50% rent reduction for premises

50% rent reduction for business premises. Decree Law 34/2020 on urgent measures to support economic activity carried out in leased business premises.

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This morning, 22nd October 2020, Decree Law 34/2020, of the 20th October, on urgent measures to support economic activity carried out in rented business premises, was published in the DOGC (Official Journal of the Government of Catalonia).

The decree has two articles that can be summarised as follows: tenants of premises whose activity is affected by measures relating to COVID-19 may demand a 50% reduction in rent.

The regulation makes no further distinction: the tenant can be a multinational with billions of euros of annual profit and the landlord cannot make ends meet; or the tenant cannot make ends meet and the landlord is a bank. All of them equally.

Eligibility for the 50% rent reduction for premises

  1. The activity on the premises is suspended or restricted as a result of measures decreed by the authorities,
  2. The contract is subject to the LAU (dated 1st January 1995 or later)

Once the above is fulfilled, the lessee (tenant) may demand a reduction of the rent by means of a burofax or other reliable means. If no agreement is reached:

  • If the activity is suspended (closure), the reduction will be 50 per cent from the date of the notice.
  • If there is a partial reduction of the activity, the reduction will be proportional: half of the loss of use measured by the reduction of capacity or opening hours (or other limitations imposed). In this case, the use of take-away or home deliveries shall not be taken into account.

The reduction shall be maintained for the duration of the measures for which it was imposed.

The tenant may also demand that the landlord apply the amounts received as security/deposit to the collection of the rent. Except for the legal deposit or others deposited with the administration. In other words, additional or voluntary guarantees may be used for the payment of rent.

In addition, if the measures of reduction or suspension of activities last for more than three months in one year (starting from today): the tenant may withdraw from the contract without penalty, up to three months after the end of the measures and by giving one month’s notice to the landlord (owner).

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