Italy — expats
Renting an office in Italy
Useful tips for tenants
Each property is defined by its destination
Italy’s real estate assets are divided in categories, based upon the use for which the property can be used (“destinazione dell’immobile”). The main categories are: (i) Residenziale: properties destined for residential purposes; (ii) Industriale e artigianale: properties destined to the production of goods; (iii) Commerciale al dettaglio: properties for the sale of goods and shops; (iv) Turistico ricettiva: properties destined to hosting people, such as hotels, campings (Bed&Breafast are considered residential); (v) Direzionale di servizio: offices; (vi) Commerciale all’ingresso e depositi: warehouses.
The category of each property is indicated in the certificate (visura catastale) which can be requested also online at the tax Office
Schede — Visura catastale — Visura catastale online — Agenzia delle Entrate (agenziaentrate.gov.it)
How long can the contract be for?
The minimum term for the rent of an office is 6 years. The contract is automatically extended for an additional six years term unless either party gives notice not to renew at least twelve months before the expiry. The provision on the minimum duration is mandatory and any agreement to the contrary is null and void. If the parties provide in the contract for a shorter duration the clause is automatically replaced by the statutory provision.
Can the parties agree upon a shorter term?
The minimum six years duration can be derogated from only if the activity to be carried out in the building is of transitory nature, for example a company needs to rend the office for a special event.
Termination
Tenant’s rights
The tenant is entitled by the Law to terminate the contract at any time but with a six months advance notice, but only if can prove to have “serious and grounded reasons”; these must be facts extraneous to the tenant’s will, occurring after the conclusion of the contract and such as to prevent its continuation, eg the closure of the tenant’s activities (winding up of the company), serious structural problems in the building, etc. The parties can however stipulate in the contract an earlier termination clause at Tenant’s will, even without serious reasons, with an advance notice that can be negotiated. A sample clause that can be used for this purpose is:
“The Tenant shall be entitled to terminate the contract at any time even without cause, by giving the Landlord a ___ month advance written notice”
Landlord’s rights
The landlord does not have the right to terminate the contract before the expiry, also in the event a just cause occurs. An exception is granted upon the first expiry of the contract under specific conditions, eg the landlord’s need to use the property for himself or his family, to start his own business or if the property is to be subject to restructuring works. In any case, the Landlord must send to the Tenant a 12 months advance notice.
Tenant’s due diligence
- It is always advisable to ask the landlord for proof of ownership (visura catastale) to make sure the signatory of the lease has the right to execute the contract.
- To be 100% compliant, any lease agreement must be filed with the Registry Office; there is a charge payable on signing of the lease usually shared 50/50 (while any other expenses, stamp duties or taxes related to the lease are normally paid by the tenant).
- Ask the landlord to confirm and provide the relevant certificates (certificate di conformità) that all utilities (electricity, gas, heating and conditioning system) are compliant. Include a specific covenant in the contract.
- Set forth clearly in the contract whether the property leased must be repainted and which other works are expected at the end of the lease and who shall bear the costs.
Compensation for loss of goodwill: a tenant’s right
The commercial lease regulations provide a mechanism of compensation to protect the tenants, as are considered the weak parties of the contract; it is a sort of compensation for loss of goodwill. In the event the landlord decides not to renew the agreement in order to unduly take over the tenant’s business by taking over an already established business, he is obliged by law to pay the tenant a sum of money equal to 18 months’ rent (21 months’ rent if the activity is of a tourist or hotel nature). This amount is doubled if the landlord, within one year of the notice of termination, starts an activity similar or identical to that previously exercised by the lessee.
The rent
The rent for a commercial lease and any future increase may be freely determined by the parties. The parties may agree on a periodic adjustment of the rent to inflation which cannot not exceed 75% of the official inflation index (ISTAT). ‘Turnover rents’ and ‘stepped rents’ (where rent changes over time to reflect increasing benefits for the tenant or the investment made by the tenant in the premises) are also permitted.
The deposit
The standard deposit, payable upon signing the contract, is equal to 2–3 month rent but this is negotiable. This only covers damage and not unpaid rent. The deposit should be refunded by the Landlord within a reasonable time after termination, after checking whether there is any damage. It is always advisable to indicate in the contract a specific term (15–30 days) within which the deposit is to be refunded.
There are often controversies at the end of the contract for the return of the deposit because landlords try to retain all or part of the deposit alleging damages. Accordingly, it would be preferable to offer a bank or insurance guarantee instead of paying a cash deposit.
Realtor’s commission
The standard commission payable to a broker ranges between one month’s rent or up to 15% of the annual rent but can be negotiated. Make sure to:
· appoint a duly licensed Realtor. You can check if the realtor is duly licensed in the Government website www.registroimprese.it
· if broker asks for exclusivity, make sure to indicate the duration of the appointment and rights and duties of each party in case the Tenant appoints a new broker who proposes the same property;
· if the Realtor is not licensed, he/she shall not be entitled to any commission and should refund to the client any sums paid
· stipulate in writing the terms and conditions of its appointment, payment terms of the commission and charges payable in case you wish to terminate the appointment even if the broker has not concluded its search.
Who is liable for maintenance and other expenses?
Registration tax (imposta di registro)
It is payable on signing of the lease and usually shared 50/50 (while any other expenses, stamp duties or taxes related to the lease are normally paid by the tenant), is charged at one percent of the total anticipated rent for the duration of the lease, or one percent of the annual rent if it is to be paid on an annual basis
The tenant is responsible for:
(a) Utilities: paying water, gas and energy bills (to avoid disputes upon termination of the contract, it is advisable to make sure that the relevant contracts are stipulated with the tenant);
(b) paying for all service charges pertaining to the property such as central heating, lift maintenance, stair cleaning, ordinary maintenance of the courtyard and garden, cold water from central systems;
© paying for any costs for the administration of the apartment building and waste tax. To assess the amount of such charges, it is advisable to request a copy of the previous year’s bill from the landlord.
(d) for costs pertaining to repairs to the sanitary fittings, electrical system, plumbing, gas and hot water systems, including an annual emissions check on the boiler.
…. and the Landlord?
The landlord is responsible for all extraordinary expenses necessary to enable the tenant’s enjoyment of the property, such as: (i) the maintenance and repair of the roof, (ii) re-painting of the façade and of the building; (iii) costs for maintenance of communal equipment such as the lift, the central heating.
Read carefully the contract because this provision can be derogated by the parties and there could be situations where the Landlord ask the Tenant to bear some additional costs. The standard clause that should be included in the contract is:
As per art. 1576 Civil Code, the Landlord shall be responsible for all costs relative to necessary maintenance and repairs and only the costs of ordinary maintenance shall be borne by the Tenant.
Damages
On expiry of the contract the property must be returned to the owner in the same conditions, without prejudice to normal wear and tear. It is advisable to take photographs of the interior of the property before taking up occupation and exchange them with the landlord, to avoid any controversies at the end of the rent.
Many landlords hold the tenant responsible for repainting the interior of the property at the end of the lease alleging that this is not to be considered normal wear and tear. Therefore, the repaint clause, if included, must be carefully evaluated and the tenant should make sure that a complete repainting is not requested.
Modifications to the property
Leases usually specify the permitted use of the places and the tenant is not entitled to modify this. The use may also be restricted by planning regulation approved by the planning authority.
Most leases limit the tenant’s right to alter or improve the places of the leased property: (i) Structural alterations are frequently prohibited, particularly where the tenant only leases part of the building; (ii) Non-structural alterations normally require the landlord’s consent, although the law requires that this consent should not be unreasonably withheld.
Under the Italian Civil Code a tenant has the right to be compensated for any improvements made during the lease, so leases usually state that the landlord can require the tenant to remove any additions and improvements at its own cost at the end of the lease.
Disclaimer: The information provided on this article (i) does not, and is not intended to, constitute legal advice; (ii) are for general informational purposes only and may not constitute the most up-to-date legal or other information (iii) this website may contain links to other third-party websites. Such links are only for the convenience of the reader; (iv) readers should contact their attorney to obtain advice with respect to any particular legal matter.
