An update on the Covid-19 Act in relation to Real Estate agreements in Singapore

Author: Patrick Tan and Berlin Soh

 

(to be read in conjunction with our article dated 23 April 2020 – Demystifying the Covid-19 Act for Landlords and Tenants)

 

Since our article on Demystifying the Covid-19 Act for Landlords and Tenants, there has been some amendments to the Covid-19 (Temporary Measures) Act 2020 (“Covid-19 Act”), and also a number of subsidiary legislations has been enacted to complement the Covid-19 Act.

 

The aim of this article is to summarise the latest amendments to the Covid-19 Act and also to highlight an important regulation which would impact real estate agreements and transactions in Singapore.

 

Amendments to the Covid-19 Act

 

One of the key amendments to the Covid-19 Act would be the definition of “Schedule Contracts” which has now been amended to include contracts such as:

  • Option to purchase agreements given by a housing developer (i.e. private housing developer or Housing and Development Board) to an intending purchaser for the purchase of a unit of housing accomodation[1]; and
  • An Agreement between a housing developer and a purchase for the sale and purchase of a unit of housing accommodation[2].

 

This means that apart from parties in a lease or licence for non-residential immovable properties, parties with residential immovable properties that fall under either of the categories in paragraph 3 above, would also be allowed to serve a Notification of Relief on the other party to the agreement should they face difficulties in meeting their obligations.

 

Upon being served with the notification of relief by the party who has not been able to fulfil his obligations under the contract, amongst other things, the other party cannot: –

  • Increase or impose any charges or interest rates for interest payable unless it is specified in the contract, provided for or permitted in the contract or has been agreed between parties[3];
  • Require that any part of the security deposit be replaced except with the agreement of the non-fulfilling party[4];
  • Withhold or forfeit any part of the booking fee or other consideration paid for the option[5]; and
  • Terminate the agreement between a housing developer and purchaser for the sale and purchase of a unit of housing accommodation[6].

 

Similarly, as mentioned in our previous article, the party being served with the notification of relief has the option of applying to the Registrar to appoint an assessor to determine if the case falls under section 5 of the Covid-19 Act.

 

Clarifications to the Covid-19 Act in relation to the transfer of benefit of property tax remission

 

Regarding the remission of property tax, the subsidiary legislation Covid-19 (Temporary Measure) (Transfer of Benefit of Property Tax Remission) Regulations 2020 was published on 12 May 2020 to supplement the laws set out in the Covid-19 Act.

 

The owner landlord is legally obligated to pass on the property tax remission to the tenants during the following periods[7]: –

 

 

Apart from passing on the property tax remission during the stipulated timeframe above, the owner landlord also has to provide the following information to the tenant:

  • Amount or extent of the benefit which the owner is passing to the tenant;
  • Method which the owner is passing the benefit to the tenant;
  • Time or times when the owner will be passing the benefit to the tenant; and
  • Under which regulation the owner is passing the benefit to the tenant.

 

Further, if requested by the tenant, the owner landlord must provide the tenant with information on the rebate amount for the property or the portion of the rebate amount in relation to any part of the year.

 

As mentioned in our previous article, should there be any dispute between parties in relation to the transfer of benefit, then the landlord owner or tenant may apply for the dispute to be heard and determined by a Valuation Review Panel[8].

 

In conclusion, these amendments and clarifications to the Covid-19 Act serve as a guiding principle and provides clarity to parties affected by the Covid-19 Act. Further, depending on the Covid-19 situation in Singapore, we may see even more amendments and/or clarifications to the Covid-19 Act in the near future.

 

 

[1] Paragraph 1(i) of The Schedule of the Covid-19 Act.

[2] Paragraph 1(j) of The Schedule of the Covid-19 Act.

[3] Regulation 3A(1)(a) and (b) of the Covid-19 (Temporary Measures) (Temporary relief for inability to perform contracts) (Amendment) Regulations 2020 (“Covid-19 (TM)(Amendment) Regulations 2020”)

[4] Regulation 3A(1)(c) Covid-19 (TM) (Amendment) Regulations 2020.

[5] Regulation 3A(1)(d) Covid-19 (TM) (Amendment) Regulations 2020.

[6] Regulation 3A(1)(e) Covid-19 (TM) (Amendment) Regulations 2020.

[7] Section 10 of the Covid-19 (Temporary Measures) (Transfer of Benefit of Property Tax Remission) Regulations 2020 (“Covid-19 (TM) (TMPTR) Regulations”).

[8] Section 30(1) Covid-19 Act.

 

Written by: Patrick Tan and Berlin Soh

 

Download article here.