Spain has quickly taken the lead on the countries with the highest number of confirmed COVID19 cases in Europe and in the world. The strict confinement measures put in place since 15th March together with the recently announced freeze on the non-essential economy, have put homes in danger by the imminent non-payment of mortgages and rent. These days, measures are being discussed at both at national and regional levels in Spain to put some relief on tenants.
For the moment, a mortgage "moratorium" executive order (an extension in the payment of the instalment) was approved on March 18th by the Spanish Government. However, it may be argued that this extension just moves the payment obligation forward, under strict conditions, keeping the collection rights of financial entities intact.
This mortgage moratorium is foreseen to be applied in the following cases:
- Loan or credit contracts guaranteed with a real estate mortgage for the acquisition of a residence.
- Debtors in cases of economic vulnerability.
- Extensive to guarantors and guarantors of the main debtor, regarding their habitual residence.
The moratorium applies from March 19th up to 15 working days (3 weeks) after the end of the validity of the order. That is, if there is no modification, until May 3rd. Once the request is made, the bank must implement it in a maximum of 15 working days (3 weeks).
Some of the effects of this order imply the suspension of the mortgage debt during this term. Payment cannot be demanded, but the amount owed remains the same. Neither can the payment of any other concept that integrates the mortgage payment be demanded: amortization of the capital, payment of interest. No interest will be added.
Having said that, the Spanish Government is also preparing an aid plan for those who cannot pay rent: interest-free loans to be repaid in six years. In total, 100 million euros in zero-rate loans for those who cannot pay their rent as a consequence of the coronavirus crisis.
This measure, proposed by the ministries of Transport, Mobility and Urban Agenda, of Economy and of Finance suggests that people in rent arrears will be eligible to request support from their banks in form of credits guaranteed by the State, that can only be used to pay their rent. Tenants will have repayment periods of up to six years, and once that time passes, according to Cadena Ser, in case the affected families will not be able to pay back, it will be the State Housing Plan that will be activated with a fund of 300 million Euros, that can be reinforced with 100 million more.
The region of the Spanish capital has begun processing a decree to reduce rent "to a minimum" to tenants of the Agencia de Vivienda Social (AVS), a Housing Europe member, in a vulnerable situation due to the coronavirus crisis.
As detailed by the regional executive in a statement, the ampunt defined will be 46.56 euros and the "potential beneficiaries" are nearly 75,000 people who live in the more than 23,300 AVS homes in the region.
Minister of Housing and Local Administration, David Pérez, explained that this "vulnerable" group includes those who have been fired or who have had a Temporary Employment Regulation File (ERTE) or the self-employed who have lost at least 40 percent of their income.
In Barcelona, the collection of housing and commercial fees managed by the Instituto Municipal de la Vivienda y Rehabilitación (IMHAB) stops until the month of July, and the City Council will allocate 3.5 million Euros to lower the fees of those in need.
The Mayor of Barcelona, Ada Colau, has also announced an agreement with the Apartur tourist flats association to allocate 200 apartments that are currently empty to confine vulnerable families during the coronavirus epidemic. Out of the 9,600 flats of this type in the Catalan capital, some 7,000 are owned by individuals or companies, associated with this employer's association.
These tourist apartments will initially be available for some of the homeless who are in the Housing First program and who currently cannot find safe confinement, also women victims of gender violence and families with children who are in the service of attention to foreigners and refugees.
The hotels, of which a "progressive and orderly" cessation of their activity due to the fall in tourism has been announced, will welcome people who require home isolation and who cannot do so in their own homes. The first hotel where this measure will be applied is the Cotton House Hotel in Barcelona. The staff have already received the relevant training, according to their employers.
In Valencia, the Generalitat Valenciana, the regional administration of Valencia, will exempt public housing tenants who have lost their job or income due to COVID19 from paying rent from April onwards. The second vice-president and councillor for Bioclimatic Architecture, Rubén Martínez Dalmau, stressed that the measure will affect some 14,000 families in the region made up of around 50,000 people.
The measure consists of two parallel bonuses. One of them, with extraordinary character, is a bonus for three months of the payment of the rent of public housing for families in case of definitive loss of employment or temporary loss (ERTE) of income.
The other, on a longer-term basis, is an extension of the public housing rental rebate to tenants who had already secured it until March 14th 2020.