The Italian law strictly regulates residential leases, and the law provides the basic requirement each rental contract needs to have, as well as introduce certain categories of rental contracts. This is extremely different from the common law system where the negotiating parties can agree terms widely and freely. In this article we try to explain the main Italian rental contracts.
Rental contract main clauses
Before digging deeper into the various rental contracts available in Italy, let’s focus on the key elements of any rental contract.
Firstly, the rental contract must be in regards to a residential unit. The contract needs to include each party’s personal details (full name, codice fiscale, date and place of birth, and residential address), the annual rental amount and the payment due dates, the cadastral coordinates of the property, as well as its address, the landlord’s IBAN coordinates, and the rental duration.
The contract must also include the APE (Attestato di Prestazione Energetica), or at least its unique identification number.
The parties can also agree to add additional clauses, such as the vacation notice period, the sub lease option among others.
Rental contract obligations
Each party is bound to certain obligations to the other. The landlord must provide a suitable place to live, a guarantee on third party claim and the features of the unit to be rented.
The landlord must also pay the extraordinary maintenance expenses, as well as register the contract at the Agenzia delle Entrate within 30 days from the signature.
In addition the landlord must provide a payment receipt to the tenant in regards to the rentals paid.
On the other hand, the tenant is due to pay the deposit and the rental at the deadline written in the contract, as well as pay the ordinary maintenance expenses (annual boiler check, broken window etc.).
Contratto canone libero
This is the free market conditions contract. The parties agree on the annual rent to be paid, and it is not regulated by any standard. The contract’s length is normally 4+4 years, meaning that the contract is renewable upon the first 4 years expiration of further 4 years; any of the party can waive the further 4 years extension by providing a vacation notice at least 6 months prior the 4 years period end (the contract can reduce this time).
Contratto canone concordato
This type of contract is regulated by local councils, and it is often referred to as 3+2 (which is the contract duration). In this type of contract, the annual lease has to fit certain boundaries set by the local councils, providing a price per square meter which varies depending on the size of property, as well as the amenities.
Local councils can also provide different prices based on different areas of their territorial municipality, this normally happens in larger cities.
The landlord or the tenant can waive the further extension by providing a vacation notice 6 months in advance.
This is a particular type of contract lasting up to 1 year, renewable only once. This contract is aimed to help workers and students who are required to take up a rent away from their home for a shorter period of time compared to other contracts.
This contract is backed up by any of the following reasons:
- Repatriation from overseas
- Work reasons
- Divorce or separation from the partner
- Healthcare reasons
- Temporary house unavailability due to renovations
- Study reasons
If the contract does not include any of the above reasons, it is still valid however it is then converted to a 4+4 regular contract.
Rental tax breaks
The Italian legislator has introduced tax breaks for tenants in order to make rents more affordable. The tax break is regardless of the amount of rent paid, and there is no benefit if your taxable income exceeds € 31,000.
The tax break ranges from € 150 up € 960 depending on your income tax band, as well as the type of contract (contratto canone concordate has a larger tax break).
In order to claim your tax break, you must file a tax return filing the appropriate section in the qualifying expenditure.