Commercial properties landlords have been brought to the limelight recently as many businesses, including F&B companies, struggle to survive the COVID-19 pandemic.
There is a growing concern that landlords of commercial properties may not be doing enough. And fortunately (or unfortunately for landlords), the government will be introducing a COVID-19 Bill in parliament that, when passed, will make it mandatory for landlords to provide additional rental relief to affected tenants.
As shared during the Fortitude Budget, the Singapore government will provide a cash grant to offset the SME owners’ rental cost, which would be disbursed through landlords. It’s important to note that landlords have to pass the cash grants to their tenants as required by the law. This is in additional to the property tax rebate that was announced in earlier budgets.
In total, the government estimated that it would be providing an equivalent of about 2 months of rent for qualifying commercial properties and about 1 month of rent for industrial and office properties.
However, it appears this isn’t enough. And rightly so in our humble opinion. With the circuit breaker already taking up 2 months, some businesses would need even further support to survive.
Read Also: 5 Key Things You Need To Know About The COVID-19 Temporary Bill
Additional Rental Relief To Be Provided By Landlords
Given the current economic conditions, commercial landlords are likely to suffer if their tenants are unable to continue their business operations. Finding new business tenants would be incredibly tough and landlords may find their commercial properties go unrented for a period of time. Let’s face it, 2020 is not exactly a year where people are scrambling to start new businesses and to find new offices.
Thus, it makes sense that commercial landlords should do their part to support their tenants, rather than have a short-term profiteering mindset.
The rental relief bill would require landlords to give eligible SMEs in Singapore additional rental waivers. This would be two months for qualifying commercial properties, and one month for industrial and office properties. This will apply in June and July 2020 for commercial properties, and May 2020 for SMEs in industrial and office properties.
Eligibility Criteria To Qualify For Additional Rental Relief
To get the additional relief, tenants have to satisfy all the following criteria.
- SMEs at the group level with a turnover of no more than $100 million in 2019.
- Substantial drop in average monthly revenue during COVID-19 (average monthly revenue from April to May 2020 on an outlet level reduced by 35% or more, compared to April to May 2019).
- The tenancy must have been entered into before 25 March 2020.
When combined with the government relief, affected tenants of commercial properties would be receiving about 4 months of rental waivers, while those who occupy industrial and office properties would have received 2 months of waiver.
This essentially means that affected tenants of commercial properties wouldn’t have needed to pay rent from April 2020 to July 2020.
While the rental waiver doesn’t cover the losses that many companies are already suffering during this period, it does help reduce the effect of COVID-19 on businesses, and hopefully, keep more companies and jobs alive for the year.
Read Also: Fortitude Budget 2020: 6 Announcements To Help Businesses In Singapore Survive COVID-19
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