The health crisis caused by the spread of the coronavirus is having a direct impact on the economy and on society, on industries, business and commerce and on the day-to-day life of citizens.
The confinement measures adopted by the Spanish Government in order to prevent the spread of the virus have implied the reduction of economic and social activity, restricting mobility and paralyzing the economic activity with the consequent loss of income for households, the self-employed and companies.
In order to mitigate these effects, the government has approved a new package of social measures for workers, families and vulnerable groups, which, after the paralysis of much of the economic activity, have seen their income dramatically reduced and, consequently, their ability to afford the expenses necessary for the maintenance of their homes and businesses.
Among these, measures for rent support: The main measures approved in relation to the rental of housing are the following:
- Suspension of the eviction procedures for vulnerable households without housing alternatives:
Once the state of alarm has been lifted the eviction procedures will be suspended, up to a maximum of six months, when the tenant proves to be in a situation of economic or social vulnerability that has arisen as a result of COVID-19, which make it impossible to find another housing.
In the event that this extraordinary suspension affects landlords who are also in a situation of social or economic vulnerability arising as a result of COVID-19, this circumstance must be taken into consideration when defining the period of extraordinary suspension and social protection measures to adopt.
The cases of vulnerability to obatin deferment of payments or other aids are the following: When the tenant is unemployed or in a situation of Temporary Employment Regulation File, in case of an employed person, or having suffered a substantial loss of income or a substantial drop in sales, if they are entrepreneurs, so that:
- The total income per household in the month prior to the request for the delayed payment does not exceed 1,612’52 Euros (three times the monthly IPREM of 537’84 Euros). Children or people over 65 allows this amount to be increased by 53’74 Euros each, in addition to other increases in the event of disability, single-parent homes, etc.
That the rent plus basic expenses and supplies is equal to or greater than 35% of the net income of the entire family unit.
• Do not own any other home in Spain.
- Extraordinary extension of the term of duration of the rental contract of the habitual residence:
An extraordinary extension of the term of the contract may be applied on regular home lease contracts that end in the period between April 1 and two months after the end of the state of alarm, upon request of the tenant, for a maximum period of six months, during which the terms and conditions established for the current contract will continue to apply. Landlord cannot refuse this request for extraordinary extension, unless other terms or conditions are set by agreement between the parties.
- Deferment of rent payment.
Government has established different modalities of payment depending on the type of lessor.
- A) Large holders, companies or public housing entities.
When the lessor is a company or public housing entity or a large holder, understanding as such the private person or company who owns more than ten urban properties, the lessee may request the deferment of rent payment. The lessor may choose one of the following alternatives:
- Reduce the monthly rental amount to 50% during the period of state of alarm and the following months if that term were insufficient, with a maximum in any case of four months.
- Postpone the payment of the rent for the duration of the state of alarm and the following months, extendable one by one, if that term is insufficient, for a maximum period of four months. Said rent will be deferred, starting from the next monthly rent, by splitting it up in instalments that will be paid, for at least during three years, without interest.
The tenant must request for any of the above options within one month, from April 1, 2020, and the lessor must formulate his proposal within 7 working days of receipt.
At the same time, the tenants will be able to access to Government financing aid program, lifting the deferment and the instalment payment in the first monthly rent in which said financing is at their disposal.
- B) Small landlords (natural person who owns a maximum of 10 urban properties)
The tenant may request from the lessor the temporary and extraordinary postponement in the payment of the rent, within a month, from April 1, 2020. The lessor has no obligation to accept the modification of the conditions proposed by the lessee, and must communicate its decision within a maximum period of 7 working days.
If the lessor does not accept any agreement on the deferment and the lessee is in a vulnerable situation, the lessee may have access to the transitional financing aid program by the Government.
- Bank guarantees with State coverage for vulnerable tenants.
In order to provide financial coverage to meet housing expenses by households in situations of social and economic vulnerability as a result of the expansion of COVID-19, a line of bank guarantees is authorized with full coverage of the State, so that Banks can offer transitory financing aid to people who are in the aforementioned situation of vulnerability, with a repayment period of up to six years, exceptionally renewable for another four and without, in any case, accruing any type of expenses and interests for the applicant.
Said transitory financing aid must be dedicated to the payment of the rent of the housing lease and may cover a maximum amount of six monthly payments.
- Aid program to help minimize the economic and social impact of COVID-19 on regular home rentals.
The purpose of this program will be to grant rental aids, through direct award, to tenants of habitual residence who, as a consequence of the economic and social COVID-19 impact, have transitory problems to attend to the partial or total payment of rent.
The ultimate purpose of this program is to face the difficulty in repaying those temporary financing aids (mentioned in point 4) contracted by vulnerable households that have not recovered from their vulnerable situation as a result of the COVID-19 crisis and that therefore, they cannot cope with the repayment of said loans.
The amount of this aid will be up to 900 euros per month and up to 100% of the rent or, where appropriate, up to 100% of the principal and interest of the loan that has been subscribed to make the payment of the rent of the habitual residence.
VBB Aabogados