Regarding the pandemic, leases, rents… (… and the failure of crisis management)
Going through the second, this time tragic, phase of the pandemic, we are counting cases, deaths and, above all, hospitalizations in ICUs – which have already “overflowed”. We are also watching the State attempt, in a panic, to manage the unprecedented health, financial (and not only) crisis. And, at the moment, not succeeding. It is noteworthy that we hear ministerial and prime ministerial announcements, provisions for businesses and employees, provisions for taming the pandemic and crisis management. However: the legislative regulations are announced, press releases are circulated and we look in vain for the Government Gazettes where they are recorded. Law 4753 / 18.11.2020 has already been published (Government Gazette A’ 227 / 18.11.20), which attempts to manage rents and leases from September onwards. Quite late and sufficiently complicated.
Let us attempt the partial decoding of the specific-also late, unfortunately, provisions (articles 33 & 34 of law 4753 / 18.11.2020):
Section One: Leases concerning businesses that are (generally) affected by coronavirus and leases concerning their employees
Pursuant to the regulations of §6 of the second article of the Legislative Decree of 20.3.2020 (A ’68), which was ratified by article 1 of law 4683/2020 (A’ 83) – the following apply from now on: with regard to specific reliefs:
Question 1: What are the reductions in rents due by businesses affected by the coronavirus?
The tenant of a professional lease of real estate which houses a business financially affected by the pandemic, may be released from the obligation to pay part of the due rent. The exemption cannot be less than 30% of the total rent for the months of September and October 2020.
It should be noted that (: article two, §1, par. b & c, law 4683/20): the stamp duty and the VAT are recalculated and imposed on the rent resulting from the above partial payment. The partial non-payment of the rent of the first paragraph does not give rise to a right to terminate the contract against the tenant or any other civil claim.
Question 2: Is a landlord and tenant agreement required to reduce the rent?
The implementation of the 30% (minimum) reduction requires a relevant agreement between the lessor and the lessee. Their declaration related to the agreement is submitted electronically to the Independent Public Revenue Authority (AADE). The Commander of AADE determines the manner, the time as well as each specific issue for its submission.
Question 3: Which businesses are under the provisions of the rent reduction?
It has already been mentioned that the right to a reduction of at least 30% of the rent concerns leases of businesses affected by the pandemic.
By decision of the Minister of Finance, after a suggestion of the Commander of AADE, the affected businesses are identified per sector and per month, as well as by any other relevant details.
It is noted, however, that in case a business is located or has a branch in a regional unit which joined for at least fourteen (14) days in October 2020 the regional units with the characterization of a “very high” epidemiological level, the following (question 7 & etc.) applies.
Question 4: Are there corresponding provisions for the reduction of the rent of the main residence of the employees employed by the affected businesses?
Corresponding legal provisions with the above apply to the leases of the main residence in which the tenant is an employee or spouse or counterparty of a cohabitation agreement of an employee in a business affected (question 3). The reduction of the rent of the main residence (of at least 30% after a tenant-landlord agreement) concerns the months of September and October 2020. A necessary condition is that the employment contract of the tenant-employee has been temporarily suspended due to measures to prevent the spread of the coronavirus.
Question 5: Are there corresponding provisions for the reduction of the rent of the main residence of students-children of employees in the affected businesses?
In the event that in order to cover the housing needs of a student of a higher education institution a house is rented (outside the place of their permanent residence) and, at the same time, said student is a child-dependent member of an employee (question 4) in an affected business, as mentioned above (question 3), an exemption from part of the total rent is possible. The exemption cannot be less than 30% of the total rent. Here, too, a relevant agreement between the lessor and the lessee must be in place and electronically submitted to AADE. The manner, the time, as well as any more specific issues for the submission of said declaration are determined by decision of the Commander of AADE.
Section Two: Leases concerning businesses operating in an area with the characterization of a “very high” epidemiological level and their employees.
Based on the already added §7 of the second article of the Legislative Decree of 20.3.2020 (A ’68), which was ratified by article 1 of law 4683/2020 (A’ 83) – the following apply from now on regarding the specific reliefs:
Question 6: What is the relief for the rents of businesses that are based or have a branch in an area with its epidemiological level characterized as “very high”?
The lessee of a professional lease of real estate in which a business is based, located or has a branch, and which is in a regional unit which joined for at least fourteen (14) days in October 2020 the regional units with the characterization of a “very high” epidemiological level and for which, in addition, the conditions mentioned below (question 8th) apply, are exempted from the obligation to pay 40% of the total rent for the month of October 2020.
It should be noted that (: article two, §1, par. B & c, law 4683/20): the stamp duty and the VAT are recalculated and imposed on the rent resulting from the above partial payment. The partial non-payment of the rent of the first paragraph does not give rise to a right to terminate the contract against the tenant or any other civil claim.
Question 7: Is an agreement between the landlord and the tenant required to reduce the rent?
In this case, no agreement is required between the landlord and the tenant.
Question 8: Which businesses are covered by the rent reduction arrangements?
The arrangements for the mandatory reduction by 40% include the leases of real estate in which a business is established (in which the business either has its headquarters or has a branch) if said real estate is in a regional unit which joined for at least fourteen (14) days in October 2020 the regional units with the characterization of a “very high” epidemiological level. But not only that, in order for the mandatory reduction to apply, the business must also be under special and extraordinary measures regarding the (temporary) suspension of its operation for preventive or repressive reasons related to COVID-19 or, alternatively, it must be financially affected by the spread of COVID-19 coronavirus.
The businesses affected by the above are identified by a decision of the Minister of Finance, after a suggestion of the Governor of the Independent Public Revenue Authority (AADE) per regional unit and per sector. A corresponding decision provides with any other necessary details for the implementation of this regulation.
Question 9: Are there corresponding provisions for the reduction of the rent in the leases of the main residence of employees employed by the specific businesses?
Corresponding legal provisions with the above apply to the leases of the main residence in which the tenant is an employee or spouse or counterparty of a cohabitation agreement of an employee in a business affected. The 40% reduction in the rent of the main residence concerns the month of October 2020. A necessary condition is that the employment contract of the tenant-employee has been temporarily suspended due to the measures to prevent the spread of the coronavirus.
Question 10: Are there corresponding provisions for the reduction of the rent in the leases of the main residence of students?
If, in order to cover the housing needs of a student of a higher education institution, a house is rented (outside the place of their permanent residence) and, at the same time, said student is a child-dependent member of an employee (question 9) in an affected business, the tenant is exempted from 40% of the total for the month of October 2020. The manner, the time, as well as any more specific issues for the submission of said declaration are determined by decision of the Commander of AADE (Article 3 §5 Law 4684/2020).
Section Three: Leases relating to businesses operating in an area of ”increased risk” or for which public health protection measures have been issued and leases of their employees.
Based on the already added §8 of the second article of the Legislative Decree of 20.3.2020 (A’ 68), which was ratified by article 1 of law 4683/2020 (A’ 83) -the following apply from now on:
Question 11: What is the relief for the rents of businesses located or having a branch in an area that is included in the epidemiological level of “increased risk”?
The professional lease of real estate in which a business is based, located or has a branch in a regional unit, which is in a regional unit included in the epidemiological level of “increased risk” [or in any of the categories mentioned below (question 13o)], is released from the obligation to pay 40% of the total rent starting from November 2020.
It should be noted here that (: article two, §1, par. b & c, law 4683/20): the stamp duty and the VAT are recalculated and imposed on the rent resulting from the above partial payment. The partial non-payment of the rent of the first paragraph does not give rise to a right to terminate the contract against the tenant or any other civil claim.
Question 12: Is an agreement between the landlord and the tenant required for the reduction of the rent?
In this case, no agreement between landlord and tenant is required.
Question 13: Which businesses are covered by the arrangements regarding the reduction of rent?
The arrangements for the mandatory reduction by 40% include the leases of real estate in which a business is established (in which the business either has its headquarters or has a branch) if said real estate is in a regional unit which is included in an epidemiological level of “increased risk”, or in a regional unit for which extraordinary public health protection measures pursuant to a regulatory act have been taken. But not only that, in order for the mandatory reduction to apply, the business must also be under special and extraordinary measures regarding the (temporary) suspension of its operation for preventive or repressive reasons related to COVID-19 or, alternatively, it must be financially affected by the spread of COVID-19 coronavirus.
The businesses affected according to the above are identified by a decision of the Minister of Finance, after a suggestion of the Governor of the Independent Public Revenue Authority (AADE) per regional unit and per sector. A corresponding decision provides any other necessary details for the implementation of this regulation.
Question 14: Are there corresponding provisions for the reduction of the rent in the leases of the main residence?
Corresponding legal provisions with the above apply to the leases of the main residence in which the tenant is an employee or spouse or counterparty of a cohabitation agreement of an employee in a business affected. The 40% reduction in the rent of the main residence concerns November 2020 and onwards. A necessary condition is that the employment contract of the tenant-employee has been temporarily suspended due to the measures to prevent the spread of the coronavirus.
Question 15: Are there corresponding provisions for the reduction of the rent in the leases of the main residence of students?
If, in order to cover the housing needs of a student of a higher education institution, a house is rented (outside the place of their permanent residence) and, at the same time, said student is a child-dependent member of an employee (question 14) in an affected business, the tenant is exempted from 40% of the total for the month of November 2020 onwards. The manner, the time, as well as any more specific issues for the submission of said declaration are determined by decision of the Commander of AADE (Article 3 §6 Law 4684/2020).
Section Four: “Compensation” of landlords who receive a reduced rent by 40%
Based on the regulations of article 34 of law 4753/2020 (A’ 227), the following apply:
Question 16: Which landlords are entitled to a “refund” of part of the reduced rent?
Beneficiary landlords are only natural persons who, from November onwards, receive a reduced rent of 40%, in accordance with provisions in the context of dealing with the effects of COVID-19 coronavirus.
Question 17: What is the percentage of the “return” part of the loss of the reduced rent?
The above (question 16th) landlords-natural persons are entitled to receive from the State half of their loss (ie 20% of the rent) from November 2020 onwards.
Question 18: What is the procedure for the payment to the landlords of the 20% of the rent that they received only by 60%?
Upon the recommendation of the Commander of AADE, the more specific procedural conditions, the cross-checking of data, the payment procedure and any other issues arising for the application of this will be determined by decision of the Minister of Finance…
Section Five: Leases under the above provisions
Question 19: In the category of professional / commercial leases which businesses are also included?
When the above regulations cover professional leases, they also include the leases for the housing of canteens or cafés and other businesses that operate within premises owned or used by public services of Ministries or subleased by them, as well as inside buildings that house their services.
As mentioned in the introduction, legislative regulations are announced, press releases are circulated and we are looking in vain for the Government Gazettes where they are recorded. There are three typical examples: Press releases of the Minister of Finance of 31.10.20 and 5.11.20 concerning announced and not yet implemented measures. Also: Common Ministerial Order of 13.11.20 (Government Gazette B ‘5048 / 16.11.20) which concerned, among other things, the possibility (!) of suspension of employment contracts “from 30/10/20 to 31/10/20” (!!!).
It is easy to see that the government is called upon to manage an unprecedented, multi-layered crisis. But: The results do not look (nor are they) as successful as the ones in the first wave of the pandemic.
The political opposition is resting.
The press (essentially) is too…
All of this, of course, seems like an unnecessary luxury at a time when hospitals in the “front-line” lack the basic materials to manage the many thousands of cases they are called upon to deal with in order to save, ultimately, human lives.
Let us hope for the (as soon as possible) rapid reversal of the phenomenon.
Let’s all work, without exception, in this direction.
Everyone must take on their own responsibilities.-
Stavros Koumentakis
Managing Partner
P.S. A brief version of this article has been published in MAKEDONIA Newspaper and makthes.gr (November 29, 2020).
Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.