This article summarises the key takeaways from the new laws by the Singapore Government on a person’s inability to pay for rent on leases for non-residential properties upon the passing of the COVID-19 (Temporary Measures) Act 2020 (“the Act”).
What does the Act provide for?
The Act allows you to obtain a deferment of payment of rent for 6 months and prevents the landlord from terminating the lease or licence or evicting you in the meantime. It is not a waiver of your rent. You will still need to pay the rent after the 6 months.
Does the Act apply to all leases or licences?
The Act gives temporary relief for contracts for leases or licences of non-residential immovable properties, like office premises or a retail shop (see paragraph 1(h) of the Schedule to the Act) which was signed or renewed before 25 March 2020 (see section 4(1) of the Act).
What criteria must I satisfy?
You must satisfy the following criteria:
- It must be a non-residential lease or licence (see above)
- you must also show that the main reason for you being unable to pay the rent is because of the COVID-19 pandemic (see section 5(1)(b) of the Act). This is in line with the aim of the Act to grant temporary relief to businesses or individuals who cannot fulfil contractual obligations because of COVID-19.
- your rental payment(s) must be due on or after 1 February 2020 (see section 5(1) of the Act).
What must I do to get a deferment of the payment of rent?
If you fulfil these conditions, you can serve a written notification of relief on your landlord, which can be in the form of a letter, setting out your intention to exercise your right to temporary relief under the Act because you are unable to pay the rent due to the COVID-19 pandemic. For example, if you lease a unit selling bicycles, you can explain that due to the laws passed by the Singapore Government, because you are a non-essential service, you have had to close your shop from 7 April to 4 May 2020. As a result, you have no income and cannot pay the rent.
While there is currently no specific form required for the notification of relief, it is still important to provide an explanation on how the COVID-19 pandemic has caused you to be unable to pay your rent. This will reduce the risk of your landlord questioning your inability to pay rent and applying for a determination by an assessor against you (see below).
What will the temporary relief provide?
Once you have served your notification of relief on your landlord, your landlord cannot terminate your lease, evict you from the property, forfeit your security deposit, seize your goods, or commence any legal proceedings against you (and other actions) because of your inability to pay your rent (see section 5(3) of the Act).
How long will the temporary relief last?
The temporary relief provided under the Act will last until the earliest of the following dates (see section 5(2) of the Act):
- The expiry of the period prescribed by the Government under the Act, which currently lasts 6 months until 7 October 2020 (unless extended or shortened by the Government);
- The date of withdrawal of your notification of relief once you are able to pay your rent (should you decide to withdraw your notification of relief); or
- The date on which an independent assessor appointed by the Registrar makes a determination that you are no longer entitled to temporary relief under the Act (see below).
What if your landlord refuses to comply with your notification of relief?
Non-compliance with the notification of relief is an offence. You can report your landlord to the authorities, and your landlord will be liable on conviction to a fine not exceeding $1,000 if found guilty (see section 8(1) of the Act).
What if your landlord decides to dispute your notification of relief?
If your landlord disagrees that you are unable to pay your rent despite the COVID-19 pandemic, your landlord may make an application for an independent third party called an assessor appointed by the Registrar to decide whether you really cannot pay the rent and serve a copy of the application on you (see section 12 of the Act).
The assessor may take into account your ability and financial capacity to pay the rent (among other factors). He will seek to achieve an outcome that is deemed “just and equitable” in the circumstances of the case (see sections 13(1)-(2) of the Act). Do note that in such proceedings before an assessor, no lawyers are allowed (see section 14 of the Act).
A resolution will be reached within 5 days. If the assessor makes a resolution in favour of the landlord, the assessor may order you to make payment of the rent due to your landlord (in full or in part) and/or for your landlord to terminate the lease, forfeit your deposit etc. (see section 13(3) of the Act). If the assessor finds in your favour, then rent is deferred for 6 months or such other time as set out above.
Further points to note
As stressed by Minister for Law Mr K. Shanmugam:
the temporary relief provided under the Act for the inability to pay rent for commercial properties is only a temporary deferment of rent payments, and does not mean that you are completely absolved from the need to pay rent for the next 6 months. In fact, rent during this 6-month period prescribed by the Government still accrues and must be paid once the temporary relief period ends.
Remissions on property tax
As a final point, it is now mandatory for your landlord to unconditionally pass on any remission of property tax made by the Government in response to the COVID-19 pandemic to his tenant – YOU. This is because such property tax rebates are intended to benefit tenants. Landlords who fail to do so without reasonable excuse will be guilty of an offence and liable on conviction to a fine not exceeding $5,000 (see section 29 of the Act).
If there any disputes over the passing on of property tax remissions, either you or the landlord may apply for the dispute to be heard and determined by a Valuation Review Panel (see section 30 of the Act). There is no specific rule preventing representation by lawyers in such proceedings.
For more details on temporary relief for tenants of commercial leases or licences:
- To read the Act, click here: https://sso.agc.gov.sg/Act/COVID19TMA2020
- To read articles from the Business Times and Straits Times, click here: