Singapore
The modern world of work is in constant flux, with businesses and freelancers seeking out solutions that fit their dynamic needs.
Enter coworking spaces, which offer flexible coworking agreements. They have rapidly grown in popularity in recent years, revolutionising the traditional office environment that typically provides a fixed rental lease. But what is the difference between a lease and a coworking agreement in Singapore?
Understanding the distinction between a traditional lease and a coworking agreement is crucial, especially for businesses considering the best workspace solution for their needs. Let’s take a closer look.
Legal definition for Rental Lease vs Coworking Agreement
Office buildings in Singapore typically offer a traditional lease, which is a contract that gives a tenant exclusive possession of an office space for a specified period in exchange for the payment of rent.
Meanwhile, a coworking space offers a coworking agreement, which is a contract that, among other services and amenities, offers a coworking member a licence to use and share the coworking provider’s office space.
The member will pay a service fee instead of traditional rent. In the context of JustCo Singapore, this often comes in the form of flexible workspace memberships.
Is rent involved in Leases and Coworking Agreements?
Yes, rent is involved for traditional leases in Singapore. Although the office space remains under the landlord’s ownership, the tenant gets the legal right to use it, to the exclusion of the landlord. This right is what the tenant pays rent for.
As for coworking spaces, there is no rent. Here’s where coworking agreements offered by these service providers differ significantly from a lease. Instead, members pay membership fees to receive rights to use or share specific spaces within the service provider’s office spaces and enjoy various other ancillary services provided by the service provider.
Why is the distinction between Rental Lease vs Coworking Agreement important?
In short, different legal principles will apply depending on whether an agreement is characterised as a lease as opposed to a coworking agreement. One key legal distinction is that a lease confers upon a tenant the exclusive right to quiet enjoyment of the office space, to the exclusion of the landlord or other third parties. A coworking agreement does not carry such rights.
In addition, coworking agreements do not establish a landlord-tenant relationship, meaning some laws governing such relationships might not apply in
Coworking agreements are more flexible than traditional office leases
While traditional office space tenants have more control over the property with exclusive rights to the space, without needing to co-share amenities, they are typically made to commit to long-term leases. This is particularly so in Grade A premium office buildings.
Meanwhile, coworking members enjoy more flexibility with shorter-term commitments. Different membership plans also allow them to customise their set-up, from a simple Hot Desk for a solo entrepreneur to custom Enterprise solutions like serviced offices for larger teams to build a stronger office culture.
Members of coworking spaces also gain access to shared amenities and other centres operated by the same coworking entity, just like how one JustCo membership can give members access to 40 centres globally beyond Singapore.
Need an office for a short period? Choose coworking
Traditional office lease agreements often span long durations from five to 20 years. This requires a substantial financial commitment, including upfront costs like security deposits, monthly rent, and investments in infrastructure, furnishings, and technology.
Companies will have a fixed financial obligation if they’re locked into a long-term lease, regardless if their requirements change – whether they grow rapidly and need more space or face downturns and need less, for instance.
As for coworking members, they can easily adjust their membership plans based on immediate needs. A start-up can grow rapidly and quickly secure more spots or even a dedicated office within the flexible workspace. Conversely, if they need to scale down, they can do so without the hassles of being tied down to a traditional lease.
This makes a coworking agreement a highly attractive option for businesses that need a short-term swing space, as these organisations can move into a temporary office space without getting locked up by long-term obligations.
Build your business with flexible workspace provider JustCo Singapore
While both traditional leases and coworking agreements offer their unique benefits, understanding these distinctions is paramount for businesses and individuals in Singapore to avoid pitfalls and make informed decisions tailored to their specific needs.
Need a swing space? Looking for a coworking membership? Let us help.
