The Ministry of Law (MinLaw) has introduced a Rental Waiver Framework to assist small and medium enterprises (SMEs) and specified non-profit organisations (NPOs) affected by the tightened safe management measures during Phase 2 (Heightened Alert) (P2(HA)). This framework is provided in the COVID-19 (Temporary Measures) (Amendment No. 4) Bill passed in Parliament on 14 September 2021. The Rental Waiver Framework is planned to commence in October 2021.
Under the framework, landlords will be required to provide a rental waiver of two weeks of gross rent (i.e., including gross turnover rent, maintenance fees and service charges) to eligible SME and NPO tenant-occupiers of qualifying commercial properties. Taken together with the cash payouts from the Rental Support Scheme (RSS) disbursed earlier in 2021, eligible tenants will benefit from a total of about 1.5 months of rental support.
MinLaw will start issuing a Notice of Rental Waiver to eligible tenants from October 2021.
- Eligibility criteria for Rental Waiver Framework
- Process to claim rental waiver
- No Notice received: application to IRAS
- Assessment by rental waiver assessors
Eligibility criteria for Rental Waiver Framework
An SME or NPO tenant-occupier, including subtenants and licensees, of a qualifying commercial property will only qualify for the rental waiver if they meet ALL of the following criteria:
- Its annual revenue does not exceed SGD 100 million in FY2019.
- Its lease or license must be:
- entered into or renewed before 20 July 2021; and
- in force for the entire period from 5 August to 18 August 2021 (both dates inclusive).
- Its lease or (if applicable) license must have been stamped on or before 2 August 2021.
(An SME or NPO tenant-occupier who meets all eligibility criteria but has yet to stamp the lease or (if applicable) license may make a manual application for rental waiver. Such cases will be assessed by a rental waiver assessor. Applications by this route will open in October 2021 and more details will be provided in due course. Successful applicants will be issued with a Notice of Rental Waiver.)
- It must have suffered at least a 20% drop in average monthly revenue during both P2(HA) periods (16 May 2021 to 13 June 2021, and 22 July to 18 August 2021, all dates inclusive), as compared to the Phase 3 period (28 December 2020 to 7 May 2021, both dates inclusive.1
- If it is a part of a Singapore group of entities,2 the group's annual revenue must not exceed SGD 100 million in FY2019 (this does not apply to SMEs that are not part of any group of companies, or to NPOs).
Process to claim rental waiver
The process for an SME or NPO to claim the rental waiver is summarized below:
- Tenants who received the second payout under the RSS will receive a Notice of Rental Waiver ("Notice") from MinLaw in October 2021.
- Tenants who receive the Notice and wish to claim the rental waiver will first have to self-assess if they meet the eligibility criteria.
- If they do, they will have to undertake the following:
- Complete the Declaration Form attached to the Notice
- Prepare the following supporting documents to prove their eligibility:
- Profit and loss statements for all the following periods:
- 16 May to 13 June 2021
- 22 July to 18 August 2021
- 28 December 2020 to 7 May 2021
- If it is a part of a Singapore group of entities:
- The entities' audited financial statements for FY2019, which show that the group's annual revenue was less than or equal to SGD 100 million in FY2019
- If the tenant is unable to provide any of the profit and loss statements mentioned in 3(b)(i) and 3(b)(ii):
- A Statutory Declaration (made before a Commissioner for Oaths, Notary Public or Justice of the Peace) attesting that the tenant meets the eligibility criteria to qualify for the rental waiver; and
- Profit and loss statements for all the following periods:
- Send the following to their immediate landlord via email or registered post within 28 calendar days from the date of the Notice:
- A copy of the Notice
- A copy of the completed Declaration Form
- Copies of the supporting documents listed under 3(b) above.
- Tenants who assess themselves to be eligible for the rental waivers should start preparing the necessary supporting documents even before they receive the Notice, so that they may claim the rental waiver in a timely fashion.
- Once an eligible tenant sends all the above documents to their landlord, the rental waiver will apply automatically in the following manner:
- For tenants with any rental arrears owed for the period 5 to 18 August 2021 (both days inclusive), these arrears will be deemed as paid, and the tenants will not be liable for any interest or charges associated to that amount.
- If rent for 5 to 18 August 2021 has already been paid, the tenant’s rent for the next most immediate month will be reduced by two weeks.
- If 5(a) and 5(b) do not apply, such as where the lease or licence has ended or is ending, the landlord must refund the tenant two weeks of rent immediately. This sum is deemed as a debt due to the tenant.
- If the tenant rents the property through an intermediary landlord, the intermediary landlord will also receive the same amount of rental waiver from their immediate landlord, up to a cap of two weeks of the gross rent of the intermediary landlord. This applies regardless of whether the intermediary landlord meets the eligibility criteria.
To claim the rental waiver, the intermediate landlord must send copies of all the documents they receive from their tenant to their immediate landlord via email or registered post, within seven calendar days of receiving the documents from their tenant.
- Landlords who have provided rental support to their tenants during P2(HA) may offset from the two-week rental waiver any direct monetary assistance or rental waivers provided to their tenants from 16 May 2021 up to the date the landlord receives all supporting documents from the tenants.
No Notice received: application to IRAS
For tenants who rent only part of a property or rent a mixed-use property (e.g., a shophouse for both retail and residential use), and/or are a licensee, they may not have received the RSS and/or Notice automatically.
For such cases, the tenant or licensee should first assess if they are eligible for the RSS and/or the Rental Waiver Framework. If they believe they are eligible, they may make an application to the Inland Revenue Authority of Singapore (IRAS). Applications to IRAS open on 1 November 2021.
Assessment by rental waiver assessors
Parties may apply for an assessment by an independent rental waiver assessor ("Assessor") in the scenarios listed below:
- Tenants may make an application to an Assessor within 14 calendar days after complete service of the copy of the Notice and supporting documents to their landlord, to ascertain either of both of the following:
- The actual amount of rent under the lease agreement
- The actual amount of any component of the formula used to compute the prescribed amount of rent that is to be waived; the formulas will be prescribed in the subsidiary legislation.
- Tenants whose lease agreements were not stamped on or before 2 August 2021, but require assistance under the Rental Waiver Framework and meet all other eligibility criteria may make a manual application for assessment by an Assessor. Successful applicants will be issued with the Notice, and will be subject to the same service requirements as other groups of tenants.
- Not all landlords will be financially able to provide the rental waiver, especially if they rely on rental as their main source of income. Such landlords may apply to an Assessor to be exempted from providing the rental waiver, or be provided with a reduced rental waiver on grounds of financial hardship, if they meet ALL of the following criteria:
- The landlord should be the property owner. It can be an individual landlord, sole proprietor landlord, or a company solely created to hold interest in the property (“holding company”), but the holding company must be owned by one or more individuals and/or sole proprietors who each meet the other two criteria below.
- The Annual Value of investment properties owned by the landlord or each shareholder of the holding company (whether directly, or indirectly through companies) is less than SGD 60,000.
- The average monthly rental income from all properties owned by the landlord, or each shareholder of the holding company (whether directly, or indirectly through companies) constitutes 75% or more of their average monthly gross income.
- If a landlord requires assistance but does not satisfy the above, it may still apply to an Assessor, stating its specific circumstances. The Assessor will then consider if it is just and equitable to exempt or reduce the rental waiver based on these circumstances. This could include cases where the landlord had provided significant rental waivers or reductions prior to 16 May 2021.
For both landlords and tenants
- Prior to receiving the Notice from MinLaw, parties should continue to comply with their existing contractual obligations. Tenants and landlords are encouraged to work out mutually agreeable arrangements based on their specific circumstances.
- However, if they are unable to reach a compromise, they may make an application to an Assessor for a determination. Assessors may take into account exceptional circumstances where landlords provided significant financial assistance prior to 16 May 2021.
An Assessor's determination will be binding on all landlords and tenants and is not appealable. More information on the application process will be available in October 2021.
1 If the business commenced after 28 December 2020, the drop in average monthly revenue will be calculated by comparing both P2(HA) periods to the period from the business commencement date to 15 May 2021 (both dates inclusive).
2 This refers to a group of entities incorporated or established in Singapore and related to each other through ownership or control in a manner that the group is required to prepare consolidated financial statements for financial reporting purposes: (i) under FRS 110 or an equivalent accounting standard; or (ii) due to equity interests in any of the entities being traded on any stock exchange in Singapore.