A Guide on the new measures regarding rental contracts and mortgages from March 31st 2020
The Spanish government, aware of the economic repercussions of the current health crisis, has decided to approve a package of measures to relieve those citizens who are having difficulties to pay their rent. These measures will come into force in a few days.
How does the Government define “renters affected by the COVID-19 crisis”?
The Government extends the legal definition of “vulnerable household” to include:
- For private persons: Unemployed persons; workers who have suffered temporary layoffs (ERTE) or ERE; and those who have had to reduce their working hours for care purposes.
- For entrepreneurs, companies, independent retailers: those who have suffered “a substantial loss of income” such as defined by the decree:
– Their income does not exceed three times the limit of the Public Indicator of Multiple Effects Income (IPREM). This limit will be increased if the person in question has dependent children, persons over 65 years of age within the family unit, a person in the household with special needs or a situation of dependency.
– The amount of rent they have to pay is greater than or equal to 35% of the net income entering the household.
The measures allow tenants affected by the coronavirus crisis to request delays in the payment of rent from their landlords. More specifically, the new decree provides measures concerning:
- Delayed rent payments
- An extraordinary extension of all rental contracts
- Suspension of expulsion decisions
- Extension of the moratorium on the payment of mortgages for commercial premises and businesses.
Delayed rent payments
There are two different cases covered, depending on the number of properties owned by the lessor:
- If the landlord owns less than 10 dwellings, an agreement on the delay will be required and, if there is no agreement, the tenant may apply for interest-free loans or subsidies from the State delivered through the Institute of Official Loan (ICO in Spanish) .
- If the landlord owns more than 10 dwellings, he must choose between a four-month moratorium on rent payments, to be paid back in 3 years; or to reduce the tenant’s rent by 50% for four months.
An extraordinary extension of all rental contracts
From the entry into force of the Decree, and until two months after the end of the alarm State, tenants may request an extension of their rental contract for a maximum period of six months, during which the terms and conditions of the previous contract will continue to apply. The extension, the decree states, must be accepted by the landlord.
Suspension of expulsion decisions
Expulsion procedures are suspended for 6 months. The tenant must prove that they are in a situation of economic vulnerability.
Extension of the moratorium on the payment of mortgages for commercial premises and businesses
The Government is extending the mortgage moratorium to the self-employed and entrepreneurs who are having difficulty paying their office or business premises fees. Freelancers and professionals who cannot afford to pay for their premises or offices, can stop paying in this situation and schedule a gradual reimbursement in the future.
This measure also includes a line of ‘microcredits’ guaranteed by the State of about 100 million euros for those who have their flat rented to individuals or small owners.