‘Stay of grace’ on mortgage and rent payments agreed due to ‘Covid crisis’


Left-wing Podemos has won its battle with coalition partners PSOE (socialists) to bring back an optional nationwide ‘payment holiday’ on mortgages and rent. Economy minister Nadia Calviño has agreed to re-launch the moratorium on housing costs for those facing financial difficulties as a consequence of the ongoing Covid-19 pandemic.
At present, this will run for a maximum of three months, until 31st March. The previous stay of grace offered for home loan repayments and rental costs finished in September, when it was thought the SARS-CoV-2 crisis, in Spain at least, was coming to an end – but when it became clear this was not the case, Podemos and its leader, deputy president Pablo Iglesias, started putting the pressure on the centre-left PSOE.
Podemos has long stressed that the whole idea of politics is for parties to disagree with and debate with each other, and that a successful coalition thrives on this rather than suffering a rift and split as a result – the bipartite national government has proven to be able to publicly disagree and resolve matters between them, Iglesias says.
Nadia Calviño’s ministry says the new moratorium on mortgages and rent has been made possible thanks to facilities provided by the European Banking Authority (EBA), and which also allowed a new ‘payment holiday’ for utility bills for those suffering financially through the pandemic, from December.
Those who qualify are households where at least 35 percent of their net monthly income goes towards paying their mortgage or rent and utilities – gas, electricity and water, but not telecommunications – whose finances have been directly affected by the pandemic, and whose income does not exceed €1,613 per month.
This figure is per household, but in the case of single-occupant homes, would cover almost every single one in Spain, as it is considerably higher than the modal average net salary nationwide and about the same as the mean net salary.
To date, around 600,000 households have benefited from these moratoria, and as at the end of November 2020, Spanish banks and building societies had deferred over €1.38 million in payments, including mortgages and loans.
The actual number of those who have taken ‘legal’ payment holidays is higher, because some banks offered them to customers who did not qualify under government guidelines.
Stays of grace on rent payments were a sticking point at first, given that these are normally payable to private landlords who need the income to cover mortgages on the property or for their own earnings to be able to pay the bills, but these landlords have often been able to apply for payment holidays themselves on mortgages and bills so they did not end up in financial difficulties as a result of condoning tenants’ pay.
In any case, banks are not permitted to repossess homes until at least a year’s worth of mortgage repayments are in arrears, and are not allowed to impose ‘abusive’ clauses, such as hiking interest to a two-figure level as a ‘punishment’ for non-payment of one or more monthly instalments, thanks to a European Union law protecting property owners from potential homelessness when they fall on hard times.