Amendments to law ensure landlords not subject to undue burden

he amendments to the COVID-19 (Temporary Measures) Act will ensure that the rent waivers granted by landlords under the rental relief framework to tenants are considered part of their obligations.

New rules will ensure that commercial landlords are not subjected to “undue burden” when they pass on to tenants the obligatory property tax rebates, reported The Straits Times citing Second Minister for Finance Lawrence Wong.

This comes as the amendments to the COVID-19 (Temporary Measures) Act will make sure that the rent waivers granted by landlords under the rental relief framework to tenants are considered part of their obligations.

To illustrate how landlords would benefit from the amendments, Wong cited a change in tenants halfway through the year, where one terminates occupancy in July and the other takes up the space from August.

In case the first tenant was a Small and Medium-sized Enterprise (SME), then this would see the property owner waiving up to four months’ rent starting from April to July under the rental relief framework. 

The minister noted that the owner would have also passed on the property tax rebate of around 1.2 months of rent, including some of the cash grant.

However, the landlord also needs to pass on the property tax rebate to the second tenant under the current property tax rebate regulations. This would be pro-rated to around 0.5 month, said Wong. 

“This is not the intended outcome. This is because the owner had already waived four months of rent for Tenant A under the rental relief framework and passed on the benefit of the property tax rebate to Tenant A. So, the owner should not need to pass on any benefit of the property tax rebate to Tenant B,” he explained as quoted by The Straits Times. 

“That is why the Bill provides regulations to be made retrospectively, to ensure that this position is maintained.”

He added that the bill also allows regulations to be made to enable the owner to recover the excess amount given to the second tenant in case he had already passed on the property tax rebate.

Details of the regulations will be provided via subsidiary legislation and on the website of the Inland Revenue Authority of Singapore when ready, said Wong.

Unveiled as part of Budget measures in February and enhanced in March, the property tax rebate grants owners of non-residential property between 30% and 100% rebate on property tax payable from 1 January to 31 December this year.

The rental relief framework, which took effect on 31 July, provides cash grants to qualifying property owners, who are mandated to extend rental relief to eligible SME and non-profit organisation tenants from April to at most July, depending on the property type.

Source: CommercialGuru, 4 Nov 2020