Short-term rental contracts in Italy for toursit purposes are on the rise / Gtres
Short-term rental contracts in Italy for toursit purposes are on the rise / Gtres

The flow of tourists in Italy has steadily increased over the years and the real estate sector has been positively affected, with a consequent increase in the number of property sales.

In most Italian regions, there has been a significant increase in the acquisition of real estate, not only by Italian customers, but also, and especially, by ex-patriates.

The purchase of luxury villas in the Italian countryside or on the coast, of old 'masseria' farms typical of southern Italy, and of buildings and apartments in historic centres, is dictated not only by residential or tourist needs, but also because the aim is to achieve a profitable investment through the rental of the property.

Location, location, location

Firstly, it should be pointed out that Italian legislation does not consider the rental of property for temporary and tourist purposes to be a 'business activity', provided that the number of units rented by the same owner does not exceed four. In this case, no administrative authorisation is required to rent out the property.

Leases stipulated for tourist use are not subject to the duration limitations that traditional leases are, which have a minimum length of four years. Given the temporary and transitory nature of such contracts, the lease period may be just a few days or weeks.

The contract must be in writing and, if the rental period is less than thirty days, it is not subject to registration. For longer-term lets, the contract must be registered with the Agenzia delle Entrate, the Italian Tax Agency, with the payment of a tax equal to 2% of the total rental amount.

It is always advisable for landlords to request full payment of the rent in advance, i.e. at the moment when the keys are handed over. It is also a good idea to get a security deposit from the tenant at the same time to cover any damage that may be caused to the property, in order to obtain immediate compensation without the need to take long and costly legal action.

Mediation agencies

If the owner has recourse to a real estate agency to let out the property, these must be real estate professionals who meet the requirements of Italian law.

The granting of the mediation, which may either be exclusive to the real estate agent or not, must be made in writing and involves the payment of a commission ranging from 15% to 20% of the rental price.

Insurance policy

It is also a good idea to take out insurance that covers not only the risk of fire and theft, but also accidents or personal injury that may occur in the property, especially in the presence of swimming pools or other facilities that may present a danger.

Before signing the liability policy, the landlord must ensure that any compensation will be paid not only to the landlord and their family and guests, but also to the tenants of the property and their guests, without exclusion of liability.

Tax

From 1st June 2017, a specific tax regulation was introduced for short-term leases (‘locazioni brevi’ in Italian), i.e. rentals of residential property situated in Italy with a maximum duration of 30 days, entered into by natural persons outside the scope of their commercial activities.

The new framework allows short-term leases to come under the so-called ‘dry-coupon’ flat rate tax system (regime della cedolare secca) which is normally reserved for long-term lease, meaning that a 21% rent tax can be levied on them.

This also means that if short-term leases have been entered into with the intervention of a real estate agency, including through the management of online portals, it will be the same agency that will ‘withhold’ from the rent, possibly received from the client, an amount equal to 21% of the rent. This amount will then be paid to the State by the same real estate agent, who, in that way, replaces the owner in the payment of taxes on the rent.