At a private sector meeting held yesterday, one issue that dominated was the rent waiver. Expectations are high that landlords or building owners would waive off or discount rents following the fiscal measures announced earlier this month.
There are expectations because the landlords need not pay interest on their housing loans. The equated monthly installments are also deferred for three months.
The fiscal and monetary interventions came as a huge relief to landlords. They could offer discounts or waive off rent completely for three months. There is no loss.
The interest waiver and loan payment deferral cover all loans. The intention is that it would help all those who have availed loans from financial institutions. This is a generous kidu. The purpose of kidu or incentives is to help someone in need, affected by disasters, misfortunes or calamities. In this case, it is for those whose sources of livelihoods are affected by the new coronavirus.
While hotels are the worst affected, no business is spared. The 7 pm restrictions on all businesses, many say, have worsened the situation. Without business, those renting space will not be able to earn enough to pay rents. And we know commercial space is expensive not only in the capital city but in every town. A small pan shop under the stairs of a building, for instance, pays about 8,000 in the capital city.
The government has not asked building owners to reduce or waive off rents. They have left it to the house owners.
Not all landlords are rich. Some do not earn enough rental income to pay the monthly installment. For some, after years of becoming a jinda (owner), the interest waiver could be their first profit from their property. This too could be ploughed back to help tenants. Help need not be only in rent waiver. It could come in the form of ensuring proper drinking water supply, creating extra parking space or for some, a thorough cleaning up of the surrounding.
Landlords should also be able to judge which of their tenants are affected or not. The loan interest waiver and the deferment of EMI payment cover everyone who availed loan from banks or financial institutions except those who defaulted or those who availed staff incentive loans.
The beneficiaries are all, those affected and not. Some are actually benefitting from the Covid-19 pandemic. How they help others in need, for instance from a 50 percent saving on rents for three months and the interest waiver on the loan he/she took from banks is also left on their ‘moral responsibility.”
Some are expecting tax deductions on rent waivers. While this could benefit all those renting space for residential or business, it could come at a huge cost to the government. The government is bearing 50 percent of the loss to financial institutions from the three-month interest waivers.
The government cannot be too generous during a pandemic. However, with the generous support from development partners and well-wishers, to help us in specific areas, including improving fiscal policies, It is a good time to relook into our lending policies.
Today, the banks are blamed for everything from increasing cost of goods and services to house rents.