27 March 2020
I am writing as a small landlord with some retail space, certainly not a mall operator or those family office landlords (they have super deep pockets).

Singapore's DPM Heng announced a SGD48bn off budget measures is a timely, bold move. It addresses many key painpoints. I really appreciate the government for coming up with the Landmark Resilience Package.

What I want to zoom in is on mortgage moratoriums, which many countries have decisively announced. For eg Malaysia's Bank Negara immediately announced 6 months mortgage principal moratorium outside of any budget/off budget announcement.

Read here:
https://www.malaymail.com/news/malaysia/2020/03/24/bank-negara-announces-automatic-six-month-moratorium-on-all-bank-loans-exce/1849820
https://www.thestar.com.my/business/business-news/2020/03/26/moratorium-is-automatic-says-bank-negara

And once the govt makes the move, private sector takes the cue, even Singapore owned OCBC's Malaysia subsidiary went one up to declare, mortgage interest also on moratorium. Other countries like Thailand also rolled moratorium and relaxed rules on loans, refinancing and repricing. For the record, Italy and France in EU also announced mortgage moratoriums mid March.

Read here:
https://www.theedgemarkets.com/article/rhb-first-local-bank-waive-compound-interest-or-profit-during-sixmonth-moratorium
https://www.tatnews.org/2020/03/thai-cabinet-approves-measures-to-help-companies-especially-smes-survive-covid-19-crisis/

ST's editor Angela Tan even called out for banks to put moratoriums on the table without waiting for the cue from the govt. But we all know, private sector won't bite the bullet until paternalistic mandates from the govt.

I call this the missing link. What's missing is an acknowledgement that mortgage repayments could be the elephant in the room and a mention that the viability of borrowers to keep up repayments would be worked out with all banks over next few weeks.

Banks need to have more skin in the game. I call this CSR - Crisis Social Responsibility with a capital C. Banks being at the top of the pecking order, should extend 2 helping hands to lift their clients up, and in the process, indirectly, lift their clients' client. Thereby creating a virtuous cycle, instead of a vicious cycle we see in every crisis.

Let's look at some numbers based on my retail property. AV is $30000, property tax is $3000/year, rental is $3600/mth (my monthly loan is $3800 btw).

1st budget - 15% property tax rebate effectively is a 1% rental rebate (hence "piecemeal")
15% x $3000 = $450/yr = $37.50/mth
$37.50/3600 = 1%
I gave 10% rebate on my own accord

2nd budget - 100% property tax rebate effectively is 7% rental rebate
$3000/yr = $250/mth
$250/3600 = 7%
7% is still "piecemeal"
I accorded 100% rental rebate to tenant because they are forced by MOH government measures to shutdown (look, I support the MOH measures in their tireless, big effort to contain COVID19).

On the second day of this petition, someone commented in the petition that her business is overseas/regional and this has greatly impacted her as she can no longer travel to conduct the business and yet has a mortgage guillotine hanging above.

Many tenants (especially those hit by Tue 24 March measures) are also facing extreme pressures to stay afloat, have appealed for rental reductions because this is one of the largest cost component and fastest to reduce (JSS will need application submission, time to payout etc); some tenants who has to shut down, just skipped rental payment totally; we want to help but many are severely handicapped due to the mortgage costs - which is the largest cost component.

Most of us just need a reprieve, a moratorium. Most of us want to stand up and run on our own. But this crisis really brought us to the knees. Having spoken to those around me who signed the petition, we are not signing this petition, licking our wounds, lamenting, we are in fact, actively searching for new revenue sources but all these take time, made worse because of the fact we cannot travel, borders are closed, there are strict (and necessary) measures globally (to contain COVID19). In fact, small landlords are equally badly hit like tenants and have to be united on this one.

IF, the banks step in and do a big CSR as below, the situation will likely take a virtuous turn.:

1. Give the entire principal + interest moratorium for at least 6 mths to 12 mths
2. Omit and/or relax LTV requirement (to allow refinancing, repricing) - this is a double whammy because a huge lumpsum cash is required when this cash can be deployed to service loans or put to more productive use during the crisis
3. Waive the penalty for early redemption, so we could refinance for a lower rate since rates have plunged but we are stuck in the higher rate contracts (banks still charge 2% penalty + big cost of funds for breaking the contract to reprice at lower rates!!)
4. Lower the bank's board rate and/or lower the spread peg on board rate/SIBOR/SOR
5. Or freeze interest charge at 0% for a year with some cost recovery after that

With the funds saved, for e.g., I could redeploy a part of this $3800/month loan to fund other important things, like helping the tenant reinvent the business (e.g. going digital, creating an online class on how to mix cocktails for their clients, working with the tenant to create cheaper food delivery ways etc).

I want to lobby for the govt to mandate banks to put the moratoriums voluntarily on the table and publicise it. Currently it is shrouded internal to the banks (it appears). The banks need to have a bigger sense of Crisis Social Responsibility.

We, small landlords and tenants, just need a reprieve during this difficult times. We are not out to take advantage. We really need help from the banks.

Let's create a virtuous cycle!