Please find below a brief summary of the main changes to the legal regime applicable to non-residential property leases pursuant to Law No. 164/2014 (the Law) designed to faster growth in the Italian economy.
The Law was published on 11 November 2014 on the Official Gazzette and came into force on 12 November 2014.
For sake of completeness, while this note is focused on non-residential property leases (including hotel leases) only, please consider that the Law also introduced changes in respect of other real estate-related matters (e.g. building permits filing and related construction charges, rent-to-buy contractual structures, SIIQ (i.e. Italian real estate listed companies).
Adopting a deregulation approach, the Law repealed the mandatory provision of Law 27 July 1978 no. 392 (the Tenancy Law) whereby any property lease agreement is null and void insofar as it derogates to certain provisions aimed at protecting the tenant’s position. This change allows a higher degree of flexibility in regulating the contractual relationship between the parties, with a likely significant effect on the hotel market sector from an investment, bankability and operational standpoint.
As a result, the parties to a non-residential property lease (including hotel leases) that provides for an annual rent of more than €250,000 may now deviate from the mandatory provisions of the Tenancy Law, provided that the relevant premises (locali) are not qualified as historical by order of the competent public authority (Region or Municipality). According to a first interpretation and a preliminary clarification from the legislative office of the Parliament, the carve-out concerning the historical features of the premises would have to be linked to the business carried out by the tenant (within the relevant building) rather than to the features of the building itself.
The table below indicates the matters in respect of which the parties can deviate under the Law.
Click here to view the table.
The Law clarifies that its provisions cannot be applied to lease agreements existing at the date on which the Law entered into force.
According to a first interpretation, we would construe the limit as if the automatic application of the Law is excluded.
As a consequence, the existing property lease agreements eligible for the new regime – if not replaced by brand new ones – should be formally and specifically amended by the parties for the new provision to apply, i.e. opening negotiations with a view of reaching an agreement on how the new regime should apply.