How much security deposit can a Singapore landlord ask a retail tenant for?

Under the Code of Conduct for Leasing of Retail Premises, mandatory for qualifying retail leases signed from 1 February 2024, the deposit is capped at three months' gross rent where the tenanted area is up to 5,000 sq ft and the term is three years or less. Security deposit is one of the few principles the parties may deviate from by mutual agreement.

Commercial Leasing

Banker's Guarantee vs Cash Deposit for a Commercial Lease in Singapore

By Mr Kobayashi, Co-Founder, REINSTATE.by MCSG · Published 22 September 2026 · 6 min read

A banker's guarantee costs roughly 1 to 2% of the guaranteed sum per year; a cash deposit costs nothing in fees but locks up three months' gross rent for the whole lease. The guarantee protects cash flow. It does not protect you at handover: an on-demand guarantee can be called the moment the landlord says reinstatement was not done.

Every commercial lease in Singapore asks for security, and most tenants choose between paying cash or arranging a banker's guarantee on the basis of which is cheaper. That is the wrong test. The question that decides whether you get the money back is what happens on the last day of the lease, when the landlord inspects an unreinstated unit and decides how to fund the strip-out.

What is a banker's guarantee in a commercial lease?

A banker's guarantee is a bank's written promise to pay the landlord up to a fixed sum if the tenant breaches the lease. The tenant pays the bank an annual commission and usually pledges collateral, but the cash stays on the tenant's balance sheet rather than in the landlord's account for the whole term.

Almost all of them are issued "on demand". That wording matters more than the rate: on an on-demand guarantee the bank pays the landlord against a written demand alone, without deciding whether the landlord's claim is fair. The tenant reimburses the bank, then argues with the landlord afterwards, from the weaker position of having already lost the money.

How much does a banker's guarantee cost in Singapore?

Budget 1 to 2% of the guaranteed amount per year, plus a minimum issuing fee of about S$150. DBS publishes 1% a year for a performance guarantee under two years, 1.5% for longer tenors and 2% a year for a financial guarantee, with minimums of S$150 on its standard format and S$250 on a non-standard one.

Charge	Published rate
DBS performance BG, under 2 years	1% p.a.
DBS performance BG, over 2 years	1.5% p.a.
DBS financial BG	2% p.a.
DBS minimum (standard / non-standard format)	S$150 / S$250
DBS amendment to tenor or amount	S$150 / S$250 min
UOB Express BG, advertised rate on first S$20,000	0.88% p.a.

Published fee schedules as at September 2026; your actual rate depends on collateral and credit assessment. A three-year lease on a S$60,000 guarantee at 1.5% is about S$900 a year, or S$2,700 over the term, and one amendment, which a lease extension will force, adds up to S$250 more.

How much security deposit can a landlord ask for?

For qualifying retail leases, three months' gross rent. The Code of Conduct for Leasing of Retail Premises, mandatory for leases signed from 1 February 2024 under the Lease Agreements for Retail Premises Act 2023, caps the deposit at three months where the tenanted area is up to 5,000 sq ft and the term is three years or less.

Security deposit is one of the small number of principles the Code allows the parties to deviate from by mutual agreement, so a larger figure is not automatically a breach, but it must be agreed, and the landlord has to declare the deviation. Outside the retail cap the market sets the number, and it is higher than most tenants expect: JTC's standard industrial tenancy asks for the equivalent of six months of fixed recurring charges, and will accept an acceptable banker's guarantee in place of cash.

Will three months' rent actually cover the reinstatement bill?

For an office, usually. For F&B and industrial units, often not. Three months' gross rent gives the landlord three times your monthly rent per sq ft to spend. Compare that with the reinstatement rate for your fit-out type and the gap, or the cushion, becomes obvious before you sign anything.

Space type	Reinstatement	3 mths' rent covers
Office, open-plan	S$3 to S$8/sq ft	Comfortably
Office, partitioned	S$8 to S$18/sq ft	Usually
Mall retail, dry fit-out	S$10 to S$25/sq ft	Usually
F&B, wet kitchen	S$12 to S$40/sq ft	Often not
Industrial / JTC	S$5 to S$10/sq ft	Rarely

Reinstatement ranges are our published 2026 figures from the linked guides. "Covers" compares them against three months' gross rent at that space type's typical rent. The industrial row is the one that surprises people: at industrial rents of around S$1.60 per sq ft a month, even a six-month JTC deposit is under S$10 per sq ft of cover against a S$5 to S$10 per sq ft strip-out. A 12,000 sq ft F&B or industrial tenant can be underwater on reinstatement before a single dispute starts.

When can a landlord call on the guarantee?

When the lease says it can, and unreinstated premises is the most common trigger. If the unit is handed back with the fit-out still in place, the landlord can appoint its own contractor and recover the cost from the deposit or the guarantee, typically at a rate the tenant had no chance to negotiate.

This is the expensive part. A landlord's nominated contractor is not shopping on price, and the tenant is not in the room. The same strip-out a tenant could have tendered competitively comes back as a single invoice, GST inclusive, against the security. Getting your own quotes compared properly before lease end is worth more than any saving on the guarantee commission, and remember that GST applies on top of every figure in this article.

Time pressure makes it worse. JTC states plainly that a tenant is liable to pay double rent from the lease expiry date if reinstatement works are not completed before the lease expires. Private landlords write the same holding-over clause into commercial leases as a matter of course.

How long should the guarantee stay valid after the lease ends?

Long enough to cover reinstatement and the final account, in practice the lease term plus two to three months. A guarantee that expires on the last day of the lease is useless to the landlord, so landlords ask for the buffer; the tenant pays commission for every month of it, so the buffer is worth negotiating down rather than ignoring.

Check the expiry mechanics as carefully as the amount. A guarantee that auto-extends unless the landlord releases it can quietly run a year past handover if the final account drags. Ask for a release trigger tied to a joint inspection sign-off, not to the landlord's unilateral satisfaction.

Cash or guarantee: which should you choose?

Retail tenants under the Code can insist on putting up to half the deposit as a non-cash bank guarantee, but only if they say so before signing. The Code of Conduct requires a qualifying retail lease to include a term letting the tenant furnish up to 50% of the security deposit by a non-cash mode, in a format of the landlord's choosing, if the tenant notifies the landlord upfront.

So the honest comparison for a S$36,000 retail deposit is not cash versus guarantee, it is S$36,000 cash versus S$18,000 cash plus about S$270 a year in commission on the other half. For a business where working capital is tight, that is a good trade. For one sitting on cash, the commission buys nothing except optionality, because the landlord's claim on the money is the same either way.

Two things tilt it. A guarantee is the safer instrument if you have any doubt about the landlord's solvency, because the money is at a bank rather than in the landlord's account. And if your unit is being taken back for redevelopment, the Code says you may not have to reinstate at all, and the retail reinstatement guide sets out which exits qualify, and it is worth checking before you commission a single dollar of strip-out.

What should you do six months before lease expiry?

Six months out is when the cost is still yours to control. JTC contacts industrial tenants about six months before expiry to inspect and set the reinstatement requirements, and private landlords work to a similar rhythm. After that the calendar, not the quote, sets the price.

Re-read the reinstatement clause and the security clause together. They are usually pages apart, and the second is how the first gets enforced.
Dig out the approved fit-out drawings. "Original condition" means the condition at handover, not bare shell, and the drawings are what prove the difference.
Get the unit quoted properly against those drawings, with the landlord's technical requirements attached. See how commercial reinstatement differs from residential.
Book the works to finish before expiry, not on it. Mall and JTC units often allow only after-hours access, which stretches a two-week job into four.
Ask for the guarantee release in writing at the joint inspection, and keep paying commission until you have it.

Lease ending on a commercial unit?

Send us the unit, the floor area and your lease-end date, and we'll quote the reinstatement against your actual fit-out drawings and the landlord's technical requirements, so the security comes back instead of funding someone else's contractor.

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Banker's guarantee rates are the banks' own published fee schedules as at September 2026 and change without notice. Reinstatement ranges are our published 2026 market figures from the linked guides; the "3 months' rent covers" column is an illustrative comparison against typical rents for each space type, not a quotation. This guide is general information, not legal or financial advice.

References & further reading

Authoritative Singapore sources for further reading. This guide is general information, not legal advice. Confirm current rules with the relevant authority.