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Tenants in limbo as some coworking firms work out arrangements for rental rebates

SINGAPORE: The lack of information from some coworking space providers on rental rebates continues to frustrate small business owners, even as the Government implements measures designed to offer relief from some rent obligations amid the COVID-19 outbreak.

The COVID-19 (Temporary Measures) Bill passed in Parliament earlier this month mandated property owners to pass on 100 per cent of the rental rebate to their tenants after an outcry by small- and medium-enterprises (SMEs) over deferred or delayed rebates.

Deputy Prime Minister Heng Swee Keat announced in March’s Resilience Budget that qualifying commercial properties would not have to pay property tax this year, as the Government sought to bolster small businesses hard hit by the COVID-19 economic slowdown.

While property owners are required to pass down rental rebates to tenants, there is no legislation that mandates tenants to pass down their rebates to their subtenants, as there is a “whole range of commercial arrangements” between tenants and subtenants and there is no contractual relationship between property owners and subtenants, said National Development Minister Lawrence Wong in Parliament on Apr 7.

READ: Parliament passes wide-ranging Bill to assist those unable to fulfil contractual obligations due to COVID-19 outbreak

WATCH: Lawrence Wong responds to clarifications on COVID-19 (Temporary Measures) Bill 

“Nevertheless, we strongly urge and encourage all master tenants to pass on the savings from the rebate to their subtenants and to share the burden during this time of uncertainty,” said Mr Wong.

Businesses who lease from coworking spaces fall under this grey area, as they do not officially pay rent. Rather, they are considered members who pay a monthly fee to use the office space.

When the “circuit breaker” was announced on Apr 3, public relations firm Gloo PR founder Oo Gin Lee, who is working out of O2Work in Odeon Towers, asked his centre’s manager to reduce April’s fees. This is because his company would have to work from home. He was told he would be kept posted as O2Work was in talks with their landlord, UOL. 

He approached the manager two weeks later only to receive a similar response. He followed up with an e-mail to the manager and O2Work’s chief operating officer but there was still no response.

O2Work is a coworking space located at Odeon Towers. (Facebook/O2Work).

Mr Oo, who is paying S$3,600 a month under a 1-year membership he signed last December, said the coworking company “should be doing their part to be fair to us”. He is looking for fees to be waived as long as the rule to work from home is in place. 

“I paid for (the space), on the understanding that I (get to use it). Now, if I can’t, why should I be paying you?” he said. 

When CNA reached out to O2Work for comment, chief operating officer Jenny Liu said that the company was planning to give rental rebates to their members, although the details have not been worked out yet.

The amount of rebate would depend on negotiations with landlord UOL, and O2Work will pass on the rebate to members after receiving their own rebate from UOL.

Lawrence Leong is in a similar predicament with his office provider, Spaces City Hall. He e-mailed the centre’s manager before the circuit breaker started, but there was no word about membership fees.

The executive director of Kingsman Media said he pays about S$3,000 a month for a room that fits five. 

READ: Tenants need ‘unprecedented’ rent relief amid COVID-19 outbreak, say retail and F&B groups

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He would like a complete membership fee waiver for April, and a 30 per cent monthly rebate from May until the safe distancing measures end, reasoning that the room he uses can only accommodate two people if the 1m rule is in place.

“I will wait till the circuit breaker is over then I’ll meet (the centre manager) face-to-face (to talk about the fees),” Mr Leong said, adding that he had signed a three-year renewal contract last November. Ending it early would cause him to lose his deposit. 

CNA has also approached Spaces for comment.

Other coworking spaces that CNA spoke to said that they were looking into offering rebates to their members, with the amount dependent on factors including how long the tenant has leased the space.

JustCo, which has 1,400 companies in Singapore, said on Apr 2 that it would offer a “multi-million dollar relief package” with membership rebates of 15 to 30 per cent for the month of May.

READ: COVID-19 Resilience Budget: ‘Landmark’ S$48 billion package to tide Singapore through ‘unprecedented’ crisis

READ: Solidarity Budget: Bill to allow firms, individuals to defer contractual obligations such as rent 'for a period'

This is “even before” JustCo received any rebate from landlords, said the company in a press release, adding that 3,000 companies across JustCo centres in eight cities are expected to benefit from the rebate.

For members, the rebates will vary. Those who have been with JustCo for two years and more will get rebates of 30 per cent for May, while other members will get 15 per cent, and it applies to all JustCo members across the region who joined JustCo before or on Apr 1.

The Working Capitol at Keong Siak Road. (Facebook/The Working Capitol).

Homegrown coworking space The Working Capitol, located at Keong Saik Road, will also offer a range of rental rebates to tenants depending on several factors, including their tenure with companies and their track record on payment.

“Suffice to say, our best and more loyal members are rewarded with rental relief of 30 per cent, while the rest will qualify for 15 per cent,” said a spokesperson.

All members have been compensated on Apr 3 for the one-month April “circuit breaker” measures, the spokesperson added.

“In line with the most recent Government bill, we provide a process for rental deferment application to members who are genuinely in need due to cashflow constraints and also support them through this process,” they said.

In response to CNA’s queries, WeWork, which has 12 spaces across Singapore, declined to comment.

READ: WeWork Singapore to expand despite tumultuous year, says Southeast Asia managing director

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Source: CNA/cc


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