Coronavirus: Proposed law to ensure landlords pass on property tax rebates in full to tenants

The rebate is granted to the owner of the property, who is liable for the property tax, in respect to each property tax account.
The rebate is granted to the owner of the property, who is liable for the property tax, in respect to each property tax account.PHOTO: ST FILE

SINGAPORE - The Government will introduce new legislation at the next sitting of Parliament on April 6 to ensure that landlords pass on property tax rebates in full to their tenants.

Property owners who fail to fully pass on the property tax rebate unconditionally to their tenants, without good reason, will be guilty of an offence, the Ministry of Finance (MOF) said in a release on Thursday afternoon (April 2).

The Government expanded the property tax rebates announced earlier to allow about 60,000 commercial properties that qualified for Budget 2020's rebate of 15 per cent or 30 per cent to now pay zero property tax for this year.

Owners of more than 58,000 qualifying retail and food and beverage properties including commercial shophouses, 2,000 properties in education, recreation, healthcare and services and 450 hotels and serviced apartments will not need to pay property tax for this year. But some tenants say landlords are dragging their feet on passing on the savings.

The rebate is intended to help businesses deal with the impact from Covid-19. For most properties, the 100 per cent property tax rebate works out to more than one month of rent. The rebate is granted to the owner of the property, who is liable for the property tax, in respect to each property tax account.

Deputy Prime Minister Heng Swee Keat has strongly urged property owners to pass on the property tax rebate to their tenants by reducing rentals.

Said the MOF: "We are appreciative of those property owners who are fully passing on the rebate to their tenants. In some instances, property owners have gone further, to reduce rentals by an amount that is greater than their quantum of the rebate. In so doing, they have taken a step further to help their tenants and share the burden during this time of uncertainty.

"However, the Government has also received feedback that other property owners have not yet passed on the rebate to their tenants. The proposed provisions ensure that property owners who have not passed on the rebate will do so," the ministry said.

Some major landlords including City Developments and Mapletree Commercial Trust have said they intend to pass on the property tax rebates to tenants.

SPH Reit, which owns Paragon, said last week that it will fully pass on its rebate in a targeted manner to tenants adversely affected by the pandemic. It will also extend its tenants’ assistance scheme to this month and next month, granting rebates according to tenants’ needs. Effectively, the most affected tenants will have base rents waived for up to two months.

Not all landlords are equally proactive, however. One tenant at Wheelock Place said he had not received any rent relief despite sales dropping up to 70 per cent. 

Subject to Parliament's approval, the proposed provisions and subsequent subsidiary legislation will impose an obligation on landlords to pass on to their tenants the full amount of property tax rebate received for each property tax account that is attributable to the tenanted property.

 
 
 

For instance, under the proposed provisions, if a property tax account is for premises wholly rented out to a tenant, the owner is required to pass the rebate received, if any, to the tenant fully.

The proposed legislation will also ensure that the rebate is passed on in a timely manner according to a prescribed timeline, and prohibit landlords from imposing conditions.

It will also allow a valuation review panel to adjudicate disputes between the property owner and the tenant over the property tax rebate. The panel will comprise members from the Valuation Review Board constituted under the Property Tax Act.