Spain has been under a state of emergency for a week now. The aim is to reduce the active spread of the coronavirus throughout the country. At the same time, movements and associations are beginning to emerge that are demanding a rent moratorium from the state. In other words, tenants want the legal right to defer payments due to the current situation in the country. They are guided by the principle: “If we don’t work and don’t get paid, we can’t pay the rent”.
This proposal was put forward by members of the Unidas Podemos party. The main idea is similar to measures that have already been taken regarding mortgage payments. On March 17, the Council of Ministers approved a moratorium on mortgage payments for the employed and self-employed. As a result of the exceptional measures taken to limit the spread of COVID-19, these groups of people are losing their jobs or their income is drastically reduced.
Factually, the Spanish government, represented by Vice President for Social Affairs Pablo Iglesias, has made it clear that “the government realizes that many people will not be able to pay their rent,” so “we will look for ways to guarantee their right to housing.”
Rent moratoriums and chaos
The possibility of a rent moratorium is becoming more and more likely. According to experts, such a measure could have an extremely unfavorable impact on many individuals or small firms.
“Such an innovation would cause chaos and uncertainty, which is the last thing we need at the moment, as it would reduce the supply of rentals. And this sector is already under serious attack from the legislature.” In addition, housing is a source of income for millions of Spaniards. And if this crisis worsens, the rental income will be the only source of income for many families and self-employed people,” said Beatriz Toribio, a real estate analyst.
The rental housing sector is a huge social sector and its proper development depends on the construction of affordable and social housing, mainly aimed at young people and low-income families. On the other hand, a person who is quarantined at home and working remotely will continue to receive a salary. Accordingly, he will be able to pay his rent in full. Those who have savings will also be able to pay until they are given unemployment benefits or find another job. Therefore, the government is being cautious and plans to focus on helping those who really need it. Despite the state of emergency in the country, it is not the time to make hasty decisions and general measures. After all, it can have a detrimental effect on individuals or small firms and the economy of the entire country.
All of this is not the time to make hasty decisions and general measures.
Opinions of experts and analysts
The CEO of the real estate agency Agencia Negociadora del Alquiler, José Ramón, recognizes that “in most cases, it is the property owners who are in a worse economic situation than the tenants”. Therefore, he warns that “any measure that is implemented regarding rent payments must be reciprocal for both parties (landlords and tenants). If there is to be a moratorium on rent payments, it must be accompanied by a similar measure towards owners. They should not be left unprotected.”
According to experts, the solution to the current situation is for landlords to negotiate individually with tenants. If tenants have specific problems, temporarily suspend monthly payments. And the state should undertake to guarantee the collection of payments after the agreed period. Or until the tenant can resume payments as normal. But this alternative is guaranteed at the expense of public resources and will directly affect the economy of the country. All indications are that the Unidas Podemos party’s proposal will only focus on large professional landlords. That is, companies and individuals who are considered as large landlords (at least 10 apartments).
At least.
How not to lose rent?
It is possible to spread arrears gradually and pay within a set period of time (six months, a year, etc.). Exempting the tenant from paying during a national emergency does not imply that the owner loses income. Prorating implies that the rent will increase in subsequent months, which is a definite plus for the tenant.
Allowing the tenant to pay a pro-rated amount does not imply that the owner is losing income.
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With respect, wishes for health and peace,
Anna Lioubavina and the team at Broadway Consulting Corporation SL