In Spain, the state of alarm declared in the wake of the covid-19 health crisis has affected businesses and self-employed individuals in an unprecedented way.
Not only have millions of people seen their livelihoods shut down over night, but they have to face overheads and expenses with no income. Among the most challenging financial obligations is monthly rental payments.
To help alleviate this problem, the government has introduced a rent moratorium on business premises.
What kind of business premises qualify?
Any sort of premises – shop, workshop, office, warehouse, café, restaurant, hairdressers…
What does the moratorium involve?
The measure, designed to help relieve the financial burden on self-employed individuals and small and medium enterprises (SMEs), contemplates two scenarios: renegotiating rental rates or delaying payments.
How does the covid-19 rent moratorium on business premises work?
Businesses and entrepreneurs are entitled to different rent ‘holidays’ depending on their landlord. The recent government decree divides the owners of business premises into two categories: institutional or public companies (large-scale landlords) and small-scale landlords. The difference between them lies in the number of properties they own.
- Institutional or public companies, large-scale landlords own more than 10 properties (not including parking space or storerooms).
- Small-scale landlords own up to 10 properties.
What sort of moratorium do I get if my landlord owns more than 10 properties?
In this case, you apply for a moratorium and it is automatically granted. It lasts for the entire period of the state of alarm for a maximum of four months.
Do I have to pay the rent back?
Although you’re eligible for a moratorium for up to four months, you still owe the outstanding rent. However, the amount owed is interest-free and you pay it back on a pro rata basis over up to 2 years (unless your contract is for a shorter period).
What sort of moratorium do I get if my landlord owns up to 10 properties?
You can request a moratorium from your landlord. Any deposit paid when you signed your rental lease can be used in lieu of rental payment but note that you must repay the deposit within a year.
Who can request a covid-19 rent moratorium on business premises?
Self-employed individuals and SMEs are eligible for the moratorium.
The self-employed must fulfil the following conditions:
- Be fully registered with the social security and tax authorities.
- Your business must be forcibly closed because of the state of the alarm or your monthly earnings total at least 75% less than your average monthly income in the previous quarter.
SMEs must meet the following criteria:
- Have a turnover of less than €4 million over the last two tax years or fewer than 50 employees in the last tax year.
- Your business must be forcibly closed because of the state of the alarm or your monthly earnings total at least 75% less than your average monthly income in the previous quarter.
What’s the time scale for applying for the moratorium?
If you qualify for the moratorium, you must apply for it within one calendar month of the publication of the government decree. It was issued on 24 April 2020, so you have until 23 May 2020 to apply.
Get in touch
At Costaluz Lawyers we’re happy to advise on the COVID-19 rent moratorium on business premises or any other matter of concern to you in these challenging times. Get in touch to arrange your free consultation. We are only too happy to help.
Maria Luisa Castro
