More rent waivers are in the works for eligible small and medium-sized enterprise (SME) tenants in pandemic-hit sectors that have suffered a 35 per cent or more drop in average monthly revenue for April to May from the same year-ago period.
This and other additional support measures are in an extended Covid-19 (Temporary Measures) (Amendment) Bill to be introduced and debated in Parliament tomorrow. If approved, the amendments will be implemented end-July.
Nearly 260,000 SMEs employing more than two million workers stand to benefit from the measures. Many need help to stay afloat as they have been hit hard by the pandemic’s unprecedented severity, with recovery likely to be slow in a phased reopening of the economy.
Eligible tenants and sub-tenants in the food and beverage and commercial sector will get a total of four months of rent waived – two months each from the Government and the landlord. Those in the office and industrial sector will get two months of rent waived – one month each from the Government and the landlord.
To be eligible, SME tenants must also have had $100 million or less in annual turnover in 2019 and the tenancy must have been entered into before March 25 this year.
Landlords will be required by law to give additional rent waivers to eligible SME tenants and sub-tenants that have been hit hard by the pandemic, on top of passing on property tax rebates and the cash grant given by the Government.
The landlord can apply for an assessment of the tenant’s or subtenant’s eligibility for relief within a specific time, and the case will be determined by an assessor.
The additional rent waivers will be applied to April through July for SMEs in commercial properties and April through May for those in industrial/office properties, as long as their leases are in force on April 1.
But some landlords can also get help. Those unable to provide the extra waivers may seek an assessment on grounds of financial hardship, which will take into consideration whether their rental income forms a substantial part of their total income and the annual value of their properties.
Law and Home Affairs Minister K. Shanmugam said at a media briefing on Tuesday: “Certain landlords will find it difficult to give the full waiver. Qualifying landlords, particularly the smaller landlords, with one property (and where rental) forms a substantial part of their income – we will set out the criteria – they will only be required to give half the amount of waiver.”
This means they may give one month’s waiver of base rent instead of two to F&B and commercial tenants, and half a month off instead of one month to office and industrial tenants.
“We are trying to strike a balance… Landlords have to do their part, tenants have to do their part, and together, with a bit of sharing of the pain, we hope that as many as possible can pull through,” Mr Shanmugam said.
The new Bill will also put a cap on late payment interest or charges for arrears for specific contracts. It will also let tenants repay their arrears through instalments.
Eligible SMEs can serve notice on landlords to take up a statutory repayment scheme for rental arrears accumulated from Feb 1 until Oct 19. Under it, tenants must start paying the first instalment by Nov 1.
For example, if a commercial tenant applies to defer payment for six months from Feb 1 to July 31, four months’ rent from April to July will be waived. The balance of two months’ rent has to be paid in equal instalments for the lease’s remaining term, up to a maximum of nine months, with interest payable capped at 3 per cent per annum.
If tenants fail to make payment or terminate the lease, the scheme will be cancelled and the landlord will be entitled to immediate payment of all rental arrears, and to take steps under the contract for unpaid rent.
Mr Terence Yow, a representative of Singapore Tenants United for Fairness, said lease contracts typically assess late payment interest of between 10 and 15 per cent per annum.
“So capping these charges at 3 per cent is very fair because the finance charges landlords pay on bank loans are around 3 per cent also,” he said.
Tenants unable to vacate their business premises after the end of their lease but before the moratorium ends on Oct 19 can seek relief too. If they meet conditions prescribed by the Law Minister, they will not be held liable.
Updated from : The Straits Times, 04 June 2020