CPD/010811

Contents
2 3 10 12 Introduction Subletting Premises in JTC Corporation A Simple 5-Step Process Further Assistance

Introduction
This easy-to-use handbook tells you about JTC Corporations subletting policies and the necessary steps on how to sublet. You are required to seek JTCs consent before commencing any subletting of your premises. To apply for subletting: Ensure that you and your subtenant comply with JTCs subletting policies and conditions; Submit the subletting application form/ information sheet to JTC at least 7 days before your proposed subletting commences; Obtain clearance(s) from the relevant authorities, such as the National Environment Agency (NEA) Central Building Plan Unit (CBPU), and Pay the subletting fees and administrative fee.

If you have any doubts or further queries, please do not hesitate to contact our officers who would be most happy to help answer your questions. Alternatively, you may call our Contact Centre Hotline at 1800 5687000. For illustration purposes, all calculations in this handbook are based on 7% GST. The amount payable for your application shall be based on GST at the prevailing rate.

Subletting Premises in JTC Corporation

I. What is Subletting?
Subletting takes place when an industrial lessee or tenant of a JTC factory, land or business park facility lets out a portion of his building space to another party even one he wholly owns or is related to. In this case, the party using the space is called the subtenant while the one subletting the space is the lessee or tenant.

II.

JTCs Policy on Subletting

A lessee or tenant who wishes to let out a portion of his space to another party, will be required to pay JTC an non-refundable administrative fee plus a subletting fee. For usage of lessees or tenant' premises by other companies as registered office / s correspondence address, a non-refundable administrative fee of $200 (plus GST at prevailing rate) will be levied upon JTCs consent. The administrative fee is charged on a per company basis1. JTC lessees and tenants are allowed to sublet their premises up to a maximum of three years. As a lessee or tenant, you must also meet the following conditions before you can sublet: 1. Floor Usage by Lessee / Tenant

For the gross floor area (GFA) occupied by you or your wholly-owned subsidiary, at least 60% of it must be used for your own industrial activities2, inclusive of ancillary stores / warehouses, with the remaining for ancillary purposes. 2. Floor Usage of Lessee / Tenant and Their Subtenant

Under URAs ruling, at least 60% of the total GFA must be set aside for industrial activities2, inclusive of ancillary stores / warehouse. The space should be used either by yourself, your wholly-owned subsidiary or other subtenants. The rest may be used for offices, neutral areas, communal facilities and other such practices endorsed in writing by JTC and the Authorities.
Only subsidiary / related / associated companies of lessees or tenants will be allowed. The lessee or tenant is required to submit an application stating their reasons and relationship with the other company or submit an online application via JTCs Customer Service Portal. For more details, please refer to the policies & procedures for Application of Registered Address on our website at http://www.jtc.gov.sg/.
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If your lease or tenancy with JTC is that of warehousing, this shall be replaced by warehousing activities.

3.

Subletting Usage

You and your subtenant must comply with JTCs Usage Guidelines. You may download a copy of the guidelines from our website at
http://www.jtc.gov.sg/aboutjtc/policies/LeaseManagement/Documents/Usage_Guidelines.pdf/.

In addition, please note that the floor area may not be sublet for: Office use only, unless it supports the manufacturing operation at the premises sublet. For example, it could be used as an office for marketing / purchasing materials for products manufactured at the premises. Third-party logistic warehousing, unless the lessee or tenant is permitted to use it as third-party warehousing.

Subletting of open land is also not allowed. 4. Maximum Subletting Space

The floor area that you may sublet is detailed in Table 1 below: Table 1 Type of Tenure Lease Type of Industrial Facility Land Standard Factory Flatted Factory Workshop Maximum Sublet Area 50% of the GFA upon TOP / lease commencement or date of assignment / transfer, whichever is later, to non-related 3 companies 50% of the GFA upon tenancy commencement to non-related companies3

Tenancy

The subletting cap of 50% of the GFA does not apply to related companies which include the following: i) Subtenant is wholly owned by the lessee / tenant or vice versa; ii) Percentage shareholding relationship between lessee / tenant and subtenant is at least 51%; iii) Lessee / tenant and subtenant are 100% owned by the same parent company. 2009 Subletting Relief Measure To help businesses tide over the current economic downturn, JTC will temporarily lift the 50% subletting cap for industrial lessees/ tenants until 31 December 2011. This means that industrial lessees/ tenants may still submit applications to sublet up to 100% of the GFA till 31 December 2011. However, please note that all industrial
Where the lessee or tenant subcontracts or outsources his operations to another company and the outsourcing is carried out at the lessee' / tenant' premises, the arrangement will not be regarded as subletting if the s s subcontractor / outsourcing company uses the space solely to carry out the lessee' / tenant' job. s s
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lessees/ tenants would, in addition to other subletting terms and conditions prevailing at the time of any future consent, also be required to comply with the 50% subletting cap with effect from 1 January 2012. Thus, the permitted sublet area, and if there are multiple sublettings then the aggregate permitted sublet area, shall be reduced to meet the aggregate cap of 50%. You would then need to meet the aggregate cap of 50% and must accordingly notify us or submit the (respective) new Subletting Application(s) if the (aggregate) area is reduced. You are advised to contact your Service Officer if you intend to apply for subletting beyond the 50% subletting cap under the 2009 Relief Measure. 5. Clearance from Other Authorities Clearance from National Environment Agency (NEA) Central Building Plan Unit
(http://ias.nea.gov.sg/publicapplicant/homepage.aspx/)

Clearance from Public Utilities Board (PUB) Applicable if your subtenants water consumption for the proposed usage exceeds 500 cubic metres per month or if the subtenant is applying for NEWater/ Industrial water usage
(http://jtccms4/ApplicationForms/documents/supportforms/appnform_pub.doc/)

Clearance from Singapore Civil Defence Force (SCDF) Applicable if your subtenants proposed usage includes storage of petroleum/ flammable material exceeding SCDF' stipulated exemption quantities s
(http://www.scdf.gov.sg/content/scdf_internet/en/building-professionals/downloads.html/)

Maritime and Port Authority of Singapore (MPA) Applicable for waterfront sites. You must obtain prior written approval from MPA before you commence subletting. For such cases, activities like cargo handling are strictly not allowed. JTC will seek clearances from other relevant authorities, if applicable. 6. Legal Action

Lessees or tenants who for some reason or other, have been served with any letter of demand by JTC, or against whom JTC has commenced legal action, shall not be able to sublet. 7. Administrative Fee

A non-refundable administrative fee of $500 is payable upon consent of the subletting application. However, If you submit the application online, the administrative fee would be reduced to $200 per application. All administrative fees are subject to GST at the prevailing rate.

III.
1.

Fees, Charges and Payments

Calculation of Subletting Fee

Subletting fee (plus GST at prevailing rate) is payable monthly in advance However, if your monthly subletting fee falls below $41.67, you shall pay the subletting fee on an annual basis. 4 The monthly/ annual subletting fee will be deducted through Interbank Giro (IBG) if you are paying monthly rent via IBG. However, if we do not receive payment by the due date, interest at 8% per annum will be payable from the due date to and including date of full payment.5 a. For lessees or tenants on land rental or upfront premium scheme Monthly subletting fee = {30% x JTCs land rental rate per annum6 x (Sublet area Total GFA) x Land area} 12 Example One JTCs land rental rate Sublet area Total GFA of lessees premises Land area of lessees site $22.20 psm pa 600 sqm 7,000 sqm 5,000 sqm

Monthly subletting fee = {30% x $22.20 x (600 7000) x 5000} 12 = $237.86 (rounded off to 2 decimal places) + GST at prevailing rate
[As monthly subletting fee exceeds $41.67, payment will be on a monthly basis]

b.

For all other lessees and tenants The formula below is applicable to lessees / tenants who are not paying land rent (e.g. lessees or tenants of high-rise industrial facilities such as flatted factories). Monthly subletting fee = (3% x Rent charged by lessee/tenant to subtenant) 12 Example Two Sublet rent charged by lessee/tenant Monthly subletting fee = 3% x $11,820 12 = $29.55 (rounded off to 2 decimal places) $11,820 pa

[As monthly subletting fee falls below $41.67, payment will be on an annual basis]

Annual subletting fee payment = $29.55 x 12 = $354.60 (rounded off to 2 decimal places) + GST at prevailing rate

Minimum monthly subletting fee is $41.67 (plus GST at prevailing rate). This works out to $500 per annum. Interest rate is subject to review from time to time. 6 To check JTCs land rental rate, you may refer to our website at http://www.jtc.gov.sg or call our Contact Centre Hotline at 1800 568 7000.
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2.

Concession for Common Shareholders

You will be given a concession if there is a shareholding relationship of 21% to 50% between you and your subtenant.7 Example Three Based on Example One, if the lessee / tenant owns a 35% share of the subtenant' company, the subletting fee will be calculated as follows: s Monthly subletting fee (after concession) = {$237.86 x (100% Percentage of shareholding relationship between lessee/tenant and their subtenant)} = {$237.86 x (100% 35%)} = $154.61 (rounded off to 2 decimal places) + GST at prevailing rate
[As monthly subletting fee (after concession) exceeds $41.67, payment will be on a monthly basis]

If the subtenant is wholly owned by the lessee/ tenant or vice versa, or the percentage of shareholding relationship between lessee / tenant and subtenant is at least 51%, the subletting fee will be waived. However, you are required to inform JTC immediately of any shareholding changes as you will be required to pay subletting fee when the shareholding relationship falls below 51%. 3. Liquidated Damages for Unauthorised Subletting

Unauthorised subletting is not allowed on JTCs premises. However, if JTC discovers that you have unauthorised subtenant(s) on your premises you will be required to evict your subtenant within a stipulated period. If JTC allows you to regularise the subletting, you will have to pay liquidated damages for the unauthorised subletting period. For subsequent offences, you will be barred from further subletting. JTC may also exercise our right of repossession under the lease / tenancy. 4. Payment Mode

You will be advised in our letter to you on the amount and term of subletting fee to be paid for the entire subletting period. Both the administrative fee and the subletting fee will be paid together with your monthly rent and will be deducted through Interbank GIRO (IBG) if you are currently paying the monthly rent by IBG. For nonGIRO customers, you are advised to make a separate cheque payment. You are also advised to pay the administrative fee and subletting fee within the stipulated period. Otherwise, interest at 8% per annum will be charged.8

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Affiliation merely with common individual directors or shareholders will not entitle you to the concession. Interest rate is subject to review from time to time.

IV.

Refund of Subletting Fee

You can request for a refund if you have paid your subletting fee upfront and you terminate your subletting prematurely or if you did not proceed with the proposed subletting. You can help to hasten the process by informing us at least 14 days in advance of your decision to terminate the subletting. We will arrange for a site inspection to confirm the termination. A refund of subletting fee will be authorised for the unexpired period. If you have already terminated your subletting prior to informing us, JTC will take the date whereby we receive the application for termination of subletting as the effective termination date. JTC will continue to bill you until and including the month of the effective termination. If you had paid the subletting fee annually in advance, pro-rated subletting fees for the unexpended months will be refunded to you. Example Four Assuming that the lessee / tenants subletting fee is $61.80 per month (inclusive of GST at prevailing rate) on 1 June 2011 and has given JTC prior notice that the subletting will be terminated prematurely on 10 June 2011. JTC will retain the subletting fee of $61.80 (inclusive of GST at prevailing rate) for the month of June 2011. No refund will be made. Example Five Assuming that the lessee / tenant paid the annual subletting fee of $428 (inclusive of GST at prevailing rate) on 1 January 2011 and has given JTC prior notice that the subletting will be terminated prematurely on 8 March 2011. Pro-rated monthly subletting fee = $428 12 = $35.67 (rounded off to 2 decimal places) Expended subletting fee = $35.67 x 3 = $107.01 (rounded off to 2 decimal places) Subletting fee to be refunded = $428 - $107.01 = $320.99 (rounded off to 2 decimal places)

V.

Expiry and Renewal of Subletting

1. Expiry of subletting If you do not renew your subletting, you will have to ensure that your subtenant leaves the premises by the expiry date of the sublet period. 2. Renewal of subletting For quick renewal of existing subletting agreement, the completed Subletting Information Sheet should be submitted to JTC 14 days before the existing subletting term expires. You may follow the same process as stated in A Simple 5-Step Process.

VI.

Terms and Conditions for Subletting

You and your subtenant are advised to read and comply with the detailed Terms and Conditions for Subletting found in Annex B. JTC reserves the right to withdraw its agreement to the subletting by giving the lessee / tenant 3 months notice in writing.

A Simple 5-Step Process

STEP 1 Go through the Subletting Handbook Before you begin, please familiarise yourself with JTC' subletting policies in s this Handbook. STEP 2 Fill up the application form You can fill in your subletting application form online via our Customer Service Portal. http://www.jtc.gov.sg/policies/leasemanagement/subletting/pages/inde x.aspx The relevant references mentioned in the application form are available at the following websites: Usage Guidelines for JTC Premises (http://www.jtc.gov.sg/aboutjtc/policies/LeaseManagement/Documents/
Usage_Guidelines.pdf/)

(http://www.ura.gov.sg/dc/mp03/text/overview.htm/ and http://www.ura.gov.sg/dc/edanet_outside.html/)

URA land use zoning and development control requirements

(http://www.ura.gov.sg/dc/edanet_outside.html/)

NEA Code of Practice on Pollution Control SCDF Fire Safety (Petroleum and Flammable Materials) Regulations

(http://www.scdf.gov.sg/content/scdf_internet/en/building-professionals/ publications.html/)

You will also need the relevant clearance(s) from other authorities to complete the application. STEP 3 Calculate Subletting Fees and Charges The subletting fees are calculated as shown in Section III Fees, Charges and Payments. You may also use the worksheet in Annex A to help you to do a preliminary calculation. Alternatively, you can wait for JTCs advice on the amount that you need to pay.

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STEP 4

Assessment of application JTC will inform you on the outcome of your application within seven (7) working days.

STEP 5

Comply with Subletting Terms and Conditions If approval is granted by JTC, you are required to make payment for the administrative fee, subletting fee and other charges by the payment due date. Please also ensure that you and your subtenant observe all the Terms and Conditions for Subletting at all times.

IMPORTANT NOTES: 1. These guidelines do not apply to non-industrial premises, sites affected by JTCs redevelopment programme and tenants under the Technopreneur Centres. Lessees / tenants of such sites are required to seek prior approval from JTC for subletting.

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Need Further Assistance?

If you require assistance, please contact: JTC Contact Centre Hotline Tel (toll-free): 1800 - 568 7000 E-mail: askjtc@jtc.gov.sg Website: http://www.jtc.gov.sg You may also access JTCs customer portal at http://www.jtc.gov.sg for information contained in the subletting handbook and download a soft copy of the application form directly onto your personal computer. You may submit your application by hand or you may mail them to JTC Corporation at The JTC Summit, 8 Jurong Town Hall Road Singapore 609434. Alternatively, you may fax your application via Facsimile to 65655301 to JTC.

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Annex A CALCULATION WORKSHEET ON SUBLETTING FEE For illustration purposes, all calculations in this handbook are based on 7% GST. The amount payable for your application shall be based on GST at the prevailing rate. a) For companies on land rental scheme or upfront premium
Fill in the details JTCs land rental rate Sublet area Total GFA of lessee' premises s Land area of lessee' site s Percentage of shareholding relationship between the company and their subtenant* Subletting term STEP 2 Calculate the subletting fee Subletting fee per month (B) = {30% x ___ ) x ( ___ ___ ) x ( ___ x (100% ___ %)} 12 S1 S2 S3 S4 P = $ _____ (rounded off to the nearest 2 decimal places) B If B $41.67, then monthly subletting fee payable (C1) = $ ( _____) + GST at prevailing rate B If B < $41.67, then annual subletting fee payable (C2) = (_____) x 12 B = $ (_____) + GST at prevailing rate (S1) $_____ psm pa (S2) _____ sqm (S3) _____ sqm (S4) _____ sqm (P) _____ % _____ year(s)

STEP 1

NOTE * If the subtenant is wholly owned by the lessee / tenant or vice versa, or the percentage of

shareholding relationship between lessee / tenant and subtenant is at least 51%, the subletting fee will be waived. Affiliation merely with common individual directors or shareholders will not entitle you to the concession. If the percentage of shareholding relationship is 20%, no concession will be granted. You are liable to pay interest at 8% per annum if you inform JTC Corporation after the subletting term has started or if JTC does not receive your payment by the due date. Interest rate is subject to review from time to time.

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CALCULATION WORKSHEET ON SUBLETTING FEE b) For companies which do not pay land rent (for example, lessees / tenants of high-rise facilities, such as flatted factories)
Fill in the details Sublet rent charged by lessee/tenant Percentage of shareholding relationship between company and their subtenant* Subletting term Calculate the subletting fee Subletting fee per annum (B) = 3% x ( _____ ) x (100% _____ %)} 12 S6 P = $ (_____) (rounded off to the nearest 2 decimal places) B If B $41.67, then monthly subletting fee payable (C1) = ( _____) + GST at prevailing rate B If B < $41.67, then annual subletting fee payable (C2) = (_____) x 12 B = $ (_____) + GST at prevailing rate (S6) $_____ pa (P) _____ % _____ year(s)

STEP 1

STEP 2

NOTE * If the subtenant is wholly-owned by the lessee / tenant or vice versa, or the percentage of

shareholding relationship between lessee / tenant and subtenant is at least 51%, the subletting fee will be waived. Affiliation merely with common individual directors or shareholders will not entitle you to the concession. If the percentage of shareholding relationship is 20%, no concession will be granted. You are liable to pay interest at 8% per annum if you inform JTC Corporation after the subletting term has started or if JTC does not receive your payment by the due date. Interest rate is subject to review from time to time.

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Annex B TERMS AND CONDITIONS FOR SUBLETTING

All references in this Annex B to "the Landlord" shall refer to the relevant lessee/tenant of the JTC Corporation and all references to "the Subtenant" shall refer to that lessee' s/tenant' s permitted subtenant. JTC reserves the right to withdraw its agreement to the subletting by giving the lessee or tenant 3 months' notice in writing. The Landlord and the Subtenant shall at all times observe and ensure full compliance with the following terms and conditions : a. The Subtenant shall not demise, assign, charge, create a trust or agency, mortgage, let, sublet, grant a licence or part with or share the possession or occupation of the sublet premises or any part thereof or permit any other party or person by way of a licence or otherwise to occupy the sublet premises or any part thereof at any time during the subletting term. The Subtenant shall permit the JTC Corporation and/or the Landlord or their respective servants or agents with or without workmen, tools and equipment during the subletting term at all reasonable times to enter upon the sublet premises and every part thereof to examine the state and condition of the same and of defects decays and wants of reparation and of all breaches of covenant there found. The Subtenant shall not cause or do or suffer to be done any act or thing which may as between the Landlord and the JTC Corporation constitute or cause a breach by the Landlord of any of the terms, covenants, conditions or stipulations on the part of the Landlord to be observed or performed by virtue of the lease or sublease between the Landlord and the JTC Corporation but shall do or permit to be done any act or thing to comply with or to prevent a breach of any of such terms, covenants, conditions or stipulations with no liability on the part of the JTC Corporation for any inconvenience, loss, damage, costs, expenses or compensation whatsoever in the event that the JTC Corporation, its employees, servants or authorised agents with or without workmen, tools and equipment should enter upon the Landlord' premises or s the sublet premises to do any act or thing which the JTC Corporation is entitled to do by virtue of the said lease or sublease or of any laws, by-laws, rules or regulations. The Landlord shall for the purposes of sub-clause (c) aforesaid acquaint the Subtenant with the terms, covenants, conditions and stipulations of the lease or sublease between the Landlord and the JTC Corporation and any variations or amendments thereto. In the event that the JTC Corporation at any time before the expiry of the subletting term gives three months'notice in writing requiring that the subletting be terminated or becomes entitled to and re-enters the Landlord' premises or any part thereof in s the name of the whole the subletting term shall upon the expiry of the said notice or upon the said re-entry absolutely determine without prejudice to any rights and/or remedies which have accrued to either party against the other under the subletting agreement and without the JTC Corporation being liable for any inconvenience, loss, damages, compensation, costs or expenses whatsoever.

b.

c.

d.

e.

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f.

The Subtenant shall at his own cost and expense and subject to the prior approval in writing of the JTC Corporation and the relevant governmental and statutory authorities provide suitable and proper foundation for all machinery, equipment and installations in connection with the approved usage at the subletting premises. The JTC Corporation shall not be liable for any loss, damage or inconvenience that the Subtenant may suffer in connection with any defects caused to the ground/production floor slabs or apron slabs by overloading and any subsidence or cracking of the ground/production floor slabs, aprons, drains and driveways of the sublet premises or from other defects inherent or otherwise in the sublet premises. The Landlord shall not renew or grant to the Subtenant an option to renew the subletting upon expiry of the subletting term, except with the prior written consent of the JTC Corporation which consent shall be obtained prior to the expiry of the subletting term and subject to such conditions as the JTC Corporation, may deem fit to impose. The Landlord shall pay to the JTC Corporation such subletting fees as the JTC Corporation requires. The Landlord shall inform the JTC Corporation of any changes in the rental charged. The JTC Corporation reserves the right to revise the subletting fees or charge additional subletting fees if there has been any change in: the rental charged by the Landlord to the Subtenant; or area occupied by the Subtenant The Landlord shall indemnify and keep indemnified the JTC Corporation, its employees, agents and servants against all proceedings, costs, expenses, claims, penalties and liabilities which arise out of or in relation to or by reason of the JTC Corporation' consent to the subletting and/or the subletting itself. s The Subtenant shall not erect or put up any temporary sheds and structures at the sublet premises or any part there of.

g.

h. i. j.

k.

l.

The information contained in this handbook is subject to change. While every reasonable care has been taken in providing this information, JTC cannot be held responsible for any inaccuracies or changes arising therefrom.

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