In the Official State Gazette (BOE) of December 23, Royal Decree-Law 35/2020, of December 22, was published, which includes new support measures for the tourism, hospitality and retail sectors, highlighting a 50% reduction in rent for premises belonging to a company or public entity or large owners (with more than 10 properties, excluding garages and storage rooms, or a constructed area of more than 1,500 m2).
We would like to inform you that Royal Decree-Law 35/2020, of December 22 (effective December 24), was published in the Official State Gazette (BOE) on December 23. This decree-law approves a stimulus plan for the hospitality and retail sectors, two of the sectors most affected by the Covid-19 health crisis. The key measure of the reform includes a 50% rent reduction for premises owned by a company or public entity, or by large landlords (with more than 10 properties, excluding garages and storage units, or a total constructed area exceeding 1,500 m²). Other expenses related to maintenance or other services, from which the tenant benefits, will be excluded.
The aim is to help the Horeca sector (restaurants, hotels and cafes) and commerce with the objective of providing "greater certainty" to the planning of the 2021 fiscal year and minimizing costs.
Leases for purposes other than housing with large landlords
- In the absence of an agreement between the parties for a temporary reduction of rent or a moratorium on its payment, the natural or legal person lessee of a lease agreement for a use other than housing (art. 3 Law 29/1994, of November 24), or for industry, who meets the requirements provided, may before January 31, 2021 request from the lessor, when this is a company or public entity, or a large landlord, understood as the natural or legal person who owns more than 10 urban properties, excluding garages and storage rooms, or a constructed area of more than 1,500 m2, one of the following alternatives:
a) A 50 percent reduction of the rental rent for the time that the state of alarm is declared to contain the spread of infections caused by SARS-CoV-2, and its extensions, and may be extended to the following months, up to a maximum of four months.
b) A moratorium on rent payments will be applied for the duration of the state of emergency declared by Royal Decree 926/2020 of October 25, and any extensions thereof, and may be extended to subsequent monthly payments, up to a maximum of four months. This rent will be deferred, without penalty or accrual of interest, starting with the next monthly rent payment following the end of the period specified in section 3. The deferred rent payments may be made over a period of two years from the end of the moratorium, and always within the term of the lease agreement or any extensions thereof, with the deferred amounts being distributed proportionally over the period.
- In cases where the lease agreement provides for the payment, in addition to the rent, of other expenses derived from maintenance or other services, and from which the tenant benefits, these common expenses will be excluded from the measures provided for in the previous section.
- The landlord shall expressly notify the tenant of their decision within a maximum of seven business days from the date the tenant submits their request through a verifiable means. Starting with the next monthly rent payment following that period, the measure chosen by the landlord from among those described in sections a) and b) will be automatically applied, or, failing express notification within the stipulated timeframe, the measure requested by the tenant.
- In the event that the parties have reached an agreement on the reduction of rent or the moratorium of its payment that only affects part of the period covered by the state of alarm declared by Royal Decree 926/2020, of October 25, and its extensions, as well as a maximum of four months after the end of the last extension of said state of alarm, paragraphs 1 and 2 of this article will also apply, but the corresponding measure provided for in paragraph 1 will only apply to the part of the period not affected by the agreement of the parties.
Attention. The provisions herein shall not apply when the landlord is in bankruptcy proceedings or when, as a result of the application of the measures provided for, the landlord is likely to become insolvent or is facing imminent or actual insolvency, in accordance with the provisions of Royal Legislative Decree 1/2020, of May 5, which approves the consolidated text of the Bankruptcy Law. Likewise, a landlord seeking to have the measure excluded from its application to landlords involved in bankruptcy proceedings must demonstrate that they meet one of the conditions stipulated therein.
Other leases for uses other than housing.
- The individual or legal entity lessee of a lease agreement for a use other than housing in accordance with the provisions of Article 3 of Law 29/1994, of November 24, or for industry, whose lessor is different from those defined in Article 1, and meets the requirements provided for in Article 3, may request from the lessor, before January 31, 2021, the temporary and extraordinary deferral in the payment of the rent provided that such deferral or a reduction of the rent has not been agreed by both parties on a voluntary basis.
- Exclusively within the framework of the agreement referred to in the preceding section, the parties may freely dispose of the security deposit provided for in Article 36 of Law 29/1994 of November 24, which may be used for the full or partial payment of one or more monthly rent payments. If the deposit is used in full or in part, the tenant must replenish the amount used within one year of the agreement's execution or within the remaining term of the lease, if that term is less than one year.
Requirements for self-employed individuals and SMEs who are tenants to request a reduction in the rent of their commercial premises
Self-employed workers and SMEs renting real estate for purposes other than housing may access the measures provided for in articles 1 and 2 when they meet the following requirements:
- In the case of a lease agreement for a property used for the economic activity carried out by the self-employed worker:
a) Be affiliated and in good standing, on the date of the declaration of the state of alarm by Royal Decree 926/2020, of October 25, in the Special Social Security Scheme for Self-Employed Workers or in the Special Social Security Scheme for Seafarers or, where applicable, in one of the Mutual Societies that replace the RETA.
b) That their activity has been suspended as a result of the entry into force of Royal Decree 926/2020, of October 25, or by orders issued by the competent Authority and the delegated competent Authorities under the aforementioned royal decree.
Attention. If your activity is not directly suspended as a result of the entry into force of Royal Decree 926/2020, of October 25, you must prove a reduction in turnover for the calendar month prior to the month in which the deferral or reduction of rent is requested of at least 75 percent, in relation to the average monthly turnover of the quarter to which said month belongs in the previous year.
- In the case of a lease agreement for a property used for the economic activity carried out by an SME:
a) That the limits established in art. 257.1 Capital Companies Law are not exceeded.
b) That their activity has been suspended as a result of the entry into force of Royal Decree 926/2020, of October 25, or by orders issued by the competent Authority and the delegated competent Authorities under the aforementioned royal decree.
Attention. If your activity is not directly suspended under the provisions of Royal Decree 926/2020, of October 25, you must prove a reduction in your turnover for the calendar month prior to the month in which you request the deferral or reduction of rent of at least 75 percent, in relation to the average monthly turnover of the quarter to which that month belongs in the previous year.
How to prove the requirements?
Compliance with the requirements established in the previous article shall be demonstrated by the lessee to the lessor by submitting the following documentation:
a) The reduction in activity will initially be demonstrated by submitting a sworn statement, based on accounting information and income and expenses, confirming a reduction in monthly turnover of at least 75 percent compared to the average monthly turnover for the same quarter of the previous year. In any case, if requested by the landlord, the tenant must provide their accounting records to the landlord to verify the reduction in activity.
b) The suspension of activity will be accredited by means of a certificate issued by the State Tax Administration Agency or by the competent entity to process the extraordinary cessation of activity regulated in article 17 of Royal Decree-Law 8/2020, of March 17, on urgent extraordinary measures to deal with the economic and social impact of COVID-19, where appropriate, on the basis of the declaration of cessation of activity declared by the interested party.
Consequences of the improper application of reduction and deferral in the payment of rent
Tenants who have benefited from the reduction and the temporary and extraordinary deferral of rent payments without meeting the requirements established in Article 3, will be responsible for any damages that may have occurred, as well as all expenses generated by the application of these exceptional measures, without prejudice to any other liabilities that their conduct may give rise to.
See: Plan to strengthen the hospitality, retail and tourism sectors (PDF)
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A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
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