On 12 November 2014 a new law governing commercial leases in Italy (the “New Law”), came into force which has radically amended the previous law (the “Old Law”), governing commercial leases in Italy.
The New Law has empowered the parties to “Major Lease Agreements” (agreements hav-ing annual rent in excess of €250,000) to depart from the very strict rules protecting ten-ants, including, but not limited to, the right for the parties to negotiate such important clauses as minimum duration, automatic renewal, pre-emption rights and the tenant’s right of early termination.
For retailers the reform is very welcome as more properties will become available for retail tenants to lease since the Old Law had a dampening effect on the willingness of landlords to offer their properties for rent. In order to “dodge” the prior protections tenants enjoyed, landlords engaged in a fiction whereby theywould “transfer the business” (including the relevant lease) in which a trading activity took place to avoid application of property law al-together, where they could.
There is a carve-out in the New Law for properties designated to be of historical interest. So, it remains to be seen if the local authorities will attempt to expand the exception appli-cable to such properties by designating more properties to be of historical interest. The New Law also does not apply to existing tenancy agreements. But, on the whole, this de-velopment should eventually free up more properties for retailers to lease in Italy which is welcome news indeed.