Parliament fast-tracks law change to give construction sector temporary relief from rental contract breaches

• Changes will create mechanism for construction, supply and related industries to seek relief, says Mr Edwin Tong
• The law gives temporary relief to those who are unable to perform their contractual obligations because of the pandemic, such as paying for rent
• However, MPs flagged issues about tenants’ lack of understanding of the reliefs, and the impact on small landlords

SINGAPORE — Throughout the circuit breaker period, some contractors had to pay rent for construction equipment even though they sat idle at worksites due to Covid-19, Second Minister for Law Edwin Tong said in Parliament on Friday (Sept 4).

While some equipment suppliers had waived the rental because they felt it was wrong for them to continue charging rental at the expense of the contractor amid the pandemic, not all took this approach, he said.

To remedy the “significant unfairness” of such a situation, Parliament passed a second set of amendments to the Covid-19 (Temporary Measures) Act following the marathon five-day debate on the President’s Address.

Among other changes, the amendments enhance a mechanism — known as Part 8 — for firms in the construction industry to obtain relief if they experience contract breaches or delays due to the pandemic.

“When it comes into force, Part 8 will provide relief for prescribed contracts that have been affected by a delay in a construction, supply or related contract,” said Mr Tong, who is also Minister for Culture, Community and Youth.

The Law Ministry is still working to finalise details on Part 8.

Other changes will expand the powers for assessors who resolve disputes between landlords and tenants, so that they can achieve a “just and equitable” outcome for both parties.

The Bill was passed under a Certificate of Urgency from President Halimah Yacob, which meant that the legislative changes could be debated and fast-tracked within a single parliamentary session. The Bill was tabled on Thursday.

The law was first rolled out in April in response to the growing impact of Covid-19 on Singapore businesses and commercial tenants as an emergency intervention to safeguard the economic structure of Singapore.

Since then, more than 6,800 businesses and individuals have sought moratoriums for their contractual obligations.

The property tax rebates amounted to about S$1.8 billion, while the cash grants disbursed from the Fortitude Budget to qualifying property owners that would support rental relief for small and medium enterprises were around S$2 billion.

The premise for the temporary law was that without such intervention, businesses which were unexpectedly hit by the economic shock of Covid-19 would have folded because other parties insisted on their strict contractual rights, such as to have rent paid to them.

MPs HIGHLIGHT RENT WOES

Nevertheless, five MPs flagged difficulties faced by contractors, tenants or landlords, especially smaller landlords who depended on rental income for a living.

Nee Soon Group Representation Constituency (GRC) Member of Parliament (MP) Louis Ng highlighted how some coffee shop stallholders in Nee Soon East are aware of the rental relief, but did not know the relief would be for four months of rent.

“Some got only one month of relief. They also did not know where to seek recourse,” he said.

“Not requiring eligible tenants and sub-tenants to take any further steps to obtain rental relief is a well-intentioned measure. However, it may be a double-edged sword if not accompanied by proactive communication and enforcement of the relief measures to tenants and sub-tenants.

Bukit Batok MP Murali Pillai said he had also received feedback on the hardship experienced by small landlords because their tenants claimed rental relief.

The lag time for the Inland Revenue Authority of Singapore (Iras) to give the property tax rebate could also create undue hardship for the small landlords, he added, describing these as “possibly unintended consequences” of the Covid-19 (Temporary Measures) Act.

Mr Tong said the law allows for landlords who are facing financial hardship themselves to apply to a panel of assessors for additional landlord relief, taking into consideration whether his rental income forms a substantial part of his total income and the annual value of his properties.

“I wouldn't say it captures everyone, but by and large in hardship cases, you're likely to fall within this framework, you will get the additional relief from the assessors and landlords,” he said.

On that note, Aljunied GRC MP Sylvia Lim questioned if the requirements for the appeal were too onerous as there was a 10-day period to appeal.

She spoke about how a resident, in her 90s and in poor health, had been dependent on rental income as a small landlord and used the proceeds to pay a family debt as well as daily expenses. Last month, the resident was given a cash grant which was meant to be passed on to the tenant, in the form of four months of rental relief.

“As the family found that the rental waivers required were too much for them to bear, they came to see me at my Meet-the-People session for assistance,” said the Workers’ Party chairman.

“The resident had to wait a few days to see me and in fact had been only recently discharged from a hospital. Her family was also more conversant in Chinese, and I myself found going through the requirements novel and onerous.”

In response, Mr Tong said that the authorities will “absolutely not” hold the lateness of these applications against the applicant.

“We look at the substance and the merits of the case, and the registrar has a discretion to accept applications out of time, and will do so as long as there's merit in the application, there’s a good reason, and it is not a frivolous reason,” he said.