After the announcement last week of the mobilization of 18,225 million to alleviate the economic consequences of the coronavirus and after the Prime Minister, Pedro Sánchez, announced last Saturday the statement of alarm, the Council of Ministers met again yesterday to approve a royal decree law with extraordinary measures to mitigate the impact of the coronavirus.
This will mobilize up to 200,000 million (117,000 million from the public sector) and includes a one-month moratorium on the payment of mortgages for particularly vulnerable debtors who see their income decrease. In addition, it includes the prohibition of cutting basic supplies (water, electricity and gas) to vulnerable groups, as well as telecommunications services.
Aid to the right to housing for people with difficulties
Specifically, the right to housing of people with the most difficulties is guaranteed . For this, a moratorium is established in the payment of mortgage payments for mortgage debtors in a situation of special vulnerability who see their income decrease. Government sources have explained that the purpose is that no person in a difficult economic situation loses their housing .
Furthermore, the protection of energy and water supplies is extended , guaranteeing essential public services for vulnerable groups. As a novelty, telecommunications services are also guaranteed
Regarding the possibility of establishing a measure similar to the moratorium on rents, as they had been demanding from United We Can, the same sources have initially ruled out such measure. They trust that there is flexibility and agreements between tenants and landlords.
In this sense, they recall that the rest of the measures included in the royal decree-law, such as the relaxation of ERTEs or the guarantee that supplies are not cut, are also aimed at ensuring that tenants can pay their rental income.
Supervisors and Banco de España study guaranteeing liquidity
As for the possible provisions that financial institutions will have to make before the moratorium on mortgages, the Government indicates that all the measures of the royal decree-law contemplate the duration of one month. But it can be extended depending on the duration of the alarm state.
However, they recall that the treatment of this type of credit by financial supervisors is being reviewed. Thus, the European Banking Authority (EBA) and the Single Supervisory Mechanism (MUS) of the European Central Bank (ECB) are studying how to accompany this type of measure so that banks have liquidity in an exceptional situation.
In any case, the Bank of Spain and the European Central Bank are aware of the situation. So they are looking at how to accommodate the applicable rules to channel credit in the most efficient way possible to the economy along with monetary policy. It seeks precisely to channel resources to the economy.
In this sense, government sources recall that the ECB reinforced the mechanisms for financial institutions to lend and guarantee liquidity and the operation of the economic fabric . The objective is to provide an adequate margin without putting the financial solvency of the entities at risk, according to Moncloa.
Definition of vulnerable groups
The assumptions of economic vulnerability as a result of the health emergency caused by the Covid-19 contemplate that the mortgage debtor becomes unemployed or, in case of being an entrepreneur or professional, suffers a substantial loss of income or a substantial fall of your sales. As well as that the total income of the members of the family unit does not exceed, in the month prior to the request for the moratorium, certain limits.
These are, in general, the limit of three times the annual Public Indicator of Multiple Effects Income of fourteen payments (hereinafter Iprem). This limit will be increased by 0.1 times the Iprem for each dependent child in the family unit.
The applicable increase per dependent child will be 0.15 times the Iprem for each child in the case of a single-parent family unit. This limit will be increased by 0.1 times the Iprem for each person over 65 years of age who is a member of 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 renders him permanently incapacitated to carry out a work activity, the limit foreseen will be four times the Iprem. Notwithstanding the accumulated increases per dependent child.
It is also foreseen that in the event that the mortgage debtor is a person with cerebral palsy, mental illness, or an intellectual disability, with a recognized degree of disability equal to or greater than 33%, or a person with physical or sensory disability, with a degree of disability recognized equal to or greater than 65%, as well as in cases of serious illness that renders the person or their caregiver incapable of carrying out a work activity, the anticipated limit will be five times the Iprem.
Other assumptions considered are that the mortgage payment, plus basic expenses and supplies, is greater than or equal to 35% of the net income received by all members of the family unit. And that, as a consequence of the health emergency, the qnnit unit has suffered a significant alteration in its economic circumstances in terms of effort to access housing, in the terms defined in the following point.
For the purposes of the regulation, it will be understood that a significant alteration of the economic circumstances has occurred when the effort that represents the mortgage burden on the family income has been multiplied by at least 1.3 . And that there has been a substantial drop in sales when this drop is at least 40%.
Lastly, the vulnerable group by family unit includes that made up of the debtor, his non-legally separated spouse or registered domestic partner and children , regardless of their age. Who reside in the home, including those linked by a relationship of guardianship, guardianship or foster care and their non-legally separated spouse or registered domestic partner, who reside in the home.