencies: A landlord’s willingness to pay both sides of the realtor commission will depend on supply and demand.
Relo Network Asia is also actively addressing the changes with clients on a case-by-case basis. Clients can expect the RNA Relo Specialist to seek advanced approval for upfront payment of any potential tenant’s commission. Information regarding realtor fees is always included in the assignee consultation and our entire team works to make sure our client relocation managers and assignees are well informed with the resources needed to make the best decisions. Please reach out should you have any questions.
