The government punishes the good owners: there is no support if we do not charge the tenants during a difficult time

He wanted to help, he stayed overboard

Entrepreneur Audrius Mockus and his family run a home decoration center in the capital, Soc. Facebook shared online that it wanted to help its tenants when the quarantine began and, in consultation with their relatives, exempt them from rent entirely, but now, as a result, the government will leave their pockets empty when others distribute the compensation.

“As soon as the quarantine was announced, we realized that we must act quickly, because the crisis is on an unprecedented scale.

On the second day of quarantine, March 17, we voluntarily exempt our 70 tenants, the vast majority of whom are small and medium-sized businesses, from rent. Our income, by our own decision, has fallen 100% in one day, but we are not “acropolises”, unlike the big ones, among which tenants, and large companies, often foreign-owned, will have a hard time survive the crisis. We already realized in mid-March that the majority of our tenant partners simply will not receive any state compensation scheme.

You see, it doesn’t matter at all how good a business support program is when a company closes. Everything for him, amen. And it will not close at all because it malfunctioned, but because it simply lacked working capital.

And do you know how the government-adopted rent compensation mechanism will affect us? Here, for those who are not asked for anything, only in consultation with the family, they gave 100 percent. discounts for your tenants? Here for them to survive and arrive not only at the end of the year, but perhaps in May? To save jobs and not become clients of the Employment Service and Sodra? We will grease the pin, “he wrote, assuring that these are the owners who just waited and will now give tenants 30 percent. Discounts, compensation will be received.

The businessman asked in the publication what message the state is sending to its residents through such support mechanisms.

“Never, by any means, be an idiot and don’t even try to be human, determined and understanding.
We smallholders stay overboard making it possible for our associate tenants not to go bankrupt and save jobs.

Once again, the state clearly shows that the already delayed compensation mechanism is intended to rescue large companies, “said businessman A. Mockus.

There are almost no customers left, but there is no compensation

And Antanas Šiuša, the head of the Beatričės saldumynai confectionery workshop in Vilnius, finds himself in a different situation. After contacting Delfi, the man also shared his experience with rent compensation.

He explained that with the start of the quarantine, product orders were canceled by almost all previous customers, but it became clear that there were only two long-term customers left and the company could not survive at any cost, the company cannot claim a refund. of INVEGA rental today.

“I called INVEGA about the real estate rental compensation and asked who the support belongs to, then they made it clear to me that if the pizzeria sold at least one pizza, the company did not meet the criteria.

I mean, we can’t claim rent compensation because we’ve done everything we can to do at least some work, “explained the manager, saying that the worst thing was that those who last tried to work would not receive compensation, but who closed the Puerta would be happy to receive the money.

According to him, the company’s workshop receives 1.7 thousand. Eur., But the total monthly turnover has now fallen by approximately 90%. and they only make up 3-4 thousand. Eur.

“To pay almost 2 thousand. Eur for rent, it is clear that we do not fit in any way. We really would have helped with the compensation of the rent,” he lamented.

He criticized order: punishing good owners

According to Jokūbas Markevičius, Director of the Financial Stability Department of the Bank of Lithuania, the current rent compensation measure is not flexible at all and does not create incentives for landlords to set values ​​below and above 30%. discounts

Ieva Valeškaitė, senior expert at the Lithuanian Free Market Institute (LFMI), shared the same opinion, who was asked to evaluate the rent compensation mechanism and said that it penalizes good owners, those who gave significant discounts to their clients or exempted them from rent. owners will not agree to give 30 percent. discounts

“The previous condition that the rent compensation will be paid only to companies that did not carry out any activity has already been modified. That is a really good reaction from the government, because not doing so would penalize the business that tried to get out of the situation without” close the door, “like the cafes and restaurants that restructured and cooked food,” he said.

The representative of LB J. Markevičius also emphasized that the main beneficiary of this measure are real estate managers, i. mainly funds invested by wealthy residents.

“In principle, they will be guaranteed 70%. Revenue stream at a time when other sectors were generally unable to generate revenue due to operating restrictions, although lessors themselves may take the opportunity to defer payments on existing bank loans.

This raises questions about both the efficiency of using limited state resources and the equity of the measure against other business sectors. The Bank of Lithuania had submitted proposals to allow tenants and lessors to agree on the rental price during the quarantine period and to use widely available standard INVEGA tools, as well as to cover other obligations to suppliers, “said the Director of the Department of Stability LB Financial

According to him, since the path of aid has already been followed, LB believes that it would make sense to build the measure so that the state compensation changes in proportion to the amount of the discount made by the real estate manager.

“This would provide incentives for the real estate manager to earn less and more than 30 percent. discount while receiving state support provided. This would save the state’s limited resources and will definitely be necessary to stimulate the economy, “he said.

He suggests linking compensation to loss of income.

However, Tadas Povilauskas, economist at SEB Bank, explained that, in general, the partial rent compensation measure applied in Lithuania is generous for both parties to the lease. According to him, that is not the case in other Baltic countries, and Sweden has a similar measure, but much more modest.

“There the government covers up to 50 percent. The amount of the discount itself, but cannot exceed 25%. Rent (for example, if the rent is 10 EUR / m2, the owner makes a 50% discount, the state pays 2.5 euros, then the tenant pays 5 euros, the owner receives 7.5 euros).

Of course, there will always be poorly considered details from the developers of this tool that may limit a particular company’s ability to take advantage of the tool, but then you should contact lawmakers directly and request a reasoned change in terms.

I think it would make sense to include the condition that partial rent compensation support is also available for those companies that may have been operating during quarantine but whose income has decreased by a third or more. On the other hand, I am very aware of the legislators that there are many points that are not favorable for business, such as the mandatory presentation of the financial statements for 2019 or the condition that it is a company in difficulties (positive capital) because what We have seen before is that when times are good, many companies did not specifically provide financial reporting documents to RC so that the public space had as little information as possible about the company.

Or those commercial comments say that the restaurant business is specific, so it is normal to work with negative capital, so there should not be a positive capital condition to receive compensation, show an irresponsible approach before the law, “he said .

I. Valeškaitė, an expert at the LFMI Institute, also suggested that it would be logical to link compensation with loss of income.

“Because now there will definitely be situations where the company’s activities were not directly prohibited, but in the absence of customers, revenue fell dramatically and perhaps did not stay at all.”

Worst of all, of course, access to rent compensation and other assistance that companies need here and now, is severely hampered by bureaucratic formalities, for example, being required to be an RC after presenting the balance sheet for 2019. or be registered for a lease. Although, otherwise, the registration of contracts is not mandatory. These are also additional costs, especially since late registration means paying more, ”said I. Valeškaitė.

Excluding who owns compensation

Indrė Jancaitė, Communication Manager of INVEGA, assured that it is possible to request a rent compensation from May 4, and the applications must be submitted here.

According to the specialist, legal entities and entrepreneurs who participate in economic activities can receive compensation for the rent.

He clarified that compensation was granted to those whose main activity corresponded to activities that had been or were prohibited during the quarantine period; the main activity was not carried out and for those to whom the lessor applies at least 30%. rental discount

“Businesses that have paid the first facility rental payments in March, April, or later this year and these payments have already been discounted compared to the monthly rent stipulated in the contract can also apply for this support.

For them, the amount of compensation is calculated by comparing the rent for the compensation period with the monthly rent specified in the lease. The lease contract for the premises must be signed no later than March 15 of this year, registered with the Registry Center (RC) and valid during the application for compensation, ”he said.

When asked whether it was true that, for example, a pizzeria had sold at least one pizza during quarantine, he could not be compensated, he explained that it depended on the company’s core business.

“Let’s say that a company whose main income came from restaurant activities, and when the latter was banned, the restaurant closed, and there was no income from restaurant activities, can apply for compensation under the lease of the restaurant premises. The fact that the restaurant’s kitchen produced take-out food and that the company received some income from this activity allows the company to request compensation, ”he clarified.

No account – without compensation

When asked if it was clear who could not receive compensation, she argued that these were cases in which the activity carried out was not economic; it was not prohibited; it has been carried out (albeit remotely) or the owner does not agree to do 30 percent. discounts

The INVEGA website also states that the rental costs of premises are not reimbursed from state funds to companies whose main activity is electronic commerce, specialized retail sale of weapons and ammunition, activities of organization of gambling and betting or other games. of chance, activities of financial institutions. The lessee and the lessor cannot belong to the same group of companies and / or leasing premises of a natural person who has the majority of the votes in the applicant company.

Finally, if the landlord has completely exempted his tenants from property tax during quarantine before the government makes a decision, according to the specialist, it is not possible to claim a rent compensation.

“It just came to our attention then. If there are no bills, the rent cannot be reimbursed,” he said.

Delfi also asked how the amount of rent compensation that can be obtained varies depending on the discount that the landlord has made and what will happen if the discount is greater than 50%.

“The compensation is calculated as follows: look at the invoice for February (for example, 100 euros) and, for example, for April. Account (70 Eur.). Since the discount is sufficient (30%), this is 50% refundable.February bills (50 euros).

If the April invoice is 50 euros (that is, 50% discount), 50 euros are reimbursed, and if the April invoice is 40 euros (because the discount was 60%), 40 euros are reimbursed “, he explained.

In other words, it means that if the landlord has made more than 50 percent to the tenant. discount, you will not be refunded more than the rest of the account.

On Friday, some 600 tenants of the locals affected by the crisis have already applied for state subsidies to cover the cost of rent.

It is planned to allocate 100 million for this benefit. euro from public funds.

Delfi recalls that companies that have leased state-owned real estate and are experiencing difficulties due to the COVID-19 crisis will also see their incomes reduced.

The Government approved a draft prepared by the Ministry of Finance to replace the leasing of tangible long-term state assets, state and municipal real estate, according to which the tenants of state real estate have the opportunity to pay 20% for two months. after quarantine. rental prices.