A man wearing a protective mask walks past a closed shop covered with advertisements for rentals and sales in Mongkok district in Hong Kong, Feb 17, 2022. (KIN CHEUNG / AP)

The government will propose legislation forbidding landlords from terminating leases and from taking legal action against tenants from specific industries who fail to pay their rents on time amid the pandemic, said Financial Secretary Paul Chan Mo-po.

Writing in his blog on Sunday, Chan said the proposed legislation, which would be in effect for three months, will cover specific industries, including the 17 scheduled premises under the Anti-epidemic Fund and beleaguered sectors such as retail outlets and interest-class operators.

This is an unusual tactic in an unusual time. We hope that setting up the moratorium period can provide breathing space for small and medium-sized enterprises to prevent the domino effect of business closures.

Paul Chan Mo-po, Financial Secretary of the Hong Kong Special Administrative Region

“This is an unusual tactic in an unusual time. We hope that setting up the moratorium period can provide breathing space for small and medium-sized enterprises to prevent the domino effect of business closures,” Chan said in his blog entry.

“We believe when the pandemic is contained, the business environment will become more stable. As business receipts and cash flow gradually becomes normal, businesses then will have the capability to resume paying rent arrears gradually,” the finance chief added.

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Chan said the proposed legislation’s goal is to help over 300,000 SMEs in Hong Kong that employ 45 percent of the labor workforce in the city’s private sector. Preserving the SMEs is the pillar of economic stability in Hong Kong, he said.

The finance chief said the proposed legislation will have several supporting measures.

First, affected landlords will be allowed to defer the payments of rates. Second, if landlords’ rental incomes are affected by the proposed legislation and they cannot repay their mortgage loans on time, they could ask banks to grant a repayment moratorium for the three-month period.

And finally, for older landlords who mainly rely on rental incomes generated from a single premises held in their individual names, the government would provide rental advance payments up to three months, capped at HK$100,000 ($12,800).

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Chan said the governments of Australia, Singapore and the United Kingdom launched similar measures when their economies were battered by the COVID-19 pandemic.

The proposed legislation would take effect after the approval of the chief executive and the Executive Council, as well as the bill’s passage by the Legislative Council.