EDITORIAL: Straits Times says: Rental reliefs will buy valuable time

The shuttered shopfronts in shopping malls and other centres in recent weeks illustrate the severity of the impact that the Covid-19 outbreak and ensuing circuit breaker measures have had on small and medium-sized enterprises (SMEs), whose revenues have fallen significantly. A slew of government measures provided some a measure of relief, with property tax rebates, government-funded cash grants and support for wages. Legislation was also passed in April to ensure that commercial property owners unconditionally passed on property tax rebates in full to tenants. But there have been continued concerns and complaints about rebates and just how much landlords were actually willing to release. But more help is pending on the rental front with legislation to be debated today, to provide relief for eligible tenants. It would mean, all told, that rental reliefs will extend to four months for commercial SME tenants and two months for industrial and office tenants.

Landlords with cash flow constraints as a result of providing relief to tenants can expect to get help in meeting their loan commitments. The burden of providing rental relief to SME tenants will have to be shared between the Government and landlords, but tenants will be required to pay rental arrears. The Government is providing relief for landlords as it recognises that they, too, face constraints. This will include absolving individual landlords facing hardship from having to provide rental arrears in full. As a result of such measures, as well as wage subsidies under the Jobs Support Scheme, many SME tenants who might otherwise have had to close shop will be able to remain in business, while landlords will get some income protection.

The proposed legislation will, however, provide only temporary relief. Rental arrears can be accumulated only till Oct 19, and tenants must start clearing their dues from November. Between now and then, tenants and landlords will need to re-examine their business models and, in some cases, even the viability of their operations, for it is unlikely that business will return to what it was in the pre-Covid era even after the pandemic passes. Customers are not likely to return in droves to retail stores, restaurants or bars. Many establishments will need to change their modes of operation – either by refocusing their businesses, remodelling their premises or relying more on e-commerce or deliveries.

Landlords, too, including those of office properties, will need to re-examine their tenant mix, and, in some cases, consider whether they want to repurpose part of their properties for an era where demand for retail and office space is likely to decline. The rental relief measures will provide vital breathing space. Landlords and tenants alike must use it astutely, to pivot to an operating model that can best thrive in a post-Covid-19 era.