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Jun Low, the Director of JC Global Concepts, recently took to her Facebook to highlight that the Government should step in to prevent retail landlords from raising their rent rates during every renewal period for the tenants.
The food and beverage (F&B) entrepreneur who is behind some of the renowned restaurants in Singapore and overseas like Central Hong Kong Café, Black Society and BreadStory (Malaysia and Dubai), was responding to an article published by The Business Times titled “Singapore business body pushing for fair rent terms from private landlords”.
In the article, it is that that the Singapore Business Federation (SBF) is looking at urging private landlords to follow the tenets drafted by the Fair Tenancy Agreement (FTA), which include being more transparent about occupancy costs and control the amount of data tenants share.
The article highlighted that SBF is currently reviewing FTA and getting landlords to follow and adopt the framework, but if all their methods fail, then the group may push for legislation.
Besides that, tenants are also forced to follow landlords’ point of sales system causing them to know the tenants’ sales.
Adding to the unfairness, the article also stressed that F&B players who are already put in a difficult situation due to the Government’s policy to curb the country’s dependency on foreign workers, are now faced with tougher environment, thanks to “the lopsided leases in Singapore”, which favours the landlords more than the tenants.
Some of the problems mentioned in the article include short-term leases which again benefits landlords as well as personal guarantee clause that “makes the tenant personally liable to pay the rent for the remaining term if he or she ceases operations”.
In addition, the pre-termination clause also puts pressure on tenants as landlords are given the green light to terminate a lease after giving, for example, just three months’ notice, as it is a condition in Reit (real estate investment trust) tenancies.
Although the article noted that the number of retail space has reduced in recent times, but landlords are still not cutting the rent rates for existing tenants. Their justification to this is that if they do give a sitting tenant a reduction, then other tenants will demand the same making their situation more difficult. As such, they prefer to just terminate a contract and offer a reduced rate to the new tenant.
Upon reading this article, Ms Low said in her Facebook post that if this unfair rent hike continues, it will eventually stifle the economy.
“CapitaLand – being the leader and government backed company – please take the lead to exercise more conscience and be conscientious in your rent rates pricing. Stop taking such high unnecessary quantum of security deposits to hoard your pile of cash further weighing down on your tenants’,” she urged.
Sympathising tenants, the well-known figure in the F&B industry expressed that retail tenants face a large amount of challenges in this tough industry and their “biggest woes are rental and labor”
This is because “not only do landlords want to have the whole pie and eat it all, they grab the crumbs altogether and ask for another pie,” she added.
As such, Ms Low pointed out that the government directives should not support this kind of greed, urging them to step in and withdraw all Reits.
If landlords’ only motive is to gain profits and growth, then the society will be transformed to one that only focuses on money, and this will result to a ripple effect as all SMEs and businesses will suffer. Therefore, she questioned, “Where is the humanity value that is so needed in society?”
“Does this ripple effect sound familiar? Did the Reits and landlords get the influence via out government bodies to always care only about a profitable bottom line? The value in our society is in ardent need for an overhaul” she wrote.
In response to queries from TOC, Ms Low said that she thinks that this situation happened due to a “domino effect” made by the Government. If this continues where landlords increase the rent at every renewal period without considering tenants’ situation or whether there’s a spike in the business, then it will not motivate entrepreneurs and enterprises, she added.
Due to the high cost of business operations in Singapore, she said that many multinational corporation (MNCs) have chosen to leave the country, and if this goes on, then the remaining small and medium-sized enterprises (SMEs) will eventually cease its operation “if you (landlord) continue to stifle them”.
“A lot of experienced operators are not expanding because they know the industry. You can see more newer brands because they don’t know (the real situation) as they have not operated before. Every new tenant think they can do magic but eventually, they will call it a day after two to three years. Is the Government or its policies wanting to see situation like forever where tenants can merely make ends meet?..So I think the Government really needs to think about this,” explained Ms Low.
In addition, Ms Low also said that landlords still make a pretty “handsome profit” even without the rent hikes. As such, she questioned the need to make life difficult for the tenants by increasing the rent.
The entrepreneur also highlighted to TOC that the renting scale is so “unevenly tilted” where landlords end up always on the benefiting side, whereas tenants fall on the losing end.
When asked about Reits, Ms Low said that it is so short-sighted. This is because if there are more for the businesses to offer, then the excess money will rotate back into the industry and everyone will have a better spending power. But with the current model, all the money is just going back to the big corporations and nothing for the people.
“The Government really needs to re-think about this. When everybody does not have enough spending power or disposable income, then how can it be recycled back into the economy?” she asked.
“I think the Government policies should step in. I told them (MPs) to gather all the landlords and have a dialogue and share the Government’s directions. Ultimately, you’re sending a message to the landlords to not keep increasing rent rates..(and) give a better operating environment for all.”