Rental subsidies in times of the coronavirus

This is a summary of the decree law approved by the Government with information on rental subsidies for the duration of the State of Alarm by COVID-19. Clear answers for each specific case.

2 April 2020 by Eduard Solé

On 11 April, the government approved a ministerial "Order" that complements the initial package of aid for the rental The new law was incorporated into the Royal Decree-Law of 31 March 2020, which establishes aid for the payment of rents for permanent housing. The entry into force of the State of Alarm had a profound and abrupt impact on people's economies and it is obvious that rent constitutes the largest unitary expenditure (at a single recipient) for a large part of the population.

It is obvious that, unlike other products and services, the habitual residence is in the top 3 of people's needs and, in my opinion, the delay in approving an aid plan has generated unnecessary additional concern. By way of example, as of the date of this article's update, the Real Estate Consulting which Monapart has made available to the public during the COVID-19 period, has received around a hundred queries related to the payment of rent, to which must be added the dozens of questions and requests we have received from our clients in the Property Management department (landlords and tenants).

In any case, here is a summary of the content of the decree based on the fundamental questions, so that you can find your way around your specific case and do not get bogged down in irrelevant casuistry.

WHAT YOU MIGHT BE WONDERING WHETHER YOU ARE A LANDLORD OR A TENANT

1. In which cases can my household be considered "Covid-19 Vulnerable"?

I am unemployed.
I am on reduced working hours due to an ERTE.
I am on reduced working hours for care.
I am self-employed or an entrepreneur and I can prove one of these situations:
- My household has an income of less than €1,645* per month. *You should consult the small increases depending on your family situation.
- The sum of the rent and basic utilities is equal to or more than 35% of the household's net income.

NOTE: In all cases, loans will not be available to households that own a dwelling that is not rented to a third party or is not habitable.

WHAT YOU MAY WONDER IF YOU ARE A TENANT

2. What type of landlord do I have?

"Big fork: has more than 10 dwellings or 1,500 m2 of residential property. If this is the case, skip to point 4.
"Small owner": has a lower net worth than the one mentioned above. The 85% of Spaniards are in this second case. Go to point 3.

NOTE: You should check with your landlord or manager about your case before making any arrangements.

3. If you are "vulnerable" and your Landlord is a "small landlord".

You will be able to apply for an "interest-free loan", which will be implemented through banks and guaranteed by the Instituto de Crédito Oficial. The loan will have a maximum amount of 900€/month or 100% of the rent (if you pay less than 900€/month); the total amount of the loan must not exceed 6 monthly payments. It can be repaid over a maximum of 6 years.

This does not mean that you cannot apply for a voluntary rent reduction or deferred payment, but your landlord is under no legal obligation to grant it.

4. If you are "vulnerable" and your Landlord is a "big fork".

You can apply directly to the lessor for one of these two options:

A reduction of 50% of the non-refundable rent for the duration of the state of alarm. If your situation of vulnerability is prolonged over time, you can apply for an extension of the discount up to a maximum of 4 months.
A moratorium, i.e. a deferral of up to 100% of the rent, during the state of alarm and subsequent months for a maximum of 4 monthly instalments. The payment of the deferred amounts must be made pro rata over the next 3 years from the moment when the situation of vulnerability is overcome or the maximum of 4 months following the state of alarm. Please note that the settlement must always be made within the term of the contract.

Our COVID-19 Real Estate Consultancy has received around a hundred queries related to the payment of rent.

5. If you are "vulnerable" regardless of what type of Landlord you have.

The Spanish Government approved on 11 April a package of direct rental subsidies, which can be applied for by all those individuals/families in a situation of vulnerability. It consists of direct aid for the payment of the rent of the habitual residence of 100% of the rent up to a maximum of €900/month, for a maximum of 6 months and a total of €5,400. The aid may be used either to pay rent arrears or to pay the instalments on the loans mentioned in point 3. The aid must be processed through the institution designated for this purpose by the Autonomous Communities, which must be set up before 30 September 2020.

WHAT YOU MAY BE WONDERING IF YOU ARE A HOMEOWNER

6. If you are a "small owner"..

You are not obliged to apply any discount on the rent, but you can do so out of goodwill and with the conditions you consider appropriate, such as, for example, requiring documentation of your tenant's reduced income.
If your tenant meets the conditions of "vulnerability" they may be late in paying the April rent, but over the next few weeks they will be able to apply for State aid in the form of a loan and you will be able to demand that they pay the agreed rent on time.

7. If you are a "big fork"..

You may not refuse to grant your tenants one of the two options described in point 4, i.e. a moratorium or a discount.
Apart from your obligations under the decree-law, you can establish other voluntary alternatives that contribute to the continuity of your tenants.

OTHER RELEVANT ISSUES

8. The deadline for applying for discounts and moratoriums to "large holders" and loans to banks is 2 May 2020.

9. All applicants must prove their status by providing relevant documentation.

If you are unable to obtain the required supporting documents within the application deadline, you can replace them with a declaration of responsibility and provide them at a later date.

10. No evictions for non-payment of rent in the next 6 months.

11. The possibility of extending for 6 months the rental contracts that end during the State of Alarm and the following 2 months has been made available.

If you still have any unanswered questions, you can ask us through the Real Estate Consulting that we have made available to everyone. We will try to help you as far as we are clear on the answers, as there are some gaps and specific situations that are still unanswered right now.