You are here

Measures Approved in Leasing Matters to Mitigate Effects Derived from COVID-19

As we have been informed, on March 14 the state of alarm was declared throughout the national territory, by virtue of Royal Decree 463/2020, of March 14, which declared the state of alarm for the management of the situation of health crisis caused by COVID-19, extending its duration until 00:00 on April 12, 2020, through the Resolution of March 25, 2020, of the Congress of Deputies.

There have been numerous measures that have been approved in recent days to mitigate the economic and social impact as a consequence of the COVID-19 pandemic, some of them being those provided for in Royal Decree-Law 11/2020, of 31 March, by which urgent complementary measures are adopted in the social and economic field to face COVID-19, published in BOE of April 1 of the current year (hereinafter, Royal Decree-Law 11/2020).

Royal Decree-Law 11/2020, among other measures, aims to ensure the protection of the group that lives under a lease and, especially, those who are in a situation of economic vulnerability, focusing on four major blocks:

  • Automatic extension of the leases of habitual residence that will expire during the months of economic stoppage.
  • Moratorium on tenancy debt in leases of habitual residence.
  • Transitional financing aid program for the payment of the tenancy debt of the habitual residence.
  • Extraordinary suspension of eviction procedures and launches that affect homes whose occupants are in a vulnerable situation and without housing alternatives.

These measures have mobilized 700 million euros and will be in force from the day following the publication in the Official State Gazette of Royal Decree Law 11/2020, that is, on April 2, 2020.

Before carefully explaining the content of the measures mentioned above, we will now describe the alleged economic vulnerability derived from COVID-19 to which the beneficiaries of the moratoriums or aid that are described below must subsume (article 5 Royal Decree-Law 11/2020 ).

The requirements (points i. And ii.) Listed below must meet together and be duly accredited:

  • On one hand, the recipients of these measures must be, in the month prior to the request for aid:
    • In unemployment situation, Temporary File of Employment Regulation (ERTE), or having reduced their working day due to care.
    • If they are entrepreneurs, they must have suffered a substantial loss in their income.
  • In both cases, the total income of the members of the family unit may not exceed:
    • In general, the limit of 3 times the monthly Multiple Effects Public Income Indicator (hereinafter, IPREM), that is, € 1,613.52.-.
    • For each dependent child, this limit will be increased by 0.1 times the IPREM and, in the case of single-parent family units, by 0.15.
    • This limit will be increased by 0.1 times the IPREM for each person over 65 years of age who is a member of the family unit.
    • If any of the members of the family unit has a declared disability greater than 33%, a situation of dependency or illness that permanently incapacitates them to carry out a work activity, the limit indicated in section 1) will be 4 times the IPREM, without prejudice of the accumulated increases per dependent child.
    • In the event that the person obliged to pay the rent is a person with cerebral palsy, mental illness, or intellectual disability, with a recognized degree of disability equal to or greater than 33%, or person with physical or sensory disability, with a recognized degree of disability equal to or greater than 65%, as well as in cases of serious illness that renders the person or their caregiver incapable of carrying out a work activity, the limit established in section 1) will be 5 times the IPREM .
  • In addition, the rental income, plus basic expenses and supplies, must be greater than or equal to 35% of the net income received by all the members of the family unit.
  • The family unit shall comprise: the person who owes the rental income, his or her legally separated spouse or registered partner, and the children, regardless of their age, who reside in the home, including those linked by a guardianship relationship, Guardianship or foster care and their non-legally separated spouse or registered domestic partner, residing in the home.

The tenant or those that make up their family unit that are the owners or usufructuaries of any dwelling in Spain will not be subsumed within the assumptions of economic vulnerability. This circumstance will be considered not to exist when:

  • An aliquot part of the property or usufruct right on a home is held.
  • You are the holder of one of these rights by inheritance or by transmission mortis causa without a will.
  • Or, when, being the owner of a home, the non-availability of the home is accredited due to separation or divorce, a cause beyond the control of the owner, or when the home is inaccessible due to the incapacity of the owner or some of the people who make up your coexistence unit.

Having established the above, we will analyze the measures approved by the Government in the matter of renting:

Extraordinary extension of the leases of habitual residence.
At the request of the lessee -whether or not he is in a situation of economic vulnerability-, the duration of the leases of habitual residence may be extended, extraordinarily, for a maximum period of 6 months, and this extension must be accepted by the lessor, unless the parties agree to other terms or conditions.

This measure is applicable to contracts for the lease of habitual residence, subject to Law 29/1994, of November 24, on Urban Leases, in which the period of compulsory extension provided for in article 9.1 or that of tacit extension established in article 10.1 of the LAU during the period from the entry into force of Royal Decree-Law 11/2020 until the day that two months have elapsed since the end of the alarm state.

During the period of time in which the term of the lease is extraordinarily extended, the terms and conditions agreed in the current contract will remain in force.

Moratorium on tenancy debt in leases of habitual residence.
Another of the measures established in Royal Decree-Law 11/2020 is the moratorium on the tenancy debt applicable to tenants of habitual residence who are in a situation of economic vulnerability as a consequence of COVID-19.

It is worth mentioning that the application of this measure has been graduated by the Spanish Government depending on who holds the position of lessor, that is, distinguishing between small holders and companies or public housing entities and large holders. This decision has been made thinking especially of the former, which represent 85% of landlords in Spain, and the impact that this measure could have on its economy if it were applied in the same terms provided for large holders. All this, in order to guarantee a balance between the contracting parties that prevents the transfer of the small tenants to the vulnerable situation of the tenants.

For this reason, next, we proceed to explain the application of the moratorium on tenancy debt depending on who holds the position of lessor in the leases of habitual residence.

Lessors, large holders and companies or public housing entities.
The measure that we detail below applies to the habitual housing lease contracts signed by virtue of Law 29/1994, of November 24, on Urban Leases, in which the lessee is in a situation of economic vulnerability and the lessor is a company or public housing entity or large holder.

Natural or legal persons who are holders of:

  • More than 10 urban real estate (garages and storage rooms are excluded),
  • Or, with a constructed area of ​​more than 1,500m2.

Before stating how this measure is carried out, it is convenient to show that the Government has foreseen that it will not be applied in the cases in which an agreement to postpone or totally or partially cancel the rental income has been previously obtained. between the contracting parties.

Thus, in the absence of such an agreement, the lessee party -who is in a situation of economic vulnerability- may request the lessor for the temporary and extraordinary deferment of payment of the rent, within a month from the entry in force of the Royal Decree-law 11/2020. Upon receipt of the request, the lessor must expressly notify the lessee, within 7 working days, of the decision taken from the following:

  • A reduction of 50% of the rental income during the duration of the state of alarm and can be prolonged during the following monthly payments, depending on the vulnerability situation of the lessee by COVID-19. This measure will be applied, in any case, for a maximum of 4 months.
  • Postponement of the rental rent and restructuring of the part due in the future. The landlord, if he does not opt ​​for the forgiveness of part of the rent referred to above, will propose to the lessee to defer the payment of the monthly rent and will offer a plan for the restructuring of the amounts due. The payment deferment will start from the next monthly rent and will be maintained for the duration of the alarm state and the following monthly installments, extendable month by month, if the initial term is not sufficient in relation to the vulnerability situation of the lessee as a consequence of the COVID-19, without being able to exceed, in any case, the 4 months. As for the debt restructuring, the deferred amounts will be delivered by the lessee in a fractional manner for a minimum period of 3 years, which will begin when the lessee exceeds the vulnerable situation, or when it ends the maximum period of the 4 months mentioned above, always within the term of the lease or any of its extensions. Finally, the deferment of the payment of the rent and the restructuring of the debt will not imply any type of penalty for the lessee nor will they bear any type of interest.

This measure is applicable to all leases corresponding to the Social Housing Fund derived from Royal Decree-Law 27/2012, of November 15, on urgent measures to strengthen protection for mortgage debtors.

As a last appreciation, indicate that the moratorium on the payment of the rent will be lifted and its fractionation if the lessee is a beneficiary of the transitional financing aid program regulated in article 9 of Royal Decree-Law 11/2020 (financing offered by banks to tenants in vulnerable situations and backed by the State), which is explained in point 3 of this note.

Small Tennants.
It will be optional for small holders to accept a moratorium on the rental debt - either through the total or partial cancellation of the rent or through a deferment of its payment.

The small holders may accept from the lessee in a situation of economic vulnerability the request that he proposes to them, such as a remission of the rent or a deferment of their payment, provided that a prior agreement has not been reached between both parties on a voluntary basis.

The lessor will communicate, within a period of 7 working days, the acceptance of the conditions of the proposal or may offer alternatives to the request made, such as the temporary and extraordinary postponement of the payment of certain monthly payments accompanied by a payment schedule to satisfy future amounts owed, or rent forgiveness.

Finally, in the event that the lessor does not accept any agreement, the lessee may have access to the transitional financing aid program described below.

Transitional financing aid program for the payment of the regular housing rental debt.
Lessees who are in a situation of economic vulnerability oversold as a result of COVID-19, whose lessors are both small and large holders, may have access to the transitional financing aid program offered by banks without accruing expenses or interest for the beneficiary. To do this, the Government has approved a line of guarantees with full State coverage so that the banking sector offers financing to people in vulnerable situations.

This program has been created exclusively to face the payment of the regular housing rental debt and may cover a maximum amount of 6 monthly payments. The term of return of the amount loaned will be up to 6 years, extendable up to 4 more years, exceptionally.

Likewise, the Government has approved a new rental aid program, called "Aid program to help minimize the economic and social impact of COVID-19 on regular home rentals", aimed at regular home tenants who are in a situation of economic vulnerability and who have transitory problems to repay the loans granted to meet the total or partial payment of the rental debt referred to above.

Through this program, the tenants will be awarded directly aid of up to € 900.- per month and up to 100% of the rental income or, where appropriate, up to 100% of the principal and interest of the loan that has been subscribed to satisfy the rent of your home. The exact amount of these grants will be determined by the competent bodies of each Autonomous Community.

Finally, indicate that the beneficiaries of the moratorium on the rental debt of their habitual residence and / or public aid without meeting the requirements will be responsible for the damages that may have occurred, canceling or suspending the aid granted and having to reimburse or return the sum delivered.

Extraordinary suspension of eviction procedures and the launching of habitual houses with no housing alternative.
Once the state of alarm has ended and the suspension of the procedural terms and deadlines, the eviction procedures and the launches derived from leases of habitual residence whose tenants are in a situation of social or economic vulnerability due to COVID-19 and have not been lifted They have a housing alternative for themselves and the people who live with them are suspended for a maximum period of 6 months from the entry into force of Royal Decree-Law 11/2020 and until the measures that the social services consider appropriate are adopted.

To conclude, indicate that, in parallel to the measures approved in the matter of housing leases, Royal Decree-Law 11/2020 has modified the original wording of the provisions that regulate mortgage moratorium for the acquisition of habitual residence provided for in the Royal Decree -ley 8/2020.

You can contact us for any questions or clarification you may have in this regard.

Subscribe to The Journal

* indicates required
Areas of Interest
                    

Pragma International will use the information you provide on this form to be in touch with you and to provide updates and marketing. Please let us know all the ways you would like to hear from us:

You can change your mind at any time by clicking the unsubscribe link in the footer of any email you receive from us, or by contacting us at info@pragma.international. We will treat your information with respect. For more information about our privacy practices please visit our website. By clicking below, you agree that we may process your information in accordance with these terms.

We use Mailchimp as our marketing platform. By clicking below to subscribe, you acknowledge that your information will be transferred to Mailchimp for processing. Learn more about Mailchimp's privacy practices here.

Article Rating: 
Average: 4.5 (4 votes)
Total reads: 406
Manubens Abogados's picture

Manubens Abogados is a multidisciplinary law firm having a clear national and international scope, specializing in providing all kinds of clients with a full range of services. Manubens Abogados offers high quality advice and excellence to the clients. His deep knowledge of the areas of work and the experience accumulated during years of active and dynamic exercise of the profession, has allowed Manubens to offer safe, reliable and innovative legal solution, with  a high added value in all disciplines.

Spain

Barcelona
Madrid
Malaga

Andorra

Andorra la Vella