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How is the mortgage and house rent moratorium like?

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The government has decided to extend the package of social measures it has already decreed in the midst of the coronavirus scare. These include extending the deadlines for applying for a moratorium on the payment of mortgages and rent to large landowners until the end of September. In addition, rental contracts that have expired during this period may be extended by six months, and home energy supplies and the social bond are guaranteed until 30 September.

The Boletín Oficial del Estado publica el Real Decreto-ley 26/2020, de 7 de julio, of economic reactivation measures to deal with the impact of covid-19 in the fields of transport and housing, introduced certain amendments to Royal Decree Law 8/2020 of 17 March and Royal Decree Law 11/2020 of 31 March, which were to be completed shortly.

Mortgage Moratorium

Debtors falling within the scope of this Royal Decree-Law may request from the creditor, until 29 September 2020, a moratorium on the payment of the loan guaranteed by a mortgage for the acquisition of their habitual residence or of property used for economic activity by entrepreneurs and professionals.

The current RDL also modifies the  artículo 13 del anterior RDLde 17 de marzo, as to the granting of the moratorium which is summarized as follows:

Once the request for the moratorium has been made, the creditor entity will proceed to its implementation within a maximum period of 15 days.
Once the moratorium has been granted, the creditor institution shall notify the Banco de España of its existence and duration. The amounts that would be payable to the debtor if the moratorium were not applied shall not be considered to be overdue. No interest shall accrue during the moratorium period.
The application of the suspension will not require agreement between the parties, nor any contractual novation, to take effect, but it must be formalised in a public deed and registered in the Land Registry.
When the financial institution grants, simultaneously or successively, a legal moratorium and a conventional moratorium, the conventional moratorium agreement signed with the debtor will expressly include recognition of the legal moratorium, suspending the effects of the conventional moratorium until the time when the moratorium ends

In the case of mortgages, it is allowed to make it compatible with the moratorium that the banking sector itself has in place, which will de facto mean three more months of legal deferment.  Households applying for both will benefit from three months with no mortgage loan instalments, and another nine months of grace period for repayment of the capital.

To date, 226,285 applications for a mortgage moratorium on the primary residence have been granted, 83% of the total submitted.

What it means to be in a situation of economic vulnerability

To be eligible for this aid, the citizen must be in the following cases (all of them):

The mortgagee must have lost his job or be a self-employed professional who suffers a substantial loss of income or a substantial drop in sales of his business.
That the mortgage payment, plus the basic expenses and supplies, is greater than or equal to 35% of the net income received by all the members of the family unit.
That, as a result of the health emergency, the family unit has suffered a significant alteration in its economic circumstances in terms of the effort required to access housing. This means that the effort represented by the mortgage burden on the family income has been multiplied by at least 1.3 or that there has been a substantial fall in sales (at least 40%).
That the total income of the members of the household does not exceed, in the month prior to the application for the moratorium:

The limit of three times the monthly Public Indicator of Multiple Effects Income, which is 537.84 euros (hereinafter the IPREM). This means not to exceed the amount of 1,613.52 euros per month.

This limit will be increased by 0.1 times the IPREM for each dependent child in the family unit. The increase applicable per dependent child will be 0.15 times the IPREM for each child in the case of a single-parent family unit.

This limit shall be increased by 0.1 times the IPREM for each person over 65 years of age in the family unit.

In the event that any of the members of the family unit has a declared disability of more than 33%, a situation of dependency or illness that permanently incapacitates him/her to carry out a work activity, the limit provided for in sub-section i) shall be four times the IPREM, without prejudice to the accumulated increases per dependent child.

In the event that the mortgagor is a person with cerebral palsy, with mental illness, or with intellectual disability, with a recognised degree of disability equal to or greater than 33 per cent, or a person with physical or sensory disability, with a recognised degree of disability equal to or greater than 65 per cent, as well as in the cases of serious illness that makes the person or his/her carer demonstrably incapable of carrying out a work activity, the limit provided for in subsection (i) shall be five times the IPREM.

How the mortgage holder must prove that their situation has worsened

Those affected by the coronavirus must go to the financial institution and present the following documents to benefit from the mortgage moratorium and request it up to 15 days after the end of the validity of this royal decree law (which has come into force today with the date of publication in the BOE), that is, it can be requested during the period of 1 month and 15 calendar days, and without prejudice to any extensions that may be agreed, from today which is when it comes into force:

If you have lost your job, you must present a certificate issued by the body that manages the benefits, which must include the monthly amount received as unemployment benefits.
If you have had to close down your business, you must submit a certificate issued by the State Tax Administration Agency or the competent body of the Autonomous Region on the basis of the declaration of cessation of activity declared by the person concerned.
Family book or document accrediting the number of people living in the same house. It is also necessary to show the certificate of registration and declaration of disability or dependence in order to carry out a work activity.
In order to show the ownership of the house, a simple note from the Property Register, the deed of sale of the house and the mortgage loan are required, as well as a responsible statement from the debtor regarding compliance with the requirements demanded to be considered without sufficient economic resources according to this Royal Decree-Law.

The validity of the social bond is also automatically extended until 30 September 2020 for those beneficiaries of the bond who are due to expire prior to that date in accordance with article 9.2 of Royal Decree 897/2017 of 6 October.

In addition to the postponement of these payments, the mortgage and rent, the Government also extends until 30 September the prohibition on cutting off energy, electricity, gas and water supplies to the most vulnerable families.

Rent Moratorium

As for the rental market, those contracts that are fulfilled until September 30 may request an extension for a period of six months.

“In the case of housing rental contracts in which the period from the entry into force of this Royal Decree-Law until September 30, 2020, ends the period of mandatory extension provided for, an extraordinary extension of the term of the rental contract for a maximum period of six months may be applied at the request of the tenant, during which the terms and conditions established for the contract in force shall continue to apply. This request for extraordinary extension must be accepted by the lessor, unless other terms or conditions are set by agreement between the parties”, specifies the BOE.

This RDL published today also modifies the  Real Decreto-ley 11/2020, de 31 de marzo, as to the period for applying for the housing rental subsidy.

“The person who leases a regular housing contract and who is in a situation of economic vulnerability, as defined in the following article, may apply to the lessor when the lessor is a company or public housing entity or a large holder, This is understood to mean the individual or legal entity that is the owner of more than ten urban properties until 30 September 2020, the temporary and extraordinary postponement of the payment of the rent, provided that said postponement or the total or partial remission of the same has not already been achieved voluntarily by agreement between both parties”, the BOE points out.

How do you prove you’re a vulnerable tenant

In order to prove to the landlord that the tenant is vulnerable, the tenant must present

a) In the case of a legal situation of unemployment, by means of a certificate issued by the entity that manages the benefits, in which the monthly amount received as unemployment benefits or subsidies is stated.

(b) In the case of cessation of activity by self-employed persons, by means of a certificate issued by the State Tax Administration Agency or the competent body of the Autonomous Community, where appropriate, on the basis of the declaration of cessation of activity declared by the person concerned.

c) Number of persons who live in the usual dwelling: family book, certificate of registration relating to the persons registered in the dwelling in the previous six months. Declaration of disability, dependency or permanent disability.

d) Ownership of the goods: simple note from the index service of the Property Register of all the members of the family unit.

If any of the documents cannot be provided, a responsible declaration including express justification of the reasons preventing the contribution of the income would be sufficient.

After the end of the state of alarm and its extensions, you will have a period of one month to provide the documents that have not been provided.

Which landlords should accept the rental moratorium

Any tenant in a situation of economic vulnerability may request the moratorium from the lessor when the latter is a company or public entity (e.g. EMVS) or a large holder, understood as a natural or legal person that owns more than 10 properties, excluding garages and storage rooms, or a built area of more than 1,500 m2. However, if this has not already been achieved on a voluntary basis by agreement between the two parties. Here is a list of companies that waive or defer the payment of rent.

The royal decree states that this moratorium of the large holders can be a postponement of the payment of rent or even the total or partial remission of the rental debt. In other words, the owner of the property (large holder) must choose the following alternatives:

a) A 50% reduction in the rental income for the duration of the state of alarm decreed by the Government and the following monthly payments if the period is insufficient in relation to the situation of vulnerability caused by COVID-19, with a maximum of four months in any case.

b) A moratorium on the payment of rental income, which will be applied automatically and which will affect the period of time during which the state of alert decreed by the Government lasts and the following monthly payments, which may be extended one by one if that period is insufficient in relation to the situation of vulnerability caused by COVID-19, with a maximum of four months in any case.

This income will be deferred from the next monthly payment. The instalments will be divided up for at least three years, which will be counted from the time when the situation of vulnerability is overcome, or from the end of the four-month period mentioned above, and always within the period during which the rental contract or any of its extensions continues to be in force. The tenant will not be penalized in any way and the amounts deferred will be returned to the lessor without interest.

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About The Author
Israel Huertas Salazar

Inmobiliaria en Torrox. Ofrezco un trato personalizado y una contrastada experiencia como intermediario en la compraventa de inmuebles de todo tipo, oportunidades y grandes inversiones inmobiliarias, en diversas ubicaciones, tanto en Torrox, como Nerja, Frigiliana, Torre del Mar… y gran parte del territorio andaluz. Como broker inmobiliario, colaboro en red con todas las inmobiliarias y empresas promotoras y puedo conseguir la propiedad de su interés.

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