Tenants sceptical that landlords will pass on rebates in Resilience Budget

Singapore

MAJOR landlords say they intend to pass on the expanded property tax rebates announced in Thursday's Budget, but tenants remain sceptical, especially those still locked in negotiations over the earlier rebates.

As part of a landmark budget to mitigate the fallout from the Covid-19 crisis, the government expanded the earlier-announced property tax rebates such that commercial properties that qualified for Budget 2020's rebates of 15 to 30 per cent will now pay zero property tax for 2020.

Non-residential properties like offices and industrial properties will get a new property tax rebate of 30 per cent. Rental waivers for tenants of government properties will be increased.

The commercial property tax savings are estimated to amount to 1.2 month's worth of rent, a marked boost from the earlier round where savings would have corresponded to five to six days of rent.

However, tenants doubt the savings will mean lower rentals for them, after what they saw as landlords dragging their feet over the earlier round of rebates, a point Deputy Prime Minister and Finance Minister Heng Swee Keat also alluded to.

"Many businesses have pointed out that it will be a lose-lose situation if landlords do not support their tenants. After all, if tenants fail, the properties will be empty," the minister said in parliament. "So my message to landlords is: do your part, chip in and give additional help to tenants who are more badly hit."

Commercial landlords such as Frasers Property, Lendlease and City Developments Limited have voiced their commitment to fully passing on the enhanced property tax rebates.

Mapletree Commercial Trust is setting aside another S$18 million of rental relief, following an earlier package of which S$8 million has been distributed as rental rebates to tenants at VivoCity. Tenants will also be offered deferred payment of fixed rent for April.

CapitaLand said late on Thursday night that it will be providing rental rebates of 1.5 months for eligible tenants. This comes on top of the half-month rebate it announced for most of its tenants in February.

In addition, the property giant will suspend the rents of tenants who have been ordered to close as part of government measures to curb the spread of Covid-19, such as bars and entertainment venues.

Frasers said it will review the announcements and share details in due course. Lendlease is still disbursing the earlier rebate, but intends to pass on the latest one in entirety.

NTUC Enterprise, which runs real estate arm Mercatus Co-operative Limited, said it's studying the updated measures and will pass on the additional rebates "directly", as it had done with the earlier round.

SPH Reit aims to finalise the details of its enhanced rebate scheme for tenants in April, and engage tenants after.

SG Tenants United for Fairness, a group of over 300 mall tenants that had sought to collectively negotiate with landlords for more rental help, does not think the "zero-sum game mentality" of landlords will change with the latest Budget, having received scant help in talks so far.

The new support measures on Thursday, including those on workforce and liquidity, are "significant and helpful", but the group was expecting more on the rental front as rental costs have risen to as much as 80 per cent of total revenues.

Some retailers like Awfully Chocolate and Bynd Artisan were uncertain if the rebates would be passed on since it's not mandatory to do so. Awfully Chocolate founder Lyn Lee said the landlords' attitudes towards passing on the first round of property tax rebates to tenants have shown that "the government's gentle cajoling will not work".

Nanyang Optical managing director Bernard Yang said a landlord told him January sales did not drop enough to warrant help and instead, chased him for February's rent.

Logan Wong, founder of Pure Senses, said the level of trust towards landlords is low among tenants, adding that negotiations have seen "slow" progress. Bengawan Solo director Henry Liew hopes that the newly-announced rebates will put the company in a "stronger position" to negotiate with landlords.

Meanwhile, most firms will also get wage offset for local employees, with the monthly qualifying wage ceiling raised from $3,600 to $4,600, in an enhanced Jobs Support Scheme.

Dandy Partnership and Yum Cha Restaurant said the overall Budget will help them stay afloat for a few more months amid declining takings of 50 to 70 per cent.

Industry bodies including the Restaurant Association of Singapore urged landlords to act on the new rental measures, with the Singapore Retailers' Association saying it would have preferred that the government mandate them.

The Association of Small and Medium Enterprises hopes landlords will also consider matching the government's rebates dollar for dollar, to pool more help.

The Restaurant Association of Singapore will continue talks with landlords, in which they are requesting rent to be pegged to tenants' gross takings alone for the next six months.

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