Bill on rental moratorium may pressure tenants, landlords: CBRE

The proposed law will pose potential cash flow issues.

The Hong Kong government’s proposed law on imposing a moratorium on rent may pose pressure on tenants and landlords, which include cash flow issues, a real estate expert of CBRE Hong Kong said.

“To tenants, it will put certain stress on their operations and cash flow if they are going to pay back three-month rents and the rent for the fourth month right after the restriction period,” Lawrence Wan, senior director of advisory and transaction services in CBRE Hong Kong, said in a media release.

Wan then pointed out that landlords will also grapple with shop vacancy and economic losses if their tenants shutter their business after the moratorium period, whilst landlords who failed to pay their mortgage will also suffer from potential cash flow problems.

Due to the fifth COVID-19 wave, businesses including large retailers are bearing the brunt of manpower allocation and paying heavy deep cleaning bills for their rental space when their workers are infected, Wan said.

This forced some operators to temporarily close some of their stores whilst most retailers are adopting a “wait-and-see approach” and suspend any new lease and expansion plans until the situation gets better, he also pointed out.

Wan also advised landlords to proactively seek negotiations during this period and find flexible leasing arrangements such as rental recession and leasing restructure to overcome the consequences of the pandemic.

Meanwhile, he said that the Hong Kong government will also roll out the $10,000 electronic consumption voucher scheme in April this year. 

As the count of COVID-19 infections remains high, Wan said they expect the cases will peak in March and consequently, the situation should calm down.