The Ministry of Law will soon introduce a new Bill that forces landlords here to hand rental waivers to Small and Medium-sized Enterprise (SME) tenants who have suffered "a significant revenue drop" in recent months.
SMEs refer to companies that have less than S$100 million in annual turnover.
This is particularly pertinent in view of mandated business closures during the ongoing islandwide Circuit Breaker period, that all but cut off many businesses' revenue streams, especially those that offer in-person services, for example.
If it is passed, Deputy Prime Minister and Minister for Finance Heng Swee Keat says SME tenants can benefit from a total of four months' rental relief, which will be shared equally by the government and landlords here.
Other SME tenants in industrial and office properties will also be given "some" relief, which is expected to be elaborated further upon by the Ministry of Law when the Bill is introduced later on.
DPM Heng additionally noted that SMEs also already benefit from temporary relief from rental payment obligations till October.
This announcement was made as part of a new S$33 billion Fortitude Budget DPM Heng unveiled on Tuesday (May 26) in Parliament.
This is the fourth Budget, after the Unity, Resilience and Solidarity Budgets announced earlier this year, that projects a hefty S$74 billion deficit on the government's part for the financial year, including a S$31 million dip into our past reserves.
New draft law will also include temporary relief from late payment interest charges & other onerous contract terms
The Bill, said Heng, will also cover onerous contractual terms that may exist in rental agreements, such as late rent payment interest charges or financial penalties. It will additionally permit tenants to pay their rental arrears to their landlords through instalments.
"We deliberated on this matter very carefully. The government does not ordinarily intervene in contracts after they have been entered into. However... 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."
S$2 billion cash grant to offset rental costs for SMEs
Separately, Heng also announced a S$2 billion cash grant that will help offset rental costs for qualifying SMEs that operate out of private properties.
In other to get the cash grant, these SMEs must have qualifying leases or licences commencing before March 25, 2020.
SME tenants who rent qualifying commercial properties (for instance, shops) will receive a cash grant of about 0.8 month's rent.
SME tenants who rent other non-residential properties (for example, industrial and office properties) will receive a cash grant of about 0.64 month's rent.
Taken together with the property tax rebates announced in the Unity and Resilience Budgets, this means that SME tenants who rent commercial properties will receive two months of rental relief, while SME tenants who rent other non-residential properties will receive one month of rental relief.
The new government cash grant will be disbursed automatically by IRAS to the qualifying property owners.
S$365 million to increase rental waivers for tenants in government premises
Separately, another S$365 million will go into increasing the rental waivers for businesses located in government-owned or managed non-residential premises.
- Stallholders in hawker centres and markets will receive five months' worth of rental waiver in total, with minimum waiver of S$200 per month.
- Commercial tenants will now get four months' worth of rental waiver in total. Eligible tenants/lessees may include those providing commercial accommodation, retail, F&B, recreation, entertainment, healthcare, and other services.
- Other non-residential tenants like those in premises used for industrial or agricultural purpose, or as an office, a business or science park, or a petrol station will get two months' worth of rental waiver in total.