Q: I would like to let my Italian property (house) for long periods, like a year or more. Any advice on involved formalities?
A: Laws on Italian property rent are very specific and strict. Please find below some key aspects applicable to Italian lease for habitation use (as opposed to commercial use), applicable no matter what the parties establish:
- the minimum lease duration is four years, unless the parties mention in the contrac specific reasons in compliance with the applicable laws regulating short rent options;
- the annual rental shall be the same every year; only annual depreciation adjustments are allowed, if pre-approved by the tenant;
- the rental contract shall be written (no required involvement of notary or italian lawyer);
- you, as the landord, have very few and limited options to deny four-year lease renewal after the first four-year period finishes;
- renewal deny shall be formally notified to the tenant with a six-month notice at least ;
- no-renewal notice shall clearly mention which of the few termination reasons allowed by the law applies to the case;
- if you agree to rent the house for more than four years, the renewal will duplicate such period of time; for example, a six-year lease shall imply a six-year renewal;
- if you sell the property, the lease contract will be in force with same rights and obligations for the new owner.
Absence of written contract is illegal and might imply several consequences, including tax fines. With respect to the civil law, lack of written contract would typically imply the following default conditions by the law to apply to the lease relationship:
- four-year duration and four-year renewal as detaild above;
- only ordinary maintenance cost on the tenant;
- no rental adjustment referred to annual financial depreciation;
- no first right of purchase offer on the buyer;
- six-month notice required for early termination by the tenant.
Also, absence of signed agreement on how to manage certain typical situations might cause unpleasant arguments during the lease relationship.
Finally, find below some key duties on the landlord when letting an Italian property:
- lease agreement regarding an Italian property shall be registered within 30 days subject to payment of stamp duty and registration tax;
- in case of multi annual lease contract, registration tax is due annually;
- registration tax is 2% of annual rental, with a minimum of EUR 67;
- stamp duty is EUR 39.24 (if the contract is longer than four pages, up to eigth, or 100 lanes, up to 200, it will be EUR 78.48);
- landlord shall inform the local police within 48 hours about the tenant's personal information and tenancy start;
- rental information might be due to be included in an annual income tax return.
If the landlord grants certain specific beneficial conditions to the tenant by means of a written contract, it might result in some tax benefits to apply in favour of the landlord, in terms of substantially lower income, municipal and registration taxation.
Lease contracts based only on parties "word" might imply several issues on the landlord, in terms of property maintainance complications, limited property use, difficulties in case of sale, etc.
Similar and further restrictions and mandatory regulations apply to commercial lease.
However, landlords should look at let options as a nice mean to withdraw financial gain from a valuable assett. A pre-assessment of case circumstances by an Italian legal expert is crucial to put in place the most appropriate lease contract in compliance with the applicable laws, landlord's needs and expectations, for a conscius and profitable investment return.
We have a very large practice of commercial and non-commercial lease agreements, early termination clauses in compliance with the law, short term lease, etc.
Should you like to contact our Italian solicitors, please click here.