Forum: Eligible small landlords can seek compensation under Re-Align Framework

We thank Mr Henry Mok Weng Foong for his Nov 18 letter (Re-Align Framework: Small landlords will be put in unfavourable position).

In view of the unprecedented impact of Covid-19, the Ministry of Law has provided a range of measures over the past few months to assist businesses, including temporary relief from legal action if they cannot fulfil certain contracts and the Rental Relief Framework.

In recent months, most economic and social activities have resumed, and business activity is picking up. The new Re-Align Framework will provide further support for small and micro businesses that continue to be significantly impacted by Covid-19 and are struggling with their contracts to renegotiate selected contracts, within a certain time.

We strongly encourage all parties to make full use of the renegotiation, to reach new contractual arrangements that re-align with current economic conditions and business objectives. We urge both parties to propose alternative terms that are reasonable and in line with current business conditions.

For tenancies, this could include a temporary rent reduction in line with market conditions, or an instalment plan, such that both tenants and landlords can meet their obligations. The framework supports termination, if the renegotiation is unsuccessful.

Renegotiation is better for the entire business ecosystem as it prevents otherwise viable businesses from struggling on in unproductive arrangements, which may ultimately lead to insolvency and litigation. This outcome is not beneficial for viable businesses or landlords.

We recognise that some smaller landlords may face financial hardship arising from the termination of leases or licence agreements under the framework. To mitigate this, eligible landlords will be able to seek some compensation in the event of an early lease termination by a tenant under the framework. The amount of the compensation will be determined by an assessor. More details will be announced soon.

With these support measures, we hope businesses and landlords alike will benefit and emerge stronger as our economy slowly recovers.

Andrea Goh

Director, Corporate Communications,

Ministry of Law

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