Landlords Oppose HK’s Proposed Rental Deferment Scheme
HONG KONG – Sources revealed that the city’s Chief Executive Carrie Lam Cheng Yuet-ngor is consulting her cabinet whether to support or reject a scheme proposed by Financial Secretary Paul Chan Mo-po to permit tenants of commercial properties to defer rental payments for up to 3 months, reported the South China Morning Post (SCMP) on Wednesday evening (9 March, SGT).
In fact, Hong Kong’s Chief Executive is seeking an informal meeting soon with her Executive Council to assess their views on the controversial proposal, amidst mounting opposition from property developers and landlords
“This proposal may not sail through the Legislative Council, as it has run into vehement opposition from developers and landlords who fear it will cause them cash flow problems. They simply want it to be scrapped,” shared an insider.
“There is some political infighting going on between Lam and Chan, as she thinks that the proposal will disrupt the non-intervention market principle,” the source said. “She will have a meeting with some Exco members to gauge their views about this issue. It is a very unusual move.”
If the proposal is vetoed by the Executive Council, the planned bill won’t be passed. This means there won’t be rental relief for thousands of struggling small and medium-sized enterprises (SMEs) amidst Hong Kong’s fifth wave of COVID-19 infections. Notably, many businesses have had to close temporarily because of the government’s harsh restrictions.
Another source disclosed that Lam became sceptical of Chan’s proposal after seeing strong opposition from major commercial property landlords and real estate developers.
“Carrie Lam is for sure not in favour of Paul Chan’s initiative. Developers and landlords are very angry. They need cash flow to pay their mortgages. The proposal will only cause tenants to have pile-up debts, and if they go bust, the landlords will never get their money back.”
SCMP also learned that the Real Estate Developers Association of Hong Kong intends to hold a special meeting to talk about its next move to exert more pressure on the government to scrap the proposal.
The insider also said banks in Hong Kong fear not being unable to receive mortgage payments from commercial property owners.
If legislated, the scheme would bar landlords and property owners from terminating tenancies, cutting services, or suing businesses from vulnerable industries for failing to pay their rent on time.
The scheme, which was watered down, also contains provisions to help small landlords cope with any cash flow problems arising from delayed rent payments. These measures include deferred tax collection, mortgage reimbursements to lenders, and granting of interest-free government loans of up to HK$100,000 (US$12,790).