A real estate agency announces a rental, this Tuesday in Madrid.
A real estate agency announces a rental, this Tuesday in Madrid.Marta Fernández Jara / Europa Press

The Council of Ministers gave the green light on Tuesday to a new decree that provides aid for tenants in situations of vulnerability due to the health emergency. After two weeks of push and pull within the coalition government, a consensus was reached on Monday that will be reflected in the final text. The basic idea is that the aid will be given in the form of a loan, as the Socialist wing of the Executive defended, through credits from the ICO with a state guarantee. But the Podemos sector has made it possible to distinguish between large and small owners when it comes to applying the solutions and has also introduced direct aid in some cases, which will soon be specified in the State Housing Plan. “If the situation occurs in which there are tenants who finally cannot pay (the credits), the State will not leave them lying around,” said the vice president of Social Rights and the 2030 Agenda, Pablo Iglesias.

For troubled tenants, the first step will be to see who their landlord is. If the house is rented to a company, a public entity or a large owner (defined as one with more than 10 urban properties, excluding garages and storage rooms, a constructed area of ​​more than 1,500 square meters), they may automatically request a moratorium payment for a maximum of four months. The owner of the house will then be able to offer two options: lower the rent to 50% for a maximum of four months or offer a moratorium on payments for the same period that will then be fragmented to be returned for a maximum of three years.

When the lessor is a small holder, who are majority in the Spanish rental market, there will also be the possibility of agreeing to a moratorium, but the owner may refuse. Then the second mechanism is activated, to which all tenants can avail, which consists of microcredits at zero interest that will be given by the Official Credit Institute (ICO). These loans will cover a maximum of six monthly payments and will then be repaid for six years, expandable by four more if the borrowers fail to pay off their debt in the initial period. If after the initial term and the extension the tenant has not been able to pay it and his vulnerability is proven, the State will directly assume that amount, Iglesias explained. In all cases, the agreement between the tenant and the owner can only be reached if, prior to the publication of the decree in the BOE, no other agreement has already been reached to mitigate the effects of the coronavirus crisis on the payment of rent.

The decree will also expand the vulnerability criteria by which tenants will be able to avail themselves of the aid compared to those approved for mortgage moratoriums. The program is aimed at the unemployed, people affected by a temporary employment regulation file (ERTE), who have reduced their working hours to care for others or similar circumstances that have led to their income being reduced. For this, they must prove that in the month prior to the request for the aid, the income of all the members of the family unit does not reach triple the IPREM (the Public Indicator of Multiple Effects Income, which is equivalent to 537.84 euros per month) with some multipliers in case they have children or dependents. Another assumption that will be considered will be that the rental income plus common expenses exceeds 35% of the net household income.

The Government has also agreed on other additional measures to alleviate the situation of households with difficulties in paying for their homes. Evictions of vulnerable people are suspended for six months and that same period is for which all rental contracts that expire during the term of the alarm state, which began on March 14 and will last at least until 11 will be extended. of April. In addition, the Executive has extended the ban on cutting water, electricity and gas supplies to the entire population (until now it only affected vulnerable families) during the duration of the health emergency.

As for direct aid, they must wait for the Ministry of Transport, Mobility and Urban Agenda (the former Promotion, on which fall the State responsibilities of Housing) to develop an order that will include in the current State Housing Plan 2018- 2021 a new specific program to reduce the impact of the crisis on the rental of habitual residence. This program will directly award aid to some vulnerable tenants and will be in charge of the credits that some citizens cannot return to the ICO.

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