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Q&A: What can I do if I’m struggling to pay my rent in Spain?

Spain's government has just extended the moratorium on rent payments until May. Find out if you qualify or if there are other options available to get help paying your rent.

Q&A: What can I do if I'm struggling to pay my rent in Spain?
Photos: AFP

What’s the latest?

Spain’s Council of Ministers on Tuesday approved the extension until May 31 of the state aid to tenants who are struggling to pay their rent due to their earnings taking a hit as a result of the coronavirus crisis.

In general terms, both the requirements and the process for these grants are the same as those in force until now, including the ban on evicting vulnerable families until the end of Spain’s state of alarm.

Am I entitled to help?

Any person or family that falls into the above group must demonstrate that their income has been reduced by the coronavirus crisis.

Earnings per family unit must not have exceeded €2,689 the month prior to the application, and the rent they pay, together with other bills, must account for at least 35 percent of their income.

Families in Spain will not be entitled to this benefit if they are homeowners or have a family home which they can live in.

People who have reduced their working hours to care for their children or dependents can also apply.

What documents will I need to show?

Any official document that can prove that you’ve become unemployed, that you’re affected by an ERTE (temporary unemployment) or proof of how your earnings have taken a hit.

In general, any “circumstance linked to work or a business activity that can be proven through documentation is accepted.”

How much are the rent aid packages?

According to the website of Spain’s Ministry of Transport, Mobility and Urban Affairs, the amounts of aid will vary depending on the age and earnings of the tenants.

In general terms it’s up to 40 percent of the monthly rent, up to 50 percent for over-65s and 30 percent in some regions for rents between €601 and €900.

How do I apply?

Each region of Spain handles its application separately but a good place to start is here, a list of the regional departments of Spain’s Ministry of Transport, Mobility and Urban Affairs.

You have to apply before May 9 2021 for your application to be accepted.

Can I stop paying my rent all together?

No, but if the owner of the home is a property holder with ten properties to his or her name, the tenant can request a deferral of the monthly rent payment.

The landlord has a week to choose whether to grant the tenant 50 percent off the rent for a maximum of four months or whether to allow him to delay payment.

This involves allowing the tenant to not pay at the moment and prorate the months not paid for the next three years (or longer).

But my landlord isn’t a company or a major property owner. What then?

In this case there isn’t the possibility of a rent reduction or postponement in payment, unless landlord and tenant reach their own agreement.

But Spain’s Official Credit Institute does offer loans at 0 percent interest for those who can’t pay the rent.

These credits have to be paid back within a period of six years, extendable to ten if the tenant still can’t afford the rent.

I already had problems paying my rent before the pandemic. Can they kick me out?

No, at least not until May 9 2021, which is when Spain’s current state of alarm ends.

Until then there’s an anti-eviction decree in place for families affected by the coronavirus crisis and those who were already vulnerable previously.

However, if they cannot prove that their financial struggles are a direct result of the Covid-19 crisis, the applicant won’t have the right to any rental assistance.

My lease is running out, what should I do?

The extension approved on Tuesday also protects tenants in this situation, as those whose rental contracts expire in the next four months can ask their landlords for a six-month extension to their contracts, which they will be legally obliged to offer.

This has to be done before May 9 2021 for it to be valid. There’s also the option of landlord and tenant agreeing to different terms.

I’ve heard Madrid is offering rent aid to middle-class families?

Indeed, Madrid’s regional government has €30million in aid available for families whose gross annual earnings are between €32,200 and €88,200 and have been registered at the town hall for at least five years.

It’s a move aimed at helping families that earn too much to qualify for social housing but are still having to make ends meet in terms of rent in the capital.

The scheme is unrelated to the coronavirus crisis and families will always have to pay a minimum of €450 of their rent out of their own pocket, but this “Bono Vivienda” can cover up to €900 in rent costs per family. 

How about if I have a mortgage I’m struggling to pay?

Spain’s government is expected to soon approve another postponement to mortgage payments for struggling families, just as it did together with the rent moratorium back in September.

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MONEY

Rampant branch closures and job cuts help Spain’s banks post huge earnings

Spain’s biggest banks this week reported huge profits in 2021 and cheered their return to recovery post-Covid, but ruthless cost-cutting in the form of thousands of layoffs, hundreds of branch closures and the removal of many ATMs have left customers in Spain suffering, in this latest example of ‘Capitalismo 2.0’. 

A man withdraws cash from a Santander branch in Madrid.
More than 3,500 Santander workers lost their jobs in Spain in 2021 and a further 2,000 more employees working for Santander across Europe were also laid off. Photo: PHILIPPE DESMAZES / AFP

Spanish banking giant Santander on Wednesday said it has bounced back from the pandemic as it returned to profit last year, beating analyst expectations and exceeding its pre-COVID earnings.

Likewise, Spain’s second-largest bank BBVA said on Thursday that it saw a strong rebound in 2021 following the Covid crisis, tripling its net profits thanks to a recovery in business activity.

It’s a similar story for Unicaja (€137 million profit in 2021), Caixabank (€5.2 billion profit thanks to merge with Bankia), Sabadell (€530 million profit last year), Abanca (€323 million profit) and all of Spain’s other main banks.

This may be promising news for Spain’s banking sector, but their profits have come at a cost for many of their employees and customers. 

In 2021, 19,000 bank employees lost their jobs, almost all through state-approved ERE layoffs, meant for companies struggling financially.

BBVA employees protest against layoffs in May 2021 in Madrid. Spain’s second-largest bank BBVA is looking to shed 3,800 jobs, affecting 16 percent of its staff, in a move denounced by unions as “scandalous”. (Photo by GABRIEL BOUYS / AFP)

Around 11 percent of bank branches in Spain have also been closed down in 2021 as part of Spanish banks’ attempts to cut costs, even though they’ve agreed to pay just under €5 billion in compensation.

Rampant branch closures have in turn resulted in 2,200 ATMs being removed since the Covid-19 pandemic began, even though the use of cajeros automáticos went up by 20 percent in 2021.

There are now 48,300 ATMs in Spain, levels not seen since 2001.

READ MORE:

Apart from losses caused by the coronavirus crisis, Spain’s financial institutions have justified the lay-offs, branch closures and ATM removals under the premise that there was already a shift to online banking taking place among customers. 

But the problem has been around for longer in a country with stark population differences between the cities and so-called ‘Empty Spain’, with rural communities and elderly people bearing the brunt of it. 

 

Caixabank laid off almost 6,500 workers in the first sixth months of 2021. Photo: ANDER GILLENEA/AFP

Just this month, a 78-year-old Valencian man has than collected 400,000+ signatures in an online petition calling for Spanish banks to offer face-to-face customer service that’s “humane” to elderly people, spurring the Bank of Spain and even Spain’s Prime Minister Pedro Sánchez to publicly say they would address the problem.

READ MORE: ‘I’m old, not stupid’ – How one Spanish senior is demanding face-to-face bank service

It’s worth noting that between 2008 and 2019, Spain had the highest number of branch closures and bank job cuts in Europe, with 48 percent of its branches shuttered compared with a bloc-wide average of 31 percent.

Below is more detailed information on how Santander and BBVA, Spain’s two biggest banks, have reported their huge profits in 2021.

Santander

Driven by a strong performance in the United States and Britain, the bank booked a net profit of €8.1 billion in 2021, close to a 12-year high. 

It was a huge improvement from 2020 when the pandemic hit and the bank suffered a net loss of €8.7 billion after it was forced to write down the value of several of its branches, particularly in the UK. It was also higher than 2019, when the bank posted a net profit of €6.5 billion.

Analysts from FactSet were expecting profits of €7.9 billion. 

“Our 2021 results demonstrate once again the value of our scale and presence across both developed and developing markets, with attributable profit 25 per cent higher than pre-COVID levels in 2019,” said chief executive Ana Botin in a statement.

Net banking income, the equivalent to turnover, also increased, reaching €33.4 billion, compared to €31.9 billion in 2020. This dynamic was made possible by a strong increase in customer numbers, with the group now counting almost 153 million customers worldwide. 

“We have added five million new customers in the last 12 months alone,” said Botin.

Santander performed particularly well in Europe and North America, with profits doubling in constant euros compared to 2020. In the UK, where Santander has a strong presence, current profit even “quadrupled” over the same period to €1.6 billion.

Last year’s net loss was the first in Banco Santander’s history, after having to revise downwards the value of several of its subsidiaries, notably in the UK, because of COVID.

The banking giant, which cut nearly 3,500 jobs at the end of 2020, in September announced an interim shareholder payout of €1.7 billion for its 2021 results. “In the coming weeks, we will announce additional compensation linked to the 2021 results,” it said.

BBVA

The group, which mainly operates in Spain but also in Latin America, Mexico and Turkey, posted profits of €4.65 billion ($5.25 billion), up from €1.3 billion a year earlier.

The result, which followed a solid fourth quarter with profits of €1.34 billion, was higher than expected, with FactSet analysts expecting a figure of €4.32 billion .

Excluding non-recurring items, such as the outcome of a restructuring plan launched last year, it generated profits of 5.07 billion euros in what was the highest figure “in 10 years”, the bank said in a statement.

In 2020, the Spanish bank saw its net profit tumble 63 percent as a result of asset depreciation and provisions taken against an increase in bad loans due to the economic fallout of the virus crisis.

“The economic recovery over the past year has brought with it a marked upturn in banking activity, mainly in the loan portfolio,” the bank explained, pointing to a reduction of the provisions put in place because of Covid.

In 2021, BBVA added a “record” 8.7 million new customers, largely due to the growth of its online activities. It now has 81.7 million customers worldwide.

The group’s net interest margins also rose 6.1 percent year-on-year to €14.7 billion, said the bank, which is undergoing a cost-cutting drive.

So far, it has axed 2,935 jobs and closed down 480 branches as the banking sector undergoes increasing digitalisation and fewer and fewer transactions are carried out over the counter.

At the end of 2020, BBVA sold its US unit to PNC Financial Services for nearly 10 billion euros and decided to reinvest some of the funds in the Turkish market.

In November, it launched a bid to take full control of its Turkish lending subsidiary Garanti, offering €2.25 billion ($2.6 billion) to buy the 50.15 percent stake it does not yet own.

The deal should be finalised in the first quarter of 2022.

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