Real Estate 3. April 2020

Spain: Urgent and extraordinary measures to support the most vulnerable tenants affected by COVID-19

3. April 2020
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César Morales
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act legal Spain

Royal Decree-Law 11/2020, of 31 March, which takes additional urgent measures in the social and economic sphere to deal with COVID-19.

The measures aim to minimize the impact of this situation and to protect tenants who remain vulnerable, but also to articulate those actions necessary so that landlords, also sometimes in difficult circumstances, can also overcome the impact of this crisis.

More relevant measures

(1) Suspension of eviction procedure and releases affecting housing leases, in situations of vulnerability without housing alternative. In eviction procedures affecting the usual dwelling, launches without a housing alternative will be suspended for a period of up to six months.

In the event that the lessor concerned is also subject to vulnerability, it will be the Judge who determines the period of suspension or the measures to be established, taking into account the report issued by the competent social services.

(2) Six-month extension on leases ending in this period, at the request of the tenant. In those housing leases in which their validity (or extensions) ends within the period from the entry into force of this royal decree-law and until the day on which two months have elapsed since the end of the alarm status, an extension period of up to six months is established.

This extension shall be mandatory for the landlord if requested by the lessee, under the same conditions set out in the current contract, unless an agreement has been reached on this matter between the landlord and tenant.

(3) State-guaranteed line of guarantees, which will allow to cover the payment of up to six months of rent, for any tenant who is in a situation of vulnerability as a result of COVID-19.

A Transitional Funding Aid Programme is created for all households that may be affected in their income by the expansion of COVID-19, so that, through an agreement with the Official Credit Institute (ICO), these households are offered the possibility of covering rent payments for a period of up to six months, without any expenses or interest for the applicant, and can be returned within six years.

(4) In situations of vulnerability, where the lessor is a public entity or a large holder, 50% reduction in income, or moratorium of up to four months in the payment of rent.

In the event that the tenant is affected by situations of vulnerability arising from the expansion of COVID-19, and the lessor is a public entity or a large holder (natural or legal person holding more than 10 urban properties, excluding garages and storage rooms, or more than 1,500 m2 of constructed area), and in the absence of an agreement between tenant and owner, it is established that for the period that such vulnerability persists, the owner may grant during that period, and with a maximum of four months, a 50% reduction in rent, or a moratorium on the payment of rent during that period to be repaid for up to three years.

This moratorium would be suspended if the tenant agreed to the financial aid explained in the previous point.

(5) Additionally 100 million euros are provided for the State Housing Plan 2018-2021. A new aid Program is implemented that will allow the granting of direct rental aid to regular housing tenants who, as a result of the economic and social impact of COVID-19, have serious problems in meeting the partial or total payment of rent.

The management of the Plan is relaxed and streamlined, in order to provide direct coverage to the vulnerable tenant for the payment of the rent or for the payment of the financing through the Official Credit Institute (ICO) subscribed by the tenant with which the rent will have been satisfied.

The document verification process and requirements for access to the State Housing Plan’s rental assistance programs speed up. Taking into account the exceptionality of the situation, the requirements to be met by beneficiaries of any rental aid financed under the State Housing Plan 2018-2021, including those of the aid program to help minimize the economic and social impact of COVID-19 on regular housing rentals, may be verified by the Autonomous Communities after the resolution of granting the aid, which is conditional on the fulfilment of the requirements.

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César Morales
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act legal - DA Lawyers
About the authors

César Morales

Partner

Regular advice to institutional clients, financial entities, real estate companies, Socimis (REITs), large accounts, family offices, and prestigious domestic and foreign companies. Experience in real estate asset purchase and sale transactions, in negotiation and formalization of lease agreements for all types of real estate such as hotels, commercial premises, offices or industrial warehouses as well as in drafting of contracts for the commercialization of real estate assets. Providing legal support in the management of real estate asset portfolios and legal due diligence.

Eduardo González

Partner

Regular advice to institutional clients, financial entities, real estate companies, Socimis (REITs), large accounts, family offices, and prestigious domestic and foreign companies. Experience in real estate asset purchase and sale transactions, in negotiation and formalization of lease agreements for all types of real estate such as hotels, commercial premises, offices or industrial warehouses as well as in drafting of contracts for the commercialization of real estate assets. Providing legal support in the management of real estate asset portfolios, legal due diligence or urban planning. Assumption of project control and transaction guidance. Representation in negotiation situations.

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