COVID-19 (Temporary Measures) Act 2020 - Practical Guide For Landlord

Landlord A: Karen, my tenants are requesting for a discount of rental.  What should I do?

This isn't the first time landlords have asked me for advice regarding rental discount.  Let me attempt to provide some clarity in this area.

For Landlord A who has leased out her shophouse space to a Restaurant Operator, she has agreed to give a rental discount to her tenant.  Her tenant has barely any business since Circuit Breaker.  Tourists also form part of this tenant’s customer base.  While this tenant is struggling to meet her overhead expenses with hardly any sales, the landlord has decided to give this tenant a discount to the monthly rental.

This gesture of goodwill by the Landlord came about as early as March.  That is even before The Temporary Measures Act 2020 came into effect.

Pursuant to Part 6 of the COVID-19 (Temporary Measures) Act 2020 (No. 14 of 2020) (the “COVID-19 Act”), it is the property owners’ obligation to fully pass the property tax rebate on to tenants.

Not all property owners are subjected to this obligation.  Only property owners of qualifying properties.  Put it simply, only non-residential property owners will be eligible to receive property tax rebate. 

Tenant of Landlord B: Karen, can you help me ask the landlord for rental discount for that condominium that my staff is renting?  My F&B business is struggling during this period.

Even though the tenancy is a company lease from a F&B operator, the property in question is a condominium  i.e, a residential property.  Landlord B will not be eligible to receive any property rebate from Inland Revenue Authority of Singapore (IRAS).  Therefore, Landlord B is not obliged to provide any rental discount to her current tenant. 

Also, do note that not all commercial property owners will be eligible to receive property tax rebate.   

Still confused?  Let me broadly categorised eligibility for Property Tax Rebate into 4 property categories:

You would probably notice that properties that are qualified for 100% property tax rebate are directly related to Travel and Tourism industry, Retail, F&B and so on - as we all know are the most impacted by the Cornavirus outbreak. Property owners of such tenanted properties are eligible for 100% property tax rebate. The amount of property tax rebate received is estimated to be slightly more than one months of rental.

I have given some examples of properties in each category in the above table.  For more details, please refer to IRAS.

Karen, my tenants are requesting for a discount of rental AGAIN.  What should I do?

In this case, this particular Landlord A has already given rental discount previously.  Then Landlord A has already satisfied the obligation imposed under the Temporary Measures Act.  That is, if the amount of rental discount given is equivalent or more than the property tax rebate the landlord has received from IRAS.

Of course, this does not stop the Landlord who might be in a better financial position to go beyond what is legislated as minimum obligations.  On top of the mandatory rental reductions, some landlords have in fact waived x% of rental payment instead of rental deferment.  

Some Landlords maybe in the same boat as the tenants.  The landlords are also equally concerned as they are experiencing the same limited cashflow situation. In order to strike a balance between ensuring that property owners will not be required to pass on more rebate that they have received on hand and ensuring that they pass on the rebate in a timely manner to their tenants, IRAS has set two milestones for the property tax rebate to be passed on to the tenant.

2 Milestones: To be observed by Landlord

Property Tax Rebate Amount Received from IRAS attributable to the rented property	Deadline to pass the rebate to Tenant
For period  1 Jan – 30 Jun 2020	31 Jul 2020
For period 1 July – 31 Dec 2020	31 Dec 2020

Mode of delivery:  Can be in the form of monetary payment, rental reductions or an offset against current and future rental.

For landlords who have not received the Rebate notice from IRAS and unsure of how much to pass on to your tenants, you can can log in to myTax portal from end-April to view your Rebate notices.  All qualifying property owners would receive their notices from IRAS by 31 May 2020.

Gentle Reminder to all Landlords of qualifying properties

You not only need to comply but ensure you have kept records evidencing compliance! So Landlords, please ensure proper documentation and retain relevant property tax rebate records up for a period of 3 years (ie, up till 21 Dec 2023). The soft c-copy or hard-copy records need to show clearly the following:

• When the rebate was passed on your tenants
• How much rebate was passed on to your tenants
• Basis used for rebate amount allocation to each tenant (if there are multiple tenants involved)

Lastly, landlord of qualifying properties, please take note!

It’s an offence for landlords who failed to properly pass on the rebate to the tenant or or to keep the records, without reasonable excuse. 

Penalty: Those guilty of such an offence shall be liable on conviction to a fine not exceeding $5,000.

Karen, my tenants have defaulted on rental payment for the past 2 months already. Can we charge them late interest payment?

And yet another inquiry from a landlord today. I shall leave this for further discussion in my next blog post.

Dear Landlords, hope you have found this post useful.  Do look out for the next part on more Practical Guide For Landlord.

📬 Let's chat about property.  Whatsapp Karen Woo @ 9159 2692 for an non-obligatory chat.

Reference: Inland Revenue Authority of Singapore. (Property Tax Rebate for Non-Residential Properties in 2020)