The Government will provide a S$2 billion cash grant to help offset the rental costs of small and medium-sized enterprises (SMEs) tenants with qualifying leases or licenses, said the Deputy Prime Minister Heng Swee Keat in Parliament on Tuesday (26 May).
Earlier before, many SME tenants have voiced out their struggle in coping with the monthly rental due to the circuit breaker measures that have led to many closures of workplace premises. Some even started a petition to appeal for a law to mandate landlords to waive a one-month rental for non-essential business tenants.
In response to the appeal, Mr Heng announced that a cash grant will be provided to the qualifying SME tenants, plus a new Bill will also be introduced to mandate landlords to pass rental waivers to tenants.
The announcement was made as a part of the country’s S$33 billion Fortitude Budget that was unveiled by Mr Heng in Parliament on Tuesday, which was the fourth round of support measures announced for the current financial year.
According to him, the cash grant will be distributed through property owners. It will be disbursed to them by the Inland Revenue Authority of Singapore (IRAS) from end-July.
Along with the existing property tax rebate, the Government will offset about two months of rental for qualifying SME tenants of commercial properties and about one month of rental for qualifying SME tenants in industrial and office properties.
SMEs refer to companies with not more than S$100 million in annual turnover, based on corporate tax and individual tax returns for the 2019 assessment year. To be qualified in obtaining the grant, the SME tenants must possess qualifying leases or licenses commencing before 25 March 2020.
Qualifying SME tenants of commercial properties – such as shops – will receive a cash grant valued at about 0.8 month’s worth of rent, as well as the existing property tax rebate. This brings total Government support to about two months for these SME tenants.
While for those who rent other non-residential properties – such as industrial and office properties – will receive a cash grant amounting to 0.64 month’s of rent, bringing the total Government support to about one month of rent for these SME tenants.
In fact, the cash grant will also be made available to SME property owners who run a trade or business on their own property. Mr Heng noted that the IRAS’ website will provide more details on this later by the end of June.
“We will significantly add to the support for rental costs earlier provided through the property tax rebate for 2020 in the Unity and Resilience Budgets. We will also expect landlords to do something, and that will be legislated,” he said.
Govt to introduce a Bill that mandates landlords to grant rental waivers to SME tenants
Mr Heng announced that a new Bill will also be introduced by the Ministry of Law next week which seeks to mandate landlords to grant rental waivers to their SME tenants, who faced “a significant revenue drop” amid the COVID-19 pandemic.
The new Bill will cover provisions on temporary relief from onerous contractual terms – such as excessive late payment interest or charges – as well as to permit tenants to repay their arrears through installments, he said.
If it is passed by Parliament, Mr Heng noted that SME tenants in commercial properties – who have suffered a significant revenue drop – will benefit from a total of four months of rental relief, which will be shared equally by the Government and landlords.
“We deliberated on this matter very carefully. The Government does not ordinarily intervene in contracts after they have been entered into,” he said.
“However, as the Minister for Law had explained in his second reading speech on the COVID-19 (Temporary Measures) Bill, in exceptional situations such as this, the Government needs to intervene, through legislation, with temporary targeted steps to safeguard the economic structure for the common good,” Mr Heng added.
Other SME tenants in industrial and office properties will also be given some rental support. The minister further asserted that SMEs also already benefit from temporary relief from rental payment obligations till October.
He added that rental relief for Government tenants will also be extended, with two more months of rental waivers for commercial tenants and hawkers. Stallholders in hawker centres and markets – that are Government-managed – will receive a total of five months of rental waiver.
Other non-residential tenants – such as industrial, office, and agricultural purposes – will get two months’ worth of rental waiver in total.
“We will also ensure that these measures flow through to help sub-tenants, many of whom are SMEs. This will dovetail with measures for SMEs being studied by the Minister for Law,” said Mr Heng.
SME tenants voiced the struggle to cope with monthly rental amid the circuit breaker period
About a month ago, Tenants Singapore started a petition to the Prime Minister Lee Hsien Loong Minister of Law K Shanmugam and proposed to enforce a law to mandate landlords to waive one-month rental for non-essential businesses tenants, on top of the existing property tax rebate.
The petition also proposed to have the late interest fees for two-month rental payments to be waived, as tenants are earning “zero revenue” during the circuit breaker period.
“During these two months, most of these non essential business are unable to operate at all and earn zero revenue as a result. Yet, many of the tenants have high rental payments that continue to accumulate. Tenants have been recommended to speak to our landlords but many of us are facing roadblocks as the landlords refused to speak to us or hear our request,” the petition page reads.
The petition has gathered about 6,968 signatures at the time of writing, aiming to hit a target of 7,500 signatures.
Following Mr Heng’s announcement, many SME tenants – who supported the petition – penned on SG Tenants United For Fairness‘ Facebook page as they “declared victory” for the results to their appeal.
Nevertheless, the petition is still ongoing, with its second request to waive all late payment fees for two months of rental payments during the circuit breaker period, as the rental waiver was not applied “retrospectively”.
Previously, many SME tenants have echoed their struggle in coping with the monthly rental while their revenue dropped significantly amid the country’s circuit breaker period.
On May 20, SME tenant, who goes by the name stackzsingapore, wrote on SG Tenants United For Fairness‘ Facebook page that landlords were adamant to waive the rental cost despite F&B business owners were unable to open for dine-in services.
The tenant added that the sales had dipped by 80 per cent to 90 per cent, while still need to use 10 per cent to 20 per cent of the sales revenue to pay commission to delivery partners.
Another SME tenant posted on 20 May, suggesting the Government allow tenants to exit the tenancy contract without a penalty, so that landlords will want to renegotiate the rental payment. He added that many tenants would not want to end their tenancy agreement but they were left with no better option.
SME tenant, Ann Dextermama Goh, urged landlords to extend their help to tenants as it will take “at least a generation” for the retail and F&B businesses to recover if landlords only focus on their “short term gains”.
Meanwhile, one SME tenant with a commercial property lease claimed that her landlord requested to increase 20 per cent of rental during the circuit breaker period. She asked whether it is legal for the landlord to do so and how to handle such a situation.
A salon owner used a metaphor of “a plant and soil” to describe the challenges of her business and the landlord. She hinted that her landlord still requested her to pay the full rental despite knowing that the salon cannot open for services during the circuit breaker, and not even able to resort to other alternatives like delivery.