Second Reading Speech by Minister for Law, Mr K Shanmugam, on the COVID-19 (Temporary Measures) (Amendment No. 4) Bill

14 Sep 2021 Posted in Parliamentary speeches and responses

I. Introduction

1. Mr Speaker Sir, I beg to move, “That the Bill be now read a second time.”

2. The Minister for Finance announced in his Ministerial Statement on 26 July this year that the Government would provide additional 2 weeks of direct rental support for qualifying tenants, owner-occupiers, of privately-owned commercial properties. This was because the tightened safe management measures, under Phase 2 (Heightened Alert) imposed a number of restrictions.

3. The Minister for Finance also said the Government would consider requiring landlords to provide a matching 2-week rental waiver for eligible tenants.

4. This Bill introduces the legislative framework to implement the mandatory rental waiver by the landlords.

II. Rationale for Intervention

5. Let me briefly explain the rationale behind this Bill.

6. There were two Phase 2 (Heightened Alert) periods:

1. 16 May to 13 June 2021.
2. 22 July to 18 August 2021.

7. During these periods:

1. Dining in was not allowed.
2. Indoor mask-off activities were restricted.
3. Operating capacity was decreased.

8. These restrictions impacted some businesses. Rental expenses were a persistent pain point.

9. The Government decided to support – through the Rental Support Scheme (or RSS for short). The RSS is part of a broader suite of measures, put in place to address the impact of the Phase 2 (Heightened Alert) measures. These include the Jobs Support Scheme and the various COVID-19 grants.

10. In total – more than S$2 billion has been set aside to cushion the business impact of Phase 2 (Heightened Alert).

III. Key Features of Bill

11. Let me now explain the key features of the Bill.

A) Provisions for Tenants

12. Eligible tenants will receive from their landlords, two weeks’ waiver of gross rent, including service & maintenance charges.

13. To qualify, they must be tenants of privately owned commercial properties, and they must meet three criteria:

1. They must be a SME, or a specified non-profit organisation, with an annual revenue of not more than $100 million.
2. Their tenancy –
1. must have been entered into before 20 July 2021, if it is a fresh lease. Or if it is a renewal, then renewed before 20 July 2021; and
2. must be in force from 5 to 18 August 2021.
3. And they must have experienced at least a 20% drop in their average monthly revenue, at the specific property, during both P2(HA) periods compared to the Phase 3 period (from 28 December 2020 to 7 May 2021). That’s the reference period.

14. This third criterion is an additional criterion – it is not required for the two RSS payouts from the Government, and these payouts include:

1. 0.5 month of rent, for the period of 14 May to 29 May 2021, which has been disbursed starting from 6 August.
2. 0.5 month of rent, in the period 22 July to 18 August 2021, which will be disbursed in October.

15. If tenants meet the first two criteria, they will receive a Notice of Rental Waiver automatically from the Ministry of Law, in the first half of October 2021.

16. Tenants who do not receive a Notice, but assess that they meet all the criteria, can make a manual application. We will announce, in due course, the date on which applications open and the other administrative details.

17. If the tenant also meets the third criterion, that is, a 20% drop in revenue, then the tenant will not be liable to pay rent in respect of the period from 5 August to 18 August 2021, provided that the tenant sends a copy of the Notice, and proof of the revenue drop to its immediate landlord within 28 calendar days of the date of the Notice.

18. This can be done via:

1. Email, which is preferred to minimise potential disputes between landlords and tenants; or
2. Registered mail.

19. f the rent has already been paid, the equivalent amount can be offset against their next rental payment.

B. Provisions for Landlords

20. In designing the framework, we also considered the interests of landlords.

21. We recognise that some landlords have been proactive. They provided assistance to their tenants, in the form of direct payments and rental waivers.

22. These landlords can offset such assistance from the rental waiver obligations, if the assistance was provided in respect of rental obligations incurred on or after 16 May 2021, which was the start of the first Phase 2 (Heightened Alert) period.

23. Some landlords may themselves face financial hardship in having to provide the mandated rental waiver. For example – retirees who depend on the rental income for their day to day expenses.

24. They can apply for relief, to be assessed by an independent Rental Waiver Assessor, who will take into account specific factors in each case. There will be objective criteria, including:

1. The annual value of their property
2. And whether the rental income forms a substantial part of their total income.

25. If they meet the criteria, the Assessors can exempt them from providing the rental waiver.

26. There may be different circumstances on the part of landlords, which warrant special consideration. For example – landlords who gave their tenants flexibility and relief, by providing short term lease extensions with significantly reduced rent.

27. It is not possible to define criteria, to account for all these circumstances in full within the legislation. Hence, the Bill includes a provision to give the Assessors greater flexibility and discretion to –

1. Take into account exceptional circumstances of landlords.
2. Determine if it is just and equitable to make appropriate adjustments to the rental waiver obligations between the landlord and tenant.

C. Other Amendments

28. Finally – besides the rental waiver framework, the Bill also introduces minor amendments relating to Part 10A of the Act.

29. Part 10A allows construction project parties to seek an assessment, on the determination of adjustments, to the contract sum arising from foreign manpower salary increases.

30. These amendments are largely administrative in nature:

1. To make clear that different application fees can be prescribed for an initial application for a determination.
2. And to allow MND to charge application fees for subsequent determinations made after the initial one.

IV. Conclusion

31. Mr Speaker, in conclusion, I would like to take the opportunity to thank the representatives from the various industry groups, and individual landlords and tenants who engaged with my Ministry in helping us come up with this Bill.

32. With that, Mr Speaker, I beg to move.

Last updated on 14 Sep 2021