Is buying a property in Italy a good investment?
Is purchasing real estate in Italy with the aim of renting it out a good investment?
It most definitely is! On one side because its dazzling cultural heritage, splendid natural environment and charm make Italy one of the world’s most sought-after tourist destinations, as the ever-increasing tourism flows show, on the other because, as surveys prove, the Italian real estate market showed promising signs even during the pandemic.
Yes, foreign investors on the go should rest assured that buying real estate in Italy to rent it out, either short or long term, is bound to be a rewarding commercial venture, provided one has the means and time to understand what Italian rental-related law maintains, and what the local bureaucracy demands.
How to rent out your property in Italy: rights and responsibilities
Starting from the dos and don’ts, i.e. from the landlord’s and tenant’s rights and duties.
Pursuant to the Italian Civil Code, namely article n. 1578 the landlord, that is to say the owner of the property, is obliged to provide a property that stands in good conditions, meaning a dwelling without imperfections or deficiencies that might interfere with its intended use, and flawless energy and safety certificates stating the kilowatt/hour needed to maintain the premises at a temperature of 18 degrees in winter and summer. The landlord is also required to hand over receipts for payments received, and accept a tenant’s decision of carrying out any amelioration of the property at his/her own expense, as long as these do not damage or otherwise impair the unit. Last, but certainly not least, Italian law forbids early termination of lease agreements if the tenant’s behavior is correct and irreproachable.
As concerns the tenant, he/she is accountable for the property, responsible for its care and maintenance, required to make use of it in compliance with the contract and in charge of settling payments for utilities. The tenant is held accountable of any damage or decline occurred, even if these arise from emergencies, aside from emergencies developed independently of his/her action.
The first issue a prospective landlord will have to deal with is the choice of the type of contract to apply. Italian law provides 5 different kinds of contracts, namely:
Contract for Students
Contract for Tourist Rentals
4+4 Contract (contratto 4+4 in Italian)
Contracts and paperwork to rent out a property
Student Contracts are contracts specifically drafted to accommodate the needs and demands of those who choose to reside in a location different from their hometown to study, generally attending university, and hence allow for a duration that usually ranges from a minimum of 6 to a maximum of 36 months.
Contracts for tourist rentals, instead, are valid for a maximum of 30 days. Being drawn up for the said period, very brief, these do not need to be formally registered, unless the tenants express the desire to prolong their stay, via a contract renewal, for over 1 month.
Agreed contracts are agreements generally valid for a 3-year period that allow for a renewal of up to a maximum 2 years over that.
Short-term rental contracts are agreements usually drawn up to meet the needs of those that need an abode for employment or business reasons. As such, the range of duration is from a minimum of 1 month to a maximum of 18 months, and cannot be extended or renewed. The 4+4 contract, the most common of all types of contract in Italy, allows for rentals lasting a minimum of 4 years and renewable for another 4 after that. In essence, it is a “free” agreement because it enables the contracting parties to mutually determine the due annual rental fee on the annual fee as they prefer.
Italian law lays down that all contracts, independently of duration and type, must comprise:
- The landlord and tenant’s personal data, to include the codice fiscale, i.e. the individual’s personal Italian tax code, and the information as reported in the person’s ID or passport;
- Complete details on the property;
- Type of contract;
- Definition of the rental period;
- The rental fee, per month;
- Itemized list of what the rental fee comprises;
- The attestazione prestazione energetica, APE: a technical certificate mandatory by Italian law that assesses the kilowatt/hour needed for the premises to be kept at 18 degrees in winter and summer;
- The deposit – owners generally ask for at least one month advance payment;
- Terms of the agreement as concerns the use and payment of utilities;
Once the landlord and tenant have agreed on the terms, the contract must be signed by both parties and registered at the local Italian Revenue Agency (Agenzia delle Entrate) within 30 days after signature date. The landlord is the one in charge of registration, and may do so in person, visiting the local Revenue Agency, or online via the official website.
The great majority of proprietors who rent their real estate units also resolve to insure them. In this case, the most advisable solution is choosing an insurance that covers the time lapses between one tenant and another, and includes public liability. Full insurance coverage, in fact, protects one from unpredictable events such as theft and damage caused by weather, while public liability protects the owner from possible allegations by third parties’.
Understanding the way Italian contracts work, and the duties and rights of the two parties is crucial, and all the more so for a foreign investor who may be unfamiliar with the local legislation. Local insight, and careful examination of the contractual details implied, can help a non-Italian national through, guaranteeing smooth proceedings, and excellent profits too.
Drafting a detailed business plan that comprises the contract details, rental fee and taxation scheme, is another highly recommended step that one should consider making to make the most of one’s investment. To be useful, and fruitful, the business plan must be accurate, and meticulously drawn up. How to do so? With the help and assistance of a team of qualified professionals.
Our services when it comes to rent out a property in Italy
Specialized in property law and rental management, our crew of perfectly English-speaking lawyers, real estate agents and developers, accountants, architects and surveyors assists foreign investors, expediting their Italian property rental. Resourceful, experienced and knowledgeable about the rental market and bureaucracy we facilitate proceedings, and provide comprehensive advice and service for contract drafting and renewals, tax consultancies and appraisals.
The extra bonus? Our widespread network of contacts, relationships and partners that enable us to advertise your property, and find the postcard-perfect well-paying dependable tenants you are looking for!
Get in touch for more info about our real estate services in Italy