Overview of Rental Waiver Framework 2021

Overview of Rental Waiver Framework 2021

2021 Rental Waiver Framework for SMEs and NPOs

Introduction

The COVID-19 (Temporary Measures) (Amendment No. 4) Bill ( “Bill”) that was passed in Parliament on 14 September 2021 provides a Rental Waiver Framework (RWF) under Part 12 of the COVID-19 (Temporary Measures) Act (“Act”) for Small and Medium Enterprises (SMEs) and specified non-profit organisations (NPOs). The RWF under Part 12 of the Act and the COVID-19 (Temporary Measures) (Rental Waiver Due To COVID-19 Event In 2021) Regulations 2021 (“Regulations”) came into force on 5 October 2021.

The RWF complements the suite of support measures introduced by the Government to alleviate the economic impact on businesses due to the tightened safe management measures imposed during the Phase 2 (Heightened Alert) [P2(HA)] periods, including the Rental Support Scheme (RSS) introduced by the Ministry of Finance.

The RWF will ensure the fair co-sharing of rental obligations over the P2(HA) periods between the Government, landlords and eligible tenants. Taken together with the RSS cash payouts, qualifying tenants in privately owned commercial properties will benefit from a total of about 1.5 months of rental support.

The mandatory rental waiver under the RWF is intended to establish a baseline position for the handling of tenants’ rental obligations. Landlords and tenants are encouraged to work out mutually agreeable arrangements based on their specific circumstances.

Additional Resources

A. Overview of Rental Waiver Framework↩

Small and Medium Enterprises (SMEs) and specified Non-Profit Organisations (NPOs) which meet the eligibility criteria will be able to claim a rental waiver of 2 weeks of gross rent1 from their landlords.

The Rental Waiver Framework does not apply to Government-owned properties.

B. Eligibility for Rental Waiver↩

SME and Non-Profit Organisation (NPO) tenant-occupiers (including subtenants and licensees) who meet all the following criteria will be able to claim a rental waiver from their landlords –

  1. Tenant-occupier of a qualifying commercial property
  2. Annual revenue not exceeding $100 million in FY2019
  3. Lease or licence must be:
    1. Entered into or renewed before 20 July 2021
    2. In force for the entire period from 5 August to 18 August 2021 (both dates inclusive)
    3. Where applicable, stamped on or before 2 August 20212
  4. Suffered at least a 20% drop in average monthly revenue during both Phase 2 (Heightened Alert) periods (16 May 2021 to 13 June 2021 and 22 July 2021 to 18 August 2021, all dates inclusive), as compared to the Phase 3 period (28 December 2020 to 7 May 2021, both dates inclusive)3
  5. If part of a Singapore group of entities4 (“group”), the group’s annual revenue does not exceed $100 million in FY2019 (this does not apply to SMEs that are not part of any group of companies, or NPOs.)

If the eligible tenant-occupier rents the property through an intermediary landlord (i.e. a landlord who is not the property owner), the intermediary landlord will also receive the same amount of rental waiver from their immediate landlord, up to a cap of 2 weeks of their own gross rent. This applies regardless of whether the intermediary landlord meets the eligibility criteria.

C. How the Rental Waivers will be Effected↩

Notice of Rental Waiver

SME and Non-Profit Organisation (NPO) tenant-occupiers of qualifying commercial properties who received the second payout under the Rental Support Scheme (RSS) administered by IRAS will receive a Notice of Rental Waiver (“Notice”) from the Ministry of Law from 6 October 2021.

Action Required by Tenant (to claim rental waiver)

Receipt of the Notice will not automatically qualify the recipient tenant for the rental waiver but signifies they have met some of the criteria. Upon receiving the Notice, tenants should self-assess if they meet all the eligibility criteria here.

Tenants who have received the Notice and meet all the eligibility criteria must comply with the following steps within the specified timelines to claim the 2 weeks of rental waiver from their landlord:

  1. Complete the Declaration Form accompanying the Notice.
  2. Send via email or registered post, the following documents to their immediate landlord within 28 calendar days from the date of the Notice:
    1. A copy of the Notice;
    2. A copy of the completed Declaration Form; and
    3. Copies of the supporting documents below (also listed in Annex A of the Notice).


List of supporting documents

  1. Copies of profit and loss statements^ for all the following periods:
    1. 16 May to 13 June 2021;
    2. 22 July to 18 August 2021; and
    3. 28 December 2020 to 7 May 2021.
    4. [Where applicable] If the tenant-occupier is part of a Singapore group of entities, the tenant-occupier must also provide the Singapore group of entities’ audited financial statements for FY2019. This does not apply to SMEs that are not part of any group of companies, or NPOs.

^ If the tenant-occupier is unable to provide any of the profit and loss statements listed above, the tenant-occupier must provide a copy of a Statutory Declaration attesting that it meets the relevant eligibility criteria to qualify for the rental waiver. Statutory Declarations must be made before a Commissioner for Oaths, Notary Public or a Justice of the Peace. The following links contain a list of Commissioners/Notaries/Justices, who may be contacted for further assistance: https://go.gov.sg/conp-list/ and https://go.gov.sg/jp-list/

Tenants are strongly encouraged to send the above documents by email to minimise potential disputes on compliance with the service requirements.

Tenants should retain the original Notice, completed Declaration Form and supporting documents, and proof of sending the copies of the documents to their landlord (email record, posting receipt) for a period of 6 months. Tenants may be required to produce these in the event of a dispute.

Once an eligible tenant sends all of the above documents to their landlord, the rental waiver will apply automatically by operation of law in the following manner:

  1. Tenants will not be liable for the rent payable from 5 to 18 August 2021, including any interest or charge associated to that amount5
  2. For tenants that have already paid their landlords rent for the period of 5 to 18 August 2021, their next rental payment will be reduced by the equivalent amount;
  3. If (i) and (ii) are both not applicable (for example, where the lease has ended or is ending), the landlord must refund the tenant the waiver amount immediately. This is deemed as a debt due to the tenant.

Where a landlord has provided direct monetary assistance or rental waivers6 to its tenants from 16 May 2021 up to when the rental waiver takes effect (i.e. once the tenant has sent the copy of Notice of Rental Waiver and documents to the landlord), such assistance can be offset from their rental waiver obligations under the Rental Waiver Framework 2021.

(For tenant occupiers who have not received the Notice) Application to IRAS

Tenants may not receive the RSS and/or Notice automatically if they 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. Tenants which assess that they are eligible for the rental waiver under the RWF but have not received the second RSS payout and Notice by 15 October 2021, should make an application for the second RSS payout through IRAS’s eligibility checker by 12 November 2021. If successful, they will receive a Notice subsequently and can follow the necessary steps to claim the rental waiver from their landlord.

If tenants have not received the Notice but have already made an application for the second RSS payout, they should wait for the outcome of their application; they do not need to take any further action until they receive the Notice.

Note: This does not apply to tenants whose lease agreements were not stamped on or before 2 August 2021, but require assistance under the RWF and meet all other eligibility criteria. Such tenants should make an application for rental waiver by 6 December 2021. Such cases will be assessed by a rental waiver assessor, and only successful applicants will be issued with a Notice of Rental Waiver. See section on Rental Waiver Assessors for more details.

Action Required by Intermediary Landlords (to provide and obtain rental waiver)

Intermediary landlords (i.e. landlords who sublet the property and are not the property owner) who receive the Notice and the other documents from eligible tenants are required under the Act to provide the rental waiver as set out in the Notice.

To also receive the same amount of rental waiver from their immediate landlord, up to a cap of 2 weeks of their own gross rent, intermediary landlords must send copies of the documents received from the tenant to their own immediate landlord via email or registered post, within 7 calendar days of receiving the documents from their tenant.

Intermediary landlords are strongly encouraged to send the relevant documents by email to minimise potential disputes on compliance with service requirements.

Intermediary landlords should retain the documents received from their tenant, and proof of sending the copies of those documents to their own landlord (email record, posting receipt) for a period of 6 months. Intermediary landlords may be required to produce these in the event of a dispute.

Action Required by Property Owner (to provide rental waiver)

Property owners receiving the Notice and the other documents from eligible tenants are required under the Act to provide the rental waiver as set out in the Notice to their tenants.

D. Rental Waiver Assessors↩

Landlords and tenants are strongly encouraged to work out mutually agreeable arrangements based on their specific circumstances.

If a landlord and tenant-occupier are unable to reach a compromise, they may make an application to an independent rental waiver assessor for a determination. Applicants must inform the property owner and all other intermediary landlords / tenants of the subject property, where applicable.


After an application for rental waiver assessment is made, the landlord and the tenant-occupier may be asked to submit additional information or documents, or attend a hearing, either virtually or in person. All parties should make their best effort to comply with these requests, to facilitate a timely resolution of the application.

The rental waiver assessor’s determination will be binding on all landlords and the tenant-occupier, and will not be appealable.

For Tenants

Tenants may make an application, within 14 calendar days after complete service of the copy of the Notice of Rental Waiver and supporting documents to their landlord, to have a rental waiver assessor ascertain any of the following:

  1. The actual amount of rent under the lease agreement.
  2. 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 RWF and meet all other eligibility criteria may make an application for assessment by a rental waiver assessor by 6 December 2021. Successful applicants will be issued with a Notice of Rental Waiver, and will be subject to the same service requirements as other groups of tenants.

For Property Owners and/or Intermediary Landlords

Property owners and/or any intermediary landlords may make an application, within 14 calendar days after receiving the copies of the Notice of Rental Waiver and supporting documents from their tenant, to have a rental waiver assessor make a determination on any of the following:

  1. Whether the tenant-occupier is eligible for the rental waiver
  2. Whether their tenant-occupier or intermediary landlord served the Notice of Rental Waiver and supporting documents in accordance with the requirements under the Act and if not, whether this non-compliance was material
  3. Whether the property owner meets the eligibility criteria to be exempted from providing the rental waiver, on the grounds of financial hardship (see subsection on Eligibility for Financial Hardship for Landlords below)
  4. Whether it is just and equitable in the circumstances of the case for the rental waiver to be reversed or reduced (see subsection on Just and Equitable Reversal or Reduction of Rental Waiver below)
  5. The actual amount of rent under the lease agreement.
  6. 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.


Eligibility for Financial Hardship for Landlords

The Government recognises that there are landlords who may face genuine financial hardship. Landlords who meet all the following criteria may apply to a rental waiver assessor to be fully exempt from their rental waiver obligations.

  1. The applicant should be the property owner, who is an individual or sole proprietor landlord, or a corporation whose operations consist wholly or mainly of the holding of investment properties (“holding company”), and is owned by one or more individuals and/or sole proprietors (who are individuals) who each meet the other two criteria below
  2. The Annual Value of all investment properties owned by the applicant, or each shareholder of the holding company (whether solely or together with another person or by an investment holding company) is less than $60,000 as at 22 July 2021
  3. The average monthly rental or dividend income from all properties owned by the applicant, or each shareholder of the holding company (whether directly, or indirectly from investment holding companies) constitutes 75% or more of his/her average monthly gross income


Just and Equitable Reversal or Reduction of Rental Waiver

Landlords who require assistance but do not meet the eligibility criteria for financial hardship may apply to a rental waiver assessor stating their circumstances. Assessors will consider if it is just and equitable to exempt or reduce the rental waiver based on each landlord’s circumstances. This could include cases where landlords had provided significant rental waivers or reductions prior to 16 May 2021.

Application for Assessment

Please refer to this link for Further Information on Application for Assessment.

1. Gross rent is what is agreed on under the lease agreement or licence, and will include gross turnover rent, maintenance fees and service charges. ↩

2. Tenants whose leases are not stamped but require assistance under the RWF and meet all other eligibility criteria may make an application for rental waiver (see section on Rental Waiver Assessors). Such cases will be assessed by a rental waiver assessor. ↩

3. For tenants that only started operating after 28 December 2020, the drop in average monthly revenue will be calculated by comparing both Phase 2 (Heightened Alert) periods to the period from the business commencement date to 15 May 2021 (both dates inclusive). ↩

4. A Singapore group of entities means a group of entities that are incorporated or established in Singapore and which are related through ownership or control in such a way that the group is either required to prepare consolidated financial statements for financial reporting purposes under FRS 110 or an equivalent standard or would have been so required if equity interests in any of the entities were traded on any stock exchange in Singapore. ↩

5. Tenants which are subsequently assessed to be ineligible under the assessment mechanism will be liable for the late payment and interest charge associated with the 2 weeks of rental waiver. Hence, tenants should make a careful assessment of their ability to qualify under RWF before proceeding with the necessary steps to claim the rental waiver. ↩

6. In-kind assistance such as additional advertising or parking promotions cannot be offset. Rental waiver assessors may take into account exceptional circumstances where landlords provided significant financial assistance prior to 16 May 2021. ↩

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