Rental Waiver Framework for Businesses Impacted by Phase 2 (Heightened Alert)
13 Sep 2021 Posted in Press releases
- The Ministry of Law (“MinLaw”) is introducing a Rental Waiver Framework to assist Small and Medium Enterprises (SMEs) and specified Non-Profit Organisations (NPOs) affected by the tightened safe management measures during Phase 2 (Heightened Alert) (“P2(HA)”). This framework is provided for in the COVID-19 (Temporary Measures) (Amendment No. 4) Bill (the “Bill”) tabled in Parliament on 13 September 2021.
- The Rental Waiver Framework complements the suite of support measures that the Ministry of Finance introduced earlier to cushion the economic impact of the P2(HA) on workers and businesses. This included one month of rental support in total under the Rental Support Scheme (RSS), paid out as cash to qualifying tenants in privately owned commercial properties. At the same time, landlords were encouraged to provide rental support, though this has not been consistently offered.
- The Rental Waiver Framework will ensure the fair co-sharing of rental obligations over the P2(HA) periods between the Government, landlords and eligible tenants. Under the framework, landlords will be required to provide a rental waiver of 2 weeks of gross rent1 to eligible SME and NPO tenant-occupiers of qualifying commercial properties. Taken together with the RSS cash payouts, these tenants will benefit from a total of about 1.5 months of rental support.
(A) Eligibility criteria
An SME or NPO tenant-occupier (including subtenants and licensees) of a qualifying commercial property must meet all of the following criteria to qualify for the rental waiver:
a. Its annual revenue does not exceed $100 million in FY2019;
b. Its lease or licence must be:
i. Entered into or renewed before 20 July 2021;
ii. In force for the entire period from 5 August to 18 August 2021 (both dates inclusive); and
c. Its lease or licence must have been stamped on or before 2 August 2021. (An SME or NPO tenant-occupier who meets all eligibility criteria but has an unstamped lease or licence may make a manual application for rental waiver. Such cases will be assessed by a rental waiver assessor2);
d. It must have suffered at least a 20% drop in average monthly revenue3 during both P2(HA) periods (16 May 2021 to 13 June 2021 and 22 July 2021 to 18 August 2021, all dates inclusive), as compared to the Phase 3 period (28 December 2020 to 7 May 2021, both dates inclusive); and
e. If it is part of a Singapore group of entities4 , the group’s annual revenue must not exceed $100 million in FY2019. (This does not apply to SMEs that are not part of any group of companies, or NPOs.)
(B) Process to claim rental waiver
- Tenants who received the second payout under the RSS will receive a Notice of Rental Waiver (“Notice”) from MinLaw in October 2021. Until such time, tenants should continue to honour their existing contractual obligations.
- Receipt of the Notice does not automatically qualify the recipient tenant for the rental waiver.
Tenants who receive the Notice and wish to claim the rental waiver will need to self-assess if they meet the eligibility criteria. If they meet the eligibility criteria, they must
a. Prepare the supporting documents (e.g. profit and loss statements) to prove their eligibility (refer to Annex A) and complete the Declaration Form attached to the Notice; and
b. Then send the following to their immediate landlord via email or registered post within 28 calendar days from the date of the Notice:/
i. A copy of the Notice;
ii. A copy of the completed Declaration Form; and
iii. Copies of their supporting documents.
- The rental waiver will apply once an eligible tenant sends all the above documents to their landlord. It will apply first to any rental arrears owed, including any associated interest or charges, for the period 5 to 18 August 2021 (both days inclusive). If rent for 5 to 18 August 2021 has already been paid, the tenant’s rent for the next most immediate month will be reduced by 2 weeks.
- If the tenant rents the property through an intermediary landlord (i.e. a landlord who is not the property owner), the intermediary landlord will also receive the same amount of rental waiver from their immediate landlord (i.e. the landlord of the intermediary landlord), up to a cap of 2 weeks of the gross rent of the intermediary landlord. This applies regardless of whether the intermediary landlord meets the eligibility criteria. To claim the rental waiver, the intermediate landlord must send copies of all the documents they receive from their tenant to their immediate landlord via email or registered post, within 7 calendar days of receiving the documents from their tenant.
- Landlords who have provided rental support to their tenants during P2(HA) may offset from their rental waiver obligations any direct monetary assistance or rental waivers5 provided to tenants from 16 May 2021 up to the date the landlord receives all the tenant’s supporting documents.
- The process to claim the rental waiver is summarised in Annex B. Tenants who assess themselves to be eligible for the rental waiver should start preparing the necessary supporting documents even before they receive the Notice, so that they may claim the rental waiver in a timely fashion.
(C) Assessment by rental waiver assessors
- Tenants and landlords are encouraged to work out mutually agreeable arrangements based on their specific circumstances. However, if they are unable to reach a compromise, they may make an application to an independent rental waiver assessor for a determination.
- We recognise that not all landlords will be financially able to provide the rental waiver, especially if they rely on rental as their main source of income. Such landlords may apply to be exempted from providing the rental waiver if they meet certain criteria.
- Refer to Annex C for more details.
- If the Bill is passed, MinLaw expects to implement the Rental Waiver Framework in October 2021. More details will be announced in due course.
MINISTRY OF LAW
13 SEPTEMBER 2021
Annex A - Supporting Documents Required to Claim Rental Waiver
Annex B - Process to Claim Rental Waiver
Annex C - Determinations by a Rental Waiver Assessor
1. Gross rent is what is agreed on under the lease agreement or licence, and will include gross turnover rent, maintenance fees and service charges. ↩
2. Successful applicants will be issued with a Notice of Rental Waiver and will be subject to the same service requirements as other groups of tenants. ↩
3. If the business commenced after 28 December 2020, the drop in average monthly revenue will be calculated by comparing both P2(HA) periods to the period from the business commencement date to 15 May 2021 (both dates inclusive). ↩
4. This refers to a group of entities that are incorporated or established in Singapore and related to each other through ownership or control in a manner that the group is required to prepare consolidated financial statements for financial reporting purposes (i) under FRS 110 or an equivalent accounting standard, or (ii) due to equity interests in any of the entities being traded on any stock exchange in Singapore. ↩
5. In-kind assistance such as additional advertising or parking promotions cannot be offset. Rental waiver assessors may take into account exceptional circumstances where landlords provided significant financial assistance prior to 16 May 2021. ↩
Last updated on 13 Sep 2021