Tuesday 4 October 2022

Housing Minister proposes three types of rent moratorium due to coronavirus crisis

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04 October 2022 - At The Banks - BCCR

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Housing Minister, Irene Campos, presented to legislators this Monday, a draft bill to establish various moratoriums and payment arrangements in terms of rents, both for housing and commercial, due to the coronavirus crisis.

Campos handed the draft to the work table on renting, in order to lessen the obligations of those who lost or had their income reduced due to the national emergency.

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The draft bill states that the lessor and lessee must negotiate a payment arrangement, in case the latter has a significant reduction in income. The arrangement would be valid for six months and have different conditions.

If the tenant lost his job or his employment contract was suspended, both parties would have to sign a contract to establish a total moratorium on payment for a maximum of six months.

On the other hand, if the tenant’s family income was reduced by 50%, the rent payment will have to be reduced by half of the original amount and, if the family’s income was reduced by less than 50%, the amount must be negotiated between the parties.

For commercial leases, the total moratorium on the lease will be authorized if the lessee had to close the premises by a sanitary order, such as the case with bars, discos and casinos and this week includes retail stores, malls, restaurants and more, save for supermarkets and pharmacies.

If there is no sanitary order and the business experiences a reduction in income of 50%, the rent payment will also be cut in half; In the event that income has decreased less than 50%, the rent payment must be agreed between the parties.Reimbursement of money to owners

In the event of a moratorium, the draft proposes that the rent amounts not paid during the six months that the law applies must be paid no later than January 2021.

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In the event that only 50% has been paid for six months, the tenants will have to pay no later than October of this year and, if a lower amount was not paid, it would have to be paid in July.

In addition, the proposal orders the suspension of increases in all rental contracts this year, as well as the execution of evictions.

According to the National Institute of Statistics and Censuses (INEC), 18.7% of the population lives in rented homes: 950,000 people out of the five million inhabitants.

The percentage of families living in a rental is much higher in the urban area than in the rural area: 22% compared to 10.6%.

Requirements for payment arrangements

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In order for the tenants to negotiate with their landlords, they must present a certificate from the employer regarding the reduction of the working day, the suspension of the contract or layoff.

If they are self-employed, they must provide a declaration of the Value Added Tax (VAT) that demonstrates the reduction in income; and, if they were informal workers, they must submit to their landlords an affidavit authenticated by a notary.

For commercial leases, the lessee (tenant) must deliver the lessor (landlord) the sanitary order to close the property or a comparison between the VAT declarations of February and that of March of this year.

The proposal tabled Monday is a new version of that requires more than “hey, I lost my job” to reach a balance between owners and tenants.

Among them, he stressed that private agreements between the parties be authorized, although he argued that many aspects of form and substance must be refined.

Legislators of the parliamentary working table are expected to meet today, Wednesday, to discuss the proposal with Minister Campos.

Ivonne Acuña, of the Nueva República independent bloc, who objected to the first proposal made last month, assured that she is pleased that the benefit is exclusive for individuals or legal entities affected by the national coronavirus emergency, in addition to the introduction of the payment arrangement between lessor and lessee.

However, the legislator said she will push for consideration of several of her observations of the proposal, such as the requirement for the need of a notary in the case of independent workers because not all families could afford that.

She also said that the moratorium may not need to be for as long as six months, as well as the need to take into account the impact on landlords, who also have commitments to pay for public services, loans, and municipal services.

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"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

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