On March 31, Royal Decree 11/2020 comes into force with measures to be taken by tenants who have been affected by quarantine.
The Spanish government has approved new measures to help people who have to pay rent for accommodation. The decree was published on March 31 at the BOE). Unemployed, employees within the ERTE, with reduced working hours, self-employed, who confirm that they were “injured” during quarantine or from its consequences, cannot be evicted. They will receive extension of lease agreements and access to microloans to pay rent. In addition, with a large company or owner of apartments (more than 10 houses owned), the tenant has the right to demand a moratorium or exemption from rent.
Following the example of how a moratorium on mortgages was introduced, the executive branch proposes a package of measures aimed at affected families and groups of people who cannot afford the expenses necessary to maintain their homes due to falling incomes and suspension of a significant part of economic activity in country caused by the COVID-19 pandemic.
The rental market in Spain is very specific. Here, 85% of owners of leased real estate are individuals, small owners. That is why it is important that the measures taken contribute to peace agreements between the two parties and help to facilitate the payment of rents.
The government assures that it will control the balance between the parties. According to the government, assistance to tenants should not affect landlords. Especially on those owners whose rental income is the main income.
What measures are approved in the new royal decree?
- Abolition of eviction within six months for affected families without alternative housing.
- Renewal of lease agreements that expire at the time of the state of emergency and another two months. The lease can be extended for six months, and the terms of the current contract will be preserved.
- Automatic moratorium on rental payments. For those tenants who are in a vulnerable position and whose landlord is a major holder of housing (more than 10 real estate objects).
- Mortgage with a state guarantee, which will cover the payment of rent for up to six months. For all those tenants who are in a vulnerable position as a result of the coronavirus.
What groups of people are those in situations of social or economic vulnerability caused by COVID-19?
People who are a month before the request for a moratorium are in:
- Unemployment situations, temporary employment regulation documents (ERTE), or their working hours were reduced due to quarantine.
- In the event that you are an entrepreneur or for other similar circumstances, you suffer a significant loss of income. And for this reason, the total income of family members has not been achieved.
What requirements must be met in order for you to be recognized as a “victim”?
In order to receive a moratorium or assistance in respect of rental income from your usual place of residence, any of the previous points must be observed. And, therefore, family income must be less than a certain limit.
- The limit is three times the monthly IPREM (Public indicator of income, this is about 1,545 euros / month). It can increase 0.1 times relative to IPREM for each child or family member over 65 years of age. (0.15 if it is a single parent family). The limit may increase four or five times compared with IPREM if one of the family members has a confirmed disability, more than 33% or 65%, respectively.
- Payment of rent, plus basic expenses and utility bills, is greater than or equal to 35% of the net income received by all family members.
- None of the family members own other properties in Spain. You will need to prove that you do not have access to other housing in order to get rental assistance.
How can you prove that you are a “vulnerable” tenant?
To prove to the homeowner that the tenant is vulnerable, he must provide:
- In the case of unemployment. You must provide a certificate issued by the organization that manages the benefits. It indicates the monthly amount received as unemployment benefits or subsidies.
- In case of termination of the self-employed workers. You must provide a certificate issued by the State Tax Authority (la Agencia Estatal de la Administración Tributaria) or the competent authority of the autonomous community. It is issued on the basis of an application for termination of activity by an interested party.
- Number of people living in the apartment/house: family book, certificate of registration, for persons registered in the home in the previous six months. Certificate of disability or permanent disability.
If it is impossible to provide any of the documents, a statement containing a clear justification of the reasons that impede the rental payment will be sufficient. After the state of emergency, you will have one month to submit documents that were not provided!
When and until how long can a moratorium be requested?
Tenants who are in a situation of economic vulnerability can request a moratorium from April 1 and within one month after the entry into force of Royal Decree 11/2020, that is, until May 2, 2020.
Which landlords should adopt a moratorium on rent?
Any tenant in a situation of economic vulnerability can request a moratorium from the lessor if this is a company or public person or large owner (individual or legal entity that owns more than 10 houses).
This may be a delay in rent or even full or partial cancellation of rental debt. That is, the owner of the house (large owner) should choose the following alternatives:
- 50% reduction in rental income during a state of emergency established by the Government. This rental reduction can be extended for up to four months due to a situation of vulnerability caused by COVID-19.
- Rent moratorium, which will be applied automatically and will affect the period of emergency. The moratorium can be renewed monthly after the end of quarantine for a total period of not more than four months.
Such rent will be deferred until the next monthly rent. Payments will be partially divided by at least three years. Which will be counted from the moment of overcoming the vulnerability situation or from the moment of the end of the four-month period mentioned above. The tenant will not receive any penalty and the deferred amounts will be paid to the lessor without interest.
What alternatives does the private owner have?
In the case of a small owner (less than 10 houses), he can voluntarily agree with the tenant to defer payment of the rent or to cancel it in whole or in part.
The owner will have seven business days to accept the terms. But in case of disagreement with the postponement or cancellation (since, for example, he could not afford it financially), the vulnerable tenant will get access to the financial assistance program regulated by the royal decree. For example, direct assistance or microcredit from ICO. Therefore, a moratorium is not necessary for a small lessor.
And if you can not cope with the payment of a loan to help, what to do?
If the family cannot cope with the repayment of the loan, it will be able to receive assistance in the amount of up to 900 euros per month and up to 100% of the rent. Or, if necessary, up to 100% of the principal amount and interest on the loan, at which the rent for the usual place of residence was paid.
The exact amount of assistance is determined by the authorities of each autonomous community.
Be careful if you request a moratorium or government assistance without being a vulnerable tenant
A person or persons who have taken advantage of the moratorium on rent for their regular residence and / or state assistance without complying with the requirements will be liable for any possible damage. Autonomous communities can verify the requirements and documents submitted for assistance after the decision to provide assistance has been made.
What is a lease renewal?
From the moment this royal decree comes into force and until the day when two months have passed since the end of the emergency, an emergency extension of the lease term can be applied at the request of the tenant. The lease renewal period can reach a maximum of six months. During this period, the conditions established for the current contract will continue to apply.
What is eviction suspension for vulnerable families without housing alternatives?
During a state of emergency, all eviction procedures are suspended.
When the state of emergency ends, if there is an eviction procedure prescribed in the rental agreement, and the tenant proves in court that he is in a situation of social or economic vulnerability resulting from exposure to COVID-19, then the eviction procedure will be suspended. Until they take measures that the competent social services deem appropriate, for a maximum period of six months from the entry into force of this royal decree.