A Letter of Intent (LOI) is a short document you submit to the landlord to say, “I’m serious about renting this place—here are the key terms I’m proposing.” It acts as a bridge between viewing/negotiation and the legally binding Tenancy Agreement (TA). In Singapore, the LOI is common but not compulsory; some parties skip straight to the TA if everyone’s ready.
Once the landlord receives your LOI and good faith deposit, they’ll usually stop marketing the unit and focus on finalising the Tenancy Agreement with you. It’s a small but meaningful gesture that builds trust on both sides.
Is it legally binding? Generally, no. An LOI signals intention and frames the key terms; the TA is the contract that binds both sides. That said, specific clauses inside an LOI (e.g., how the deposit is handled) can still carry weight—so read before you sign and keep “Subject to Contract” language in.
The Good Faith (Booking) Deposit vs Security Deposit — what’s what?
When you submit an LOI, you’ll usually pay a Good Faith Deposit (also called a booking deposit). It shows commitment and typically equals one month’s rent for a 12-month lease (two months for 24 months). Once the TA is signed, this amount commonly rolls into your Security Deposit or first month’s rent.
- Good Faith Deposit (with LOI): paid at LOI stage to “hold” the unit; later offset against rent or converted to the Security Deposit after TA signing.
- Security Deposit (with TA): held for the lease period; used for damages/early termination where applicable; returned if no valid deductions at lease end.
Quick comparison
| Item | When you pay | Typical amount | Purpose | What happens next |
|---|---|---|---|---|
| Good Faith (Booking) Deposit | With LOI | ~1 month for 12-month lease (guide) | Shows commitment and “holds” the unit | Usually offset into first month’s rent or converted to Security Deposit after TA |
| Security Deposit | When signing TA | Often 1 month (12-month lease) / 2 months (24-month lease) | Covers damage/early termination per TA | Returned at lease end if no valid claims |
Figures are industry practice, not hard rules; negotiate and record clearly.
What should an LOI include?
Keep it short, precise, and aligned with the TA you expect to sign. Typical inclusions:
- Parties and property details
- Lease term and rent (start date, duration, any option to renew)
- Security deposit and Good Faith Deposit amounts, and what the Good Faith Deposit converts into after TA
- Diplomatic clause (for leases >12 months, if relevant to you)
- Specific requests you’ve agreed with the landlord (e.g., cleaning, minor repairs, furniture changes, pet permission)
- A time frame to issue and sign the TA (e.g., “landlord to issue TA within X days; both parties to sign within Y days”)
- “Subject to Contract” wording (to keep the LOI non-binding as a contract)
Can I get my Good Faith Deposit back?
It depends on what happens and what your LOI says:
- You change your mind after signing the LOI: expect forfeiture of the Good Faith Deposit.
- Landlord changes their mind or both sides can’t agree on final TA terms within the LOI timeline: you should be able to get the Good Faith Deposit back.
- Ambiguous situations: recovery may involve negotiation or a Small Claims Tribunals route—another reason to write clear timelines and refund triggers into the LOI.
Do I always need an LOI?
Not always. If both sides are aligned and ready, you can go straight to a TA. But the LOI is still useful to “hold” the unit and commit terms before the TA is drafted—especially in a competitive market.
Practical tips from Hozuko
- Insist on clarity. Spell out timelines: when the landlord will issue the TA, by when both parties must sign, and what happens to the Good Faith Deposit if the timeline slips.
- Keep it aligned with your TA. If it matters to you in the TA, put it in the LOI (pets, minor works, furnishing swaps, cleaning). It prevents “surprises” later.
- Use “Subject to Contract”. This signals the LOI frames intent, not a binding lease.
- Pay the Good Faith Deposit to the landlord directly (not an agent), and get a written acknowledgement.
- Verify ownership before paying anything. Ask the landlord to verify via official SLA/HDB/IRAS channels.
- Keep receipts and a clean paper trail. If disputes arise, documentation helps.
Bottom line
Think of the LOI as a clean handshake—recorded on paper. It tees up your Tenancy Agreement by locking down the big points, setting a timeline, and parking a Good Faith Deposit that later becomes your first rent or Security Deposit. Write it clearly, align it with the TA you expect, and you’ll glide into signing day with fewer surprises.