March 31 comes into force Royal Decree 11/2020 with measures to be taken by tenants who have been affected during the quarantine.
Spain’s government has approved new measures to help people who have to pay rent to live. The decree was published March 31 in the BOE ). Unemployed, workers under ERTE, with reduced working hours, self-employed, who confirm that they were “affected” during the quarantine or from its effects, cannot be evicted. They will get lease extensions and access to microcredit, to pay their rent. In addition, in a large firm or apartment owner (more than 10 houses owned), the tenant has the right to request a moratorium or rent exemption.
Like themortgage moratorium, the executive branch is proposing a package of measures aimed at affected families and groups of people who cannot afford the expenses necessary to maintain their homes due to the fall in their income and the suspension of much of the economic activity in the country caused by the COVID-19 pandemic.
The rental market in Spain is very specific. Here 85% of rental property owners are individuals, small landlords. That is why it is important that the measures taken promote amicable agreements between both parties and help to facilitate the payment of rents.
The government assures that it will monitor the balance between the parties. According to the government, tenant relief should not affect landlords. Especially on those landlords whose rental income is their main income.
The government says it will control the balance between the parties.
What measures are approved in the new royal decree?
- Cancellation of evictions within six months for affected families without alternative housing.
- Renewal of leases that expire at the time of the state of emergency and for another two months. Leases can be renewed for six months, and the terms of the existing contract will remain in effect.
- Renewal.
- Automatic rent moratorium. For those tenants who are vulnerable and their landlord is a large landlord(more than 10 properties).
- Mortgagewith a government guarantee that will cover rent payments for up to six months.For all those tenants who are vulnerable as a result of the coronavirus.
Which groups of people are those in situations of social or economic vulnerability caused by COVID-19?
People who, one month prior to the time the moratorium is requested, are in:
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- Situations of unemployment, Employment Regulation Temporary Employment (ERTE) documentation, or their hours of work have been reduced due to quarantine.
- In case you are an entrepreneur or other such circumstances, you suffer a substantial loss of income. And for this reason, the total income of the family members is not reached.
What requirements must be met for you to be recognized as an “injured person”?”
To qualify for a moratorium or assistance with respect to rental income from a customary residence, any of the preceding items must be met. And, therefore, the household income must be less than a certain limit.
- The limit is three times the monthly IPREM (Public Income Measure, which is about €1,645/month). It can increase by 0.1 times relative to IPREM for each child or family member over 65. (0.15 if it is a single-parent family). The limit may increase four or five times relative to IPREM if any family member has a verified disability greater than 33% or 65%, respectively.
- Payment of rent, plus basic expenses and utilities, more than or equal to 35% of net income, received by all family members.
- None of the family members owns another property in Spain. You will need to prove that you do not have access to other housing to get rental assistance.
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How can you prove that you are a “vulnerable” tenant?”
To prove to a landlord that a tenant is vulnerable, they must provide:
- In the case of unemployment. You must provide a certificate issued by the organization that administers the benefits. It indicates the monthly amount received as unemployment benefits or subsidies.
- In case of termination of self-employed workers. A certificate issued by the State Tax Authority (la Agencia Estatal de la Administración Tributaria) or by the competent authority of the Autonomous Community must be presented. It is issued on the basis of an application for termination by the interested party.
- Number of people living in the apartment/home: family book, residence registration certificate, for persons registered in the dwelling in the previous six months. Certificate of disability or permanent incapacity for work.
If you are unable to provide any of the documents, a statement containing a clear justification of the reasons preventing you from paying rent will suffice. After the emergency ends, you will have one month to provide the documents that were not provided!
When and until when 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 of the entry into force of Royal Decree 11/2020, that is, until May 2, 2020.
Which landlords should accept a rent moratorium?”
Any tenant in a situation of economic vulnerability can request a moratorium from a landlord if it is a company or public entity or a large owner (an individual or entity that owns more than 10 homes).
This could be a deferral of rent or even a full or partial elimination of rent arrears. That is, the homeowner (large owner) must choose the following alternatives:
- 50% reduction in rental income during a state of emergency established by the Government. This rent 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 extended monthly after the end of the quarantine for a total period not to exceed four months.
That rent will be deferred until the next monthly rent payment. The payments will be partially split over at least three years. Which will run from the time the vulnerability situation is overcome or 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 landlord without interest.
The tenant will not receive any penalty and the deferred amounts will be paid to the landlord without interest.
What alternatives does a private owner have?”
In the case of a small landlord, (less than 10 houses), he can voluntarily negotiate with the tenant to defer payment of rent or waive all or part of it.
The owner will have seven working days to accept the terms. But if he or she does not agree to the postponement or cancellation (because, for example, he or she could not afford it financially), the vulnerable tenant will have access to a financial assistance program regulated by royal decree. For example, direct assistance or a micro-loan from the ICO. Therefore, for a small landlord, a moratorium is not necessary.
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What is a rent assistance program?”
If a private landlord and a vulnerable tenant fail to reach an agreement on temporary deferment or sharing of rent arrears, the latter can access the banks’ temporary financial assistance program with full government coverage:
- The assistance can cover a maximum of six monthly installments of rent.
- The repayment period will be six years. However, in exceptional cases there will be the possibility of extending it for a further four, and in any event without any cost or interest to the applicant.
- Access to such assistance will be available to all tenants who are vulnerable as a result of COVID-19. Tenants whose owners are large landlords may also have access to this assistance.
And if you can’t handle paying off your assistance loan, what should you do?”
If a family can’t cope with the loan repayments, they can get help of up to €900 per month and up to 100% of the rent. Or, if applicable, up to 100% of the principal and interest on the loan where the rent for the usual residence has been paid.
The exact amount of assistance is determined by the authorities of each autonomous community.
Be careful if you are requesting a moratorium or state aid without being a vulnerable tenant
A person or persons who have taken advantage of a rent moratorium for their usual residence and/or public assistance without complying with the requirements will be liable for any damages that may occur. Autonomous Communities may conduct a review of the requirements and documents submitted for assistance already after the decision to grant assistance has been made.
What is a lease extension?”
From the effective date of this Royal Decree until the day two months from the end of the PE have elapsed, an extraordinary lease extension may apply at the tenant’s request. The lease extension period may reach a maximum of six months. During this period, the terms and conditions set out for the current contract will continue to apply.
What is a suspension of eviction for vulnerable families with no housing alternatives?”
All eviction proceedings are suspended during a state of emergency.
When the state of emergency is over, if there is an eviction procedure spelled out in the rental agreement, and the tenant proves in court that he or she is in a situation of social or economic vulnerability resulting from COVID-19, the eviction procedure will be suspended. Until the measures deemed appropriate by the competent social services are taken, for a maximum period of six months from the entry into force of this royal decree.
At the same time, the eviction procedure will be suspended for a maximum period of six months.