We are approaching the end of the year and idealista/news is taking a look at the residential rental market in Italy in 2022 by asking experts in the sector. The main discovery is that in these twelve months there has been a real boom in demand and that the "cedolare secca" flat-rate tax regime has continued to register a clear preference among owners of properties offered for rent. In the coming months at the beginning of 2023, demand is expected to be buoyant, mainly due to the sharp rise in mortgage interest rates, and rents are expected to be quite high. Let's have a closer look at Italy's home rental market, including 2022 trends and the 2023 outlook, with the help of Isabella Tulipano, from the press office of SoloAffitti, a network specialised in the Italian rental market.
How has 2022 been for the Italian home rental market?
"We can say that 2022 was the year of rentals, that is, the year in which the demand for rental housing in Italy really took off; the year in which rental values, thanks precisely to the overabundance of demand, almost reached again the levels of 2008/2009, before the financial crisis.
But, above all, 2022 is the year in which supply does not keep up with demand: what the market can offer in terms of available properties is, throughout Italy and almost without distinction between large and small cities, insufficient and scarce."
How much has the rise in inflation affected and is it affecting rents?
"This year we have again recorded a clear preference for Italy's flat-rate tax regime on IRPEF income tax (91% of landlords opt for this "cedolare secca") and therefore it is not possible to apply the increase in most of the stipulated contracts. However, we try to make a comparison and realise that if these were the rates of increase for a while, perhaps more than one landlord might start to consider that it is worth at least reflecting on the issue. Different is the situation with commercial contracts for which the increases are applied with a serious burden on commercial activities".
Have rents gone up in Italy in 2022?
"To answer this question on increasing rents in Italy, I will give an example: if I am the owner of a property rented at 700 euros per month with a free contract of 4 years + 4, then I will multiply 700 by 11.8% (Istat index for October) to obtain 82.6 euros, which I can round off to 83 euros. I will then send a message to the tenant advising him that he will have to pay me 783 euros instead of 700 euros. Per year the gain is 996 euros".
Has the behaviour of tenants and landlords changed? What in particular have you recorded?
"Students' requests make up 25.6 per cent of the total rental requests received by the SoloAffitti points in the regional capital cities in 2022, an increase of almost 4 percentage points compared to 2021; on the other hand, 31.6 per cent of requests come from workers, one of the main tenant targets, again an increase of over 2 percentage points compared to the previous year.
This increase is offset by the respective drop in requests to rent a main residence, not for work or study reasons, but for simple housing needs, a choice that we believe will increasingly represent a valid alternative to buying, for both economic and cultural reasons.
Renting is once again becoming above all a 'question of cohabitation': the number of couples renting (particularly those without children, who have risen from 38% to 39.8% in one year) and those living in shared accommodation (14.5%, +1.1 percentage points) is on the rise
This latest increase, moreover, signals the definitive overcoming of the fears of rent-sharing, a phenomenon previously recorded due to the health emergency."
Then there is the problem of expensive energy. Have cost increases also been felt in the rental market?
"The costs in this case remain with the tenants who pay the bills, at least as far as the long-term rental sector is concerned. The situation is different for owners of properties rented on a short-term basis, where high utility bills threaten to jeopardise net income and lead many to reconsider moving the property to the traditional market'.
What is the outlook for the Italian rental market in 2023?
"The expectation is for further confirmation of these trends: very buoyant demand, rising mainly due to the sharp rise in interest rates on mortgages, and fairly high rents. What is hoped, above all, is that there will be an upturn in supply, with more owners being able to put their properties on the market.
Maybe an intervention at political level to support this could be helpful to re-balance a market where the demand for real estate is a really urgent need and fulfils a primary need".