Economic downturn Landlords may also be struggling
The finance minister expect the landlord to help their tenants by waiving rental for 2 to 4 months. The government will only compensate the landlord for half of the cost. The landlord has to bear the other half.

This directive is wrong. It assumed that the landlords have been enjoying a good yield on their property and can afford to bear part of the loss. It is a wrong assumption.

Some landlords have bought their property at low prices and enjoyed a good yield on rising rentals. 

But some landlords bought their property at high prices, either as first time buyer or on resale, and need the rental income to service their mortgage payments or to meet their business operating expenses or to meet their living expenses. 

The landlords are in different financial situations. 

The finance minister may argue that, without the rental waivers, the tenants may not survive and the landlord may be hit harder. That may be true. But surely, it is better to let the landlord and tenants to sort out this matter, rather than for the government to apply an inflexible directive?

At the start of the circuit breaker, I had suggested a different approach. I suggested that the landlord and tenant should negotiate the amount and duration of the rental waiver and the landlord can apply to the government to subsidize half of the rental that has been waived. 

This will take into account the financial situation of the landlord and the tenant, and are best know to the parties themselves. It is not suitable for the government to issue a directive.

Sadly, my proposal was not followed by the finance minister. 

There is also uncertainty about the application of the directive. The directive require the tenant to be "suffering a drop of revenue of a certain magnitude". It is difficult to measure.

There is also unclarity about how the landlord can recover the government's share of the rental waived. The directive has a lot of complicated clauses. It is unfair to the landlord to get the further burden of working out the calculations.

The minister and his civil servants are not practical people. They write regulations that are troublesome and costly to administer, and has a lot of negative impacts.

Do you agree?

Tan Kin Lian
 

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