New law to make landlords pass on rebates to tenants
New law to be introduced in Parliament on Monday will help tenants receive property tax rebates in full
Landlords will have to pass on property tax rebates in full to their tenants - the businesses the move aims to help - an upcoming law will ensure.
Those that fail to do so could find themselves facing fines of up to $5,000.
Almost 60,000 commercial properties - including 58,000 retail, and food and beverage properties - qualified for Budget 2020's rebate of 15 per cent or 30 per cent. This meant they would pay zero property tax for the year.
The rebate is intended to help businesses deal with the fallout from Covid-19, but some tenants say landlords are dragging their feet in passing on the savings.
This has prompted the Government to introduce new legislation - the Covid-19 (Temporary Measures) Bill, which will be introduced in Parliament on Monday to make landlords pass on the savings to their tenants.
For most properties, the 100 per cent property tax rebate works out to more than one month of rent.
Deputy Prime Minister Heng Swee Keat urged property owners to pass on the rebates to their tenants by reducing rents.
"Landlords and tenants have a win-win relationship - when the tenants do well, landlords benefit too.
"So landlords must do their part for tenants during these times. But some have chosen not to," he said on Facebook last night.
"I have said that if the need arises, the Government will not hesitate to take legislative action, to make it mandatory for landlords to pass on these rebates to their tenants.
"To tackle the challenge decisively, the Government will be introducing legislative action," Mr Heng said.
Many retailers cheered the new law because it holds landlords accountable.
"Some landlords were using the property tax rebates as leverage to force tenants to be up-to-date with rent payments," Mr Bernard Yang, managing director of Nanyang Optical said.
Another proposed law that allows virus-affected commercial tenants to defer paying rent temporarily for at least six months will also help.
"That means I don't have to lay off anyone. From Dorscon Red, retailers are now hovering between Dorscon Orange and Yellow," Mr Yang said.
Property tax rebates cannot be passed on directly to tenants as property taxes are not payable by them in the first place, TSMP Law partner Jennifer Chia said.
"Lease contracts generally do not make it mandatory that landlords share property tax rebates with tenants. The proposed new law brings much-needed transparency as to what rebates businesses can expect, so they can plan their expenses," she added.
The rebate has to be passed on in a timely manner, with a prescribed timeline, and the landlord is not allowed to impose any conditions.
Mr Kurt Wee, president of Association of Small and Medium Enterprises, said the new laws will help to clear up tension between landlords and tenants. "The landlords have been receiving good rent for many years from tenants. They now have to be part of the solution."