Royal Decree-Law 11/2020, in force since 2 April 2020, widens the mortgage moratorium of 17 March and extends it to other loans. Who can apply, with what paperwork and by when.
On 1 April 2020 the Official State Gazette published Royal Decree-Law 11/2020, approved by the Council of Ministers on 31 March and in force from 2 April. It completes the mortgage moratorium that Royal Decree-Law 8/2020 of 17 March had created for people who lose income because of the COVID-19 crisis, and takes it to other loans and to rented housing.
Who can apply
Individuals can apply if they have a mortgage on their main home, on premises that the self-employed and professionals use in their work, or on rented homes whose owner has stopped receiving rent because of the measures in favour of tenants. Guarantors are covered in respect of their own main home. The new decree-law adds a similar suspension for credit and loans with no mortgage guarantee, including consumer loans, which can be requested up to one month after the state of alarm ends.
Four conditions must be met at once. First: being unemployed or, for the self-employed, having suffered a substantial loss of income, with a fall in turnover of at least 40%. Second: total household income in the month before the request must not exceed three times the monthly IPREM. Third: mortgage instalments plus basic expenses and utilities must add up to at least 35% of the household’s net income. Fourth: because of the health emergency, the mortgage burden on family income must have multiplied by 1.3 or more.
With a monthly IPREM of €537.84, the general ceiling is €1,613.52. It rises slightly for each dependent child or household member over 65, and is four times the IPREM if someone in the household has a disability above 33%, is dependent or is permanently unable to work, and five times in the most serious cases.
How to apply and what it does
The request goes to the bank with a certificate of unemployment or of cessation of activity, the family record book, a certificate of registration at the address for the present and the previous six months, a land registry extract for the whole household, the purchase and loan deeds and a sworn statement. If the state of alarm makes a document impossible to obtain, a sworn statement can stand in for it and the document can be supplied in the month after the alarm ends. The deadline for the mortgage moratorium runs until fifteen days after the measures cease to apply, and the decree-law extends them until one month after the state of alarm ends.
Once requested, the bank has a maximum of fifteen days to apply it and must report it to the Bank of Spain. The suspension lasts three months, extendable by decision of the Council of Ministers: no instalment can be demanded, no ordinary or default interest accrues and the acceleration clause does not apply. What is deferred is not paid in one go afterwards; instead, future payments shift by the length of the suspension and the loan is lengthened by the same amount. The deed cannot be signed during the state of alarm, but that does not delay the moratorium, and the bank pays the fees.
Rents and what to review
For tenants of a main home in a vulnerable situation, the decree-law suspends evictions of households with no alternative housing for up to six months and allows them to request an extraordinary extension of the lease, of up to six months, if it expires during the state of alarm or in the two months that follow. Against a public housing company or body or a large landlord, with more than ten urban properties or 1,500 square metres built, a deferral of rent can be requested within one month; if there is no agreement, the landlord must choose between cutting it by 50% or deferring it, for up to four months and with repayment without interest over at least three years. With other landlords, there is access to an ICO guarantee line that finances up to six months’ rent with no fees or interest.
Before asking for anything, it is worth checking with the bank which loans you hold and whether the four conditions are met, because anyone who benefits from the moratorium without meeting the requirements is liable for the damage and costs caused. If the difficulty is going to last beyond three months, it is worth discussing a more lasting solution with the lender. Ask your adviser how it applies to your case.
A moratorium is a pause in payment, not a write-off of the debt.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
