Read this before you rent a place

Source : Sunday Times - 18 Jan 2009

The process of finding a rental home may be smooth for some but a nightmare for others.

Late last month, a Malaysian couple and a Japanese expatriate were duped by a conman posing as the property manager-cum-landlord of a terrace house in Serangoon Gardens.

He ‘leased’ the same house to both parties and then ran off with $10,300 of their money.

The two parties have made police reports but there is no guarantee that they will get the money back.

Rental scams surface from time to time and many of them involve HDB flats, property agents said.

While there are no foolproof ways of avoiding one completely, there are precautions tenants can take to ensure they do not fall prey to a scam.

Dealing with agents

First of all, tenants should engage or deal with a property agent from a reputable or established company, said PropNex chief executive Mohamed Ismail.

While this is obviously not foolproof, it does provide a level of protection if anything were to go wrong. ‘At least there is a company to go to for help,’ he said.

Firms like his will carry out their own investigations and take appropriate action, such as helping the tenant to get his money back or terminating the agent’s services if need be, he said.

Second, check with the agent’s property firm or the website of the Institute of Estate Agents (IEA) to see if the agent you are dealing with is a legitimate one, advised Mr Ismail, who is also the IEA’s first vice-president.

On the IEA website, click on Central Register Scheme and type in the agent’s particulars. If the agent has quit or been terminated, his name would have been taken off the list.

But note that the IEA’s list is not comprehensive as its membership is not compulsory. For instance, a major agency, HSR Property Group, is not on the list.

Thirdly, do not pay a property agent a large sum in cash. ‘If you pay cash, he can misappropriate the money,’ said Mr Ismail.

Instead, tenants should pay using a cheque or cashier’s order which states the owner’s name.

Before signing the lease

Property agency bosses also advise potential tenants to do some homework and find out about standard practices before committing to a lease.

There was a case last year where a 20-year-old student from China paid eight months’ advance rental for a four-room Punggol flat to someone who claimed to be the landlord, but who turned out to be the sub-tenant of the flat and a conman.

The student told The Sunday Times on Thursday that she was chased out of the $1,600-a-month flat by the owner, who had returned home after a trip, the day after she moved in. The sub-tenant had disappeared by then.

What she should have done was to get proof of the property’s ownership or ask to meet the owner, agency bosses said.

Property agents are supposed to do due diligence to ascertain the ownership of the property they are handling, so tenants can ask to see the documentation. The owner’s property tax statement would be good.

If you are dealing with the managing agent, ask for documentary proof such as a power of attorney or a letter from the owner authorising the agent to act on his behalf, said C&H Realty managing director Albert Lu.

Minimising losses

HSR Property Group’s executive director, Mr Eric Cheng, said the student would not have been cheated of so much money if she had known that it is the norm in Singapore to pay just a deposit and one month of advance rental.

Tenants can also negotiate for a lower deposit, he said. It is up to the landlord to say yes, although in the market, the norm is a one- month deposit for a one-year lease and a two-month deposit for a two-year lease.

Mr Lu said tenants should pay the advance rental only upon the handing over of the keys to the property, to minimise their risk.

But legitimate owners can sometimes be cheats too. Tenants should therefore pay their rent on a monthly basis, advised Mr Cheng.

He has encountered cases where tenants were happy to pay six to eight months in advance rental for a lower rent, only to find out later they had been cheated.

In one case, the legitimate owner sold his flat soon after the lease was sealed and disappeared, said Mr Cheng.

Tenants just have to be vigilant, said Mr Lu. ‘If the rent is too good to be true, then you have to beware.’

Based on past instances, there is a high chance of a scam happening if the rental is too cheap, he said.

Get the keys first

Tenants should pay the advance rental only upon the handing over of the keys to the property.

Cheap trick

If the rent is too good to be true, then you have to beware. Based on past instances, there is a high chance of a scam happening if the rental is too cheap.