Definitive guide to residential rental contract
The residential rental contract is the document by which the house’s owner grants to a tenant a property for a certain period, in exchange for a rent. According to different kinds of rental in Italy, we have created this definitive guide to the residential rental contract. The best way to understand what is the custom suits your needs.
What to write in the rental contract
First of all, the lease requires the payment of a monthly fee, for the use of a property. The element that distinguishes it from the loan of use, which instead is free. The rental agreement also contains aspects such as the date of conclusion, general details of the owner and tenant, the duration of the contract, and the amount of the rent, in addition to the payment method.
Usually, the contract also contains two other elements. The first is the security deposit, which is the money that the renter pays to the owner in advance as a form of guarantee in the event of damage. The second is the so-called cedolare secca, a specific Italian tax deduction for homeowners who decide to rent a property.
What is the so-called "cedolare secca" in residential rents
The so-called “cedolare secca” in residential rents concerns the exemption from registration tax and stamp duty, is only possible for the lease for residential use. Specifically, it is an optional tax scheme that replaces the Irpef and the related additional on rental income, which are taxes due on leases.
The scheme may be chosen by the owner (and not by the tenants) when registering the contract. However, once this form of exemption is chosen, it will no longer be possible to adjust the rent for the current year according to the price index established by Istat. In other words, the rent cannot be revised upwards. For subsequent annuities, however, if you decide to revoke the cedolare secca, you can request the update of the rent (always according to the Istat index), as well as having to pay the registration fees/ annuity.
More specifically, the cedolare secca with 21% standard rate applies to contracts with free rent of the so-called 4+4, while the reduced rate of 10% is valid on contracts with agreed rent (3+2) but also to transients for university students and transients at agreed fee.
We also recall that from January 2024 the taxation of the cedolare secca rises to 26% for short rentals of not more than 30 days, when the lessor allocates to the lease more than two apartments.
Now, let’s look at the different types of lease agreements.
Types of lease: the "free" rental contract
The rental agreement for “free” rent for residential use lasts four years with the possibility of automatic renewal for the next four if the withdrawal is not communicated by one of the two parties, within the deadlines provided.
In this kind of contract, the fee is free and is established between the parties. If the owner has not requested the cedolare secca during registration, it can annually recalculate up to 100% on an Istat basis.
The owner’s cancellation can be made within six months from the deadline and only if justified by specific needs. The tenant can withdraw at any time, provided that at least six months’ notice.
Lease agreement at "agreed" rent for residential property
The “agreed” rental contract has a duration of three years with the possibility of automatic renewal for the next two. For this contract, the rent must be within a minimum and maximum limit established between the tenant and owner organizations, according to territorial deals. It is also bound to criteria such as surface area and general conditions of the property.
If the owner has not chosen the cedolare secca, it is possible to recalculate the rent within a maximum of 75% on an Istat basis. As for cancellation of the owner or withdrawal of the tenant, the same time as the free rental contract applies.
The transitional use contract for specific needs
This lease for residential property can be activated for specific needs of the owner (such as an upcoming sale of the leased property) or the tenant (for example, for business needs). The duration of the contract may not exceed 18 months.
The rent varies in municipalities with more or less ten thousand inhabitants. For those above the threshold, rent is calculated in bands established between landlord associations and tenant unions. In larger municipalities, but also for contracts of 30 days or less, the rent is free. The contract expires at the end of the stipulated term and only the tenant can ask for the early termination, provided that he respects the established timing in the contract.
Transitional contracts for university students
The peculiarity of this contract is that it can be activated only in cities that host universities or academy detachments, or in neighboring municipalities. The tenant must have residence in a different municipality and the contract goes from a minimum of six months up to a maximum of 36.
As for the fee, the minimum and maximum cost is determined by territorial agreements and the cancellation can be made only by the student, upon presentation of the notice in compliance with the contractual agreements. If the cancellation does not occur, the contract is automatically renewed for the same duration as the previous one.
Rental with contract for guest accommodation
The lease for guest use concerns the rent of a property by a company or more generally by a legal entity (Spa, Srl etc.), which will let its employees live in that property. The particularity of this contract therefore lies in the nature of the tenant, but also in the complete freedom to define security and duration of the contract by the lessor and lessee. For this type of contract, the owner of the property can never use the dry coupon scheme.
Whether you are a property owner or renter looking for a new home to live in, our advice is to always rely on real estate professionals, able to direct you to solutions in line with your needs.
