Italy Rental Laws: Pro-landlord, Neutral or Pro-tenant?

Italian law and practice are Pro-Tenant. Italian laws, available in English, make it difficult for landlords to evict tenants without significant compensation, even in cases of non-payment. The eviction process can be lengthy, sometimes dragging on for over two years due to the legal procedures involved.

Rents: Can landlord and tenant freely agree rents in Italy?

Rent can be freely negotiated between the parties, but the agreed-upon annual rent must remain unchanged for the entire duration of the lease. This means that if a lease lasts for four years, the tenant will pay the same rent throughout that period. However, cost-of-living adjustments can be applied annually if explicitly stated in the contract, provided the landlord has not opted for the flat tax on rental income.

Landlords are forbidden to request payment in advance amounting to more than three months' rent, and the same applies to security deposits. So normally, tenants pay a total of six months' rent - three months advance, three months deposit - prior to occupancy. The deposit is given back with interest (currently at 3%) at the termination of the contract.

What rights do landlords and tenants have in Italy, especially as to duration of contract and eviction?

Italy's rental laws strongly favor tenants, as outlined in the 'Fair Rent' Act (L.n. 392/1978), L.n. 431/1998, and even the Constitution. These laws, available in English, make it difficult for landlords to evict tenants without significant compensation, even in cases of non-payment. The eviction process can be lengthy, sometimes dragging on for over two years due to the legal procedures involved.

For a rental contract to be legally valid in Italy, it must be registered with the regional ufficio del registro. However, some landlords try to bypass this requirement to avoid taxes, often offering tenants a reduced rent in exchange. This practice carries legal risks for landlords. Additionally, all rental agreements must be in writing, as verbal agreements are not legally recognized.

The Four Types of Rental Contracts

• Unrestricted Contracts (contratto di locazione a canone libero): These are long-term agreements lasting four years, with an option to renew for another four. Rent is set freely between the parties.
• Conventional Contracts (contratto a canone concordato): These last for three years with the possibility of a two-year renewal. They typically offer lower rent than market rates, and landlords benefit from tax incentives.
• Transitory Contracts (contratto di locazione ad uso transitorio): Designed for short-term rentals, these agreements range from one month to 18 months and cannot be renewed once they expire.
• Student Contracts (contratto di locazione a favore degli studenti universitari): These contracts are established through agreements with university cities. They can last between six months and three years and renew automatically unless terminated. Rent is freely negotiable.

Legislation

Tenancy in Italy is regulated by L.n. 392/1978 (the 'Fair Rent' Act), L.n. 431/1998, and the Constitution. These laws provide the framework for rental contracts, including the duration of tenancy, rent and rent increases, as well as dispute settlement.

How effective is the Italian legal system?

Even though a special procedure speeds landlord/tenant dispute resolution, evictions are slow because the tenants' eviction is usually suspended for six months, or 18 months if the tenant is unemployed, 65 years old and above, or has five or more children.

Brief History: Recent changes in Italian landlord and tenant law

The rental market has been in decline for decades. Beginning in the 1920s, special statutes denied termination of contracts and prevented rent increases. Then the 1978 'Fair Rent' Law (No 392) fixed four years as the minimum tenure duration, and continued rent control.

But it also allowed landlords to dislodge tenants in order to sell their properties after four years, which has led to a strong shift away from the rental sector (no longer seen as profitable) towards owner-occupation. The rental law of 1998 does not substantially ameliorate the situation. As might be expected, the market now shows a strong contrast between 'old' contract rents (which have not kept pace with inflation) and 'new' contract rents (where inflation expectations tend to be 'front-loaded' into high rents).