Broad support for government’s income relief scheme, but some agents still fall through the cracks

By
/ EdgeProp Singapore
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April 3, 2020 7:00 AM SGT
SINGAPORE (EDGEPROP) - It is common in Singapore to see real estate agents and potential buyers congregating in showflats at weekend project launches. Sometimes, the agents even outnumber actual buyers as can be seen by their colour-coded jackets.
However, as the government steps up efforts to curb community transmissions of Covid-19 through stricter safe-distancing measures and property-buying interest wane over the course of March due to an uncertain economic outlook, it will be sometime before we see this familiar sight again.
The painful truth is that the reduced sales opportunities have hit the pockets of real estate agents and most are bracing for several more months of financial uncertainty. It is an especially difficult time for this group since the majority are considered self-employed and rely solely on sales commission as the main source of income.
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Income relief

Thankfully, some relief has come from the government’s Supplementary Budget 2020 — also known as the Resilience Budget — which was announced by Deputy Prime Minister Heng Swee Keat in Parliament on March 26. This saw the current government committing more than $48 billion to deal with the economic disruption caused the virus.
Assistance for local self-employed individuals were one of the key groups identified to receive targeted support under the Resilience Budget. The others include the tourism and aviation sectors.
 Infographic: Ministry of Finance
Infographic: Ministry of Finance
The highlight for self-employed individuals was the introduction of the Self-Employed Person Income Relief Scheme (SIRS), which the government has allocated $1.2 billion. Eligible local self-employed persons will receive three quarterly cash payouts of $3,000 each in May, July, and October this year.
The criteria to be eligible for SIRS includes earning a net trade income of no more than $100,000; living in a property with an annual value of no more than $13,000; as well as not having ownership of two or more properties. (See Table 1 below)
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In a follow-up press release, the Ministry of Manpower says about 88,000 self-employed individuals are expected to automatically benefit from the cash payouts. This includes private hire car drivers, media and art freelancers, and real estate agents.

Beefing up Resilience

Eugene Lim, key executive officer at ERA Realty Network, says SIRS is timely in helping mitigate “some of the impact” given “the volume of real estate transactions is expected to slow down amid the uncertainties and fallout effects on the economy caused by Covid-19”.
ERA Realty Network is the second largest agency in Singapore, with over 6,967 registered agents, based on statistics by the Council for Estate Agencies as of Jan 1, 2020. This is followed by OrangeTee & Tie (OTT) which has about 4,218 agents.
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 Eugene Lim of ERA Realty Network says the local market is in a phase of mismatched price expectations and needs time to find an equilibrium (Picture: Samuel Isaac Chua/The Edge Singapore)
Eugene Lim of ERA Realty Network says the local market is in a phase of mismatched price expectations and needs time to find an equilibrium (Picture: Samuel Isaac Chua/The Edge Singapore)
Steven Tan, managing director of OTT, says that agents have been facing uncertainty in terms of their income amid growing pandemic concerns, stricter safe-distancing measures, and infection fears. Assurance in their ability to receive an income and provide for their families is therefore shaken, he says.
But while SIRS is helpful, Tan says the monthly payments “cannot cover the monthly marketing budgets of most real estate agents”. This is because most agents are still marketing properties but the cash payout — which translates to $1,000 over nine months — is not enough to cover their marketing budgets.
Still, Tan acknowledges that it is a “tricky time for the government, and there is definitely a need to put limits [on the income relief scheme] and set a threshold for qualified self-employed persons.”
Table 1
SIRS - Self-employed person
Meanwhile, a spokesperson from PropNex Realty, the largest agency in Singapore with more than 8,324 agents, says that the company is “thankful” of the government’s announcement of SIRS, adding “it will definitely help real estate salespersons in their cash flow and provide some financial support.”

Flexibility to be exercised

Since the announcement of the income relief scheme on March 27, some self-employed individuals have raised concerns that they do not automatically qualify for the scheme.
In a Facebook statement on March 29, Manpower Minister Josephine Teo says that her ministry will be flexible when considering appeals. This includes those living in private properties with an annual value that is slightly more than $13,000, and those who have regular part-time work that pays a small salary, on top of self-employment.
For real estate agents, some could be automatically ineligible for the scheme if they closed a relatively large priced deal last year, busting the net trade income criteria. However, such large transactions are fairly uncommon and may not be reflective of their general track record, says Tan.
Leong Boon Hoe, CEO of Arcadia Consulting, says real estate agents tend to face greater income insecurity compared to other self-employed groups since commission payouts may take up to three months to reach their pockets while other agents handling developer sales may only see their commissions four to six months down the road.
 Leong of Arcadia Consulting says agents face income insecurity since commission payouts may take up to three months to reach their pockets (Picture: Samuel Isaac Chua/The Edge Singapore)
Leong of Arcadia Consulting says agents face income insecurity since commission payouts may take up to three months to reach their pockets (Picture: Samuel Isaac Chua/The Edge Singapore)
Leong is a veteran real estate agent who set up his own boutique real estate agency in January this year, after more than three years as Chief Operating Officer at List Sotheby’s International Realty (Singapore).
Leong admits these are challenging times, especially for boutique-sized agencies and notes that high-net worth clients are scarce these days due to quarantine measures. And although investment funds and some clients still harbour property investment interest in the Asia-Pacific region, he expects it would take longer than usual to seal these deals.

Optimistic about the market

Still, some agents remain positive about the sector’s outlook. Lim of ERA says, “Property transaction volume is expected to slow down, but it has not happened; at least not for ERA. ERA is still seeing stable transaction volume. The market has not come to a standstill, nor has it plunged.”
Lim says the local market is in a phase of mismatched price expectations with buyers who are on the lookout for bargains on one side and sellers who are under pressure to lower prices on the other. This means it will take longer to manage and match expectations, says Lim.
Lim’s sentiments are echoed by Tan of OTT, who says that as long as a full lockdown in Singapore does not occur, such as the ones in China which were forcefully implemented, it is likely that property transactions in the city state will continue.
While SIRS is helpful, Steven Tan of OrangeTee & Tie says the monthly payments “cannot cover the monthly marketing budgets of most agents” (Picture: Samuel Isaac Chua/The Edge Singapore)
While SIRS is helpful, Steven Tan of OrangeTee & Tie says the monthly payments “cannot cover the monthly marketing budgets of most agents” (Picture: Samuel Isaac Chua/The Edge Singapore)
With or without SIRS, Lim says there will always be agents who are not closing deals, or enough deals, affecting their income and cash flow. “So when SIRS is introduced, it is a welcome relief for those who qualify,” says Lim.
Meanwhile, Lim believes more can be done to stimulate the market. “Perhaps, at an opportune time, the government may even relax some of the cooling measures like ABSD and SSD and also the cap on LTV ratios for property loans,” says Lim, “This will boost property market transactions and therefore the income for those that depend on the property market for a living.”

Self-help the best help

Some agencies are also stepping up their efforts to support their own agents. According to Tan, there has been more interest in e-learning and live-streaming of training sessions, and OTT hopes to roll out more tools to help its agents market properties and secure deals.
But such support means higher expenses for the company, and with the expected decline in revenues, the senior management team at OTT is considering downward pay adjustments of their own salaries to help absorb the higher costs, says Tan.
Lim at ERA says: “To encourage its salespersons to complete their annual Continuing Professional Development (CPD) training early (within Dec 1, 2019, to April 30), ERA also pays for two CPD Professional Competency courses that will help its salespersons earn four CPD credits.”
A PropNex spokesperson says, “We have reminded our salespersons to fully utilise this period to attend the CPD Courses as we work with our training provider in subsidising the fee to up to 50% with the balance that salespersons could also use their NTUC UTAP Funds. These are currently in place while PropNex is working on our Resilience Package for our agents to further assist them to tide over during this period and will share that in due time.”
Perhaps with more agents in classrooms, potential buyers will feel more at ease when viewing showflats and take their time in making the best purchasing decisions, says Tan.
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