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Singapore Requires Landlords to Provide Tenants With More Rental Waivers

June 17, 2020

The Singapore government on 5 June passed the COVID-19 (Temporary Measures) (Amendment) Bill, which aims to provide eligible small- and medium-sized enterprises with rental relief. The bill is premised on a fair sharing of obligations between the government, landlords, and tenants.

Under the new laws, small- and medium-sized enterprises (SMEs) with no more than S$100 million turnover in 2019 and suffered at least a 35% drop in average monthly revenue from April to May 2020 compared to the same period last year are eligible for rental relief. They must have tenancies entered into before 25 March 2020. Subtenants or licensees which meet these requirements are also eligible.

Qualifying commercial property owners must give eligible tenants a waiver of base rent for June and July 2020. Industrial and office property owners must give eligible tenants a waiver of base rent for May 2020. Base rent excludes the variable rent based on a tenant’s gross turnover, as well as maintenance fee and other service charges. These measures are in addition to the rent support previously announced by the government. In total, qualifying commercial property tenants will get four months’ worth of rental relief from April to July 2020, while industrial and office property tenants will get two months’ worth of rental relief for April and May 2020.

In addition, eligible SMEs will be allowed to repay part of the rental arrears that they may have accumulated from 1 February 2020 to 19 October 2020 via installments, with the first being no later than 1 November 2020.  For commercial tenants, the maximum amount of arrears that can be paid in instalments will be five months of base rent. For those at industrial and office properties, it will be four months of base rent. The interest payable on such arrears will be capped at 3% per annum. If a tenant fails to make payment or terminates the lease, the repayment scheme will be cancelled and it may be liable to repay all arrears immediately.

Landlords that are unable to provide tenants with the additional rental waivers may seek an assessment on grounds of financial hardship. If the appeal is granted, they will only have to give half of the waivers. The factors considered during the assessment include the annual value of the property and whether rental forms a substantial proportion of the landlord’s total income.

These measures will provide additional support and relief to SMEs in order to tide them over during the period of the COVID-19 pandemic. Given that they are legislative measures, they will have greater force and ensure that tenants also benefit from rental rebates received by landlords.

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Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers, who are directors of Morgan Lewis Stamford LLC, a Singapore law corporation affiliated ‎with Morgan, Lewis & Bockius LLP:

Singapore
Daniel Chia
Annette Liu
Yanguang Ker