Singapore expats are asking for lower rents as they face the prospect of salary cuts amid slower businesses due to the Covid-19 pandemic.
Clarence Foo, a real estate agent with APAC Realty unit ERA, revealed that he has encountered seven such cases in the past month – the most number of requests he has seen in his seven-year career, with four being successful.
One such request came from an American woman, who informed Foo via a text message that her salary would be slashed by 20% from 1 May until 31 July. Thereafter, her employer would reassess the financial health of the company, reported Bloomberg.
The executive is paying a monthly rent of $3,400 for a one-bedroom apartment at Tanjong Pagar, near the financial district of Singapore. Her rent was slashed by $250 per month or about 7%.
“At first glance, it isn’t a lot. But over three months, the duration of her pay cut, it’s a substantial saving,” said Foo.
For this year, Singapore is forecasted to sink deeper into recession as its partial lockdown is extended. Wages will be more affected than jobs as businesses try to reduce costs in an economy that is bracing for a sharp contraction, said the central bank last month.
And although the government has rolled out a slew of support measures, most of them were targeted at Singapore citizens. In April, over $7 billion was given to employers to co-fund the wages of more than 1.9 million local workers, said Manpower Minister Josephine Teo. Some rebates and levy waivers were also provided to help companies meet their obligations to foreign employees.
Singapore has one of the most expensive property markets in the world. In 2019, residential rents soared to a three-year, with prices boosted by robust overseas demand. Government data showed that private residential rents rose 1.1% during the first quarter.
Tan Tee Khoon, Country Manager of PropertyGuru Singapore said: “from a contractual standpoint, rents are fixed throughout the lease period till expiry or the next renewal. Thus landlords are not obliged to consider rent reduction requests.
“That said, such requests are not unexpected during this pandemic especially when there are salary cuts and the prospect of retrenchment looms.
“Last month, Maybank economists Chua Hak Bin and Lee Ju Ye predicted 150,000 to 200,000 job losses in Singapore this year, even with fiscal aid from the Government. Half of the layoffs are expected to affect foreigners, as the Government’s stimulus is targeted at saving local jobs with unemployment rate expected to spike above 5%.
“Some landlords may also be affected financially by the pandemic. As such, retention of tenants become a priority as a bird in the hand is worth two in the bush. Landlords are likely to relent on rent reduction requests of possibly up to 20% of rents at least during the extended circuit breaker period“.
Read: PropertyGuru Property Market Index Q2 2020 Report: How Has COVID-19 Affected the Singapore Property Market?
The city-state’s rental market is usually dominated by foreigners. The country has a very high local home ownership, with about 80% of Singaporeans living in housing development board flats and not private condominiums.
Another real estate agent dealing with expat rent reduction requests is Lester Chen. One expat who is living in a Sentosa Cove apartment managed to have his rent reduced by 20%.
Some landlord hold out due to the short supply of the type of apartments they own or since they use their rental income to paying their own mortgage.
Those who acquiesce are “willing to close one eye because at least they get some income instead of ending up empty handed”, explained Chen, from Singapore Realtors Inc.
However, it is not always the case.
In April, a British man requested for 50% reduction on his two-bedroom inner city apartment, which he rents for $8,000 per month.
“The landlord was shocked,” said Chen. “There’s no way he’s going to accept such a steep cut.”
Looking for a property in Singapore? Visit PropertyGuru’s Listings, Project Reviews and Guides.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email firstname.lastname@example.org