By Gan Jer Nynn
On 7th April 2020, the Singapore Government passed the COVID-19 (Temporary Measures) Act 2020 (“the Act”). The Act serves as temporary relieves and measures to individuals and businesses who are affected by the enforcement of the Circuit Breaker (in effect from 7th April to 4th May 2020).
For the purpose of this article, we will look at how the Act applies on commercial leases entered or renewed before 25th March 2020.
The landlord is obligated to pass the benefit of reduction in property tax on the property to the tenant. This transfer to the tenant must be unconditional. Failure to do so shall render the landlord guilty of an offence and be liable to a fine not exceeding $5,000.
The Act prescribes 2 ways that the transfer can be done:
- Payment of money, either lump sum or instalments;
- Set off against or a reduction of the whole or any part of the rent or license fee payable by the tenant to the landlord.
Landlords are reminded to keep and retain in safe custody, the records evidencing compliance of the abovementioned provisions, for a period of 3 years.
Disputes may occur between a landlord and tenant during the transfer of benefit, for example:
- whether the landlord is required to pass any benefit to the tenant;
- the amount, extent, manner, or time of the passing of such benefit;
- any other non-compliance by the landlord.
Either party may make an application, within 12 months after the end of the period to which the remission relates, for the dispute to be heard and determined by a Valuation Review Panel appointed by the Chairman of the Valuation Review Board.
During the enforcement of the Act, a tenant will be provided temporary relief, subject to the following criteria:
- The tenant is unable to pay his/her rent on or after 1st February 2020;
- The inability is materially caused by a COVID-19 event;
- The tenant has served a notification of relief on the landlord.
If the tenant fulfils the above criteria, a landlord may not take any action against the tenant, as follows:
- The commencement or continuation of an action in court against the tenant;
- The termination of the lease for non-payment of rent, and
- The exercise of a right of re-entry or forfeiture or the exercise of any other right that has a similar outcome.
Whether or not COVID-19 has a ‘material’ impact is determined on a case by case basis. In the event of a dispute, the Ministry of Law can appoint an assessor to make a determination on the tenant’s eligibility for the relief sought.
As of the date of this publication, Malaysia has not enacted any statute to govern a tenancy/lease situation during the Movement Control Order. As such, tenants are generally still bound to pay their monthly rentals, subject to landlord’s consent to waive the rental or force majeure clause. Force Majeure clauses have been discussed in our previous articles.