Rent to buy (affitto con riscatto)

What rent to buy is, in simple terms

Rent to buy combines two parts. The first is the rental: you pay a monthly rent and occupy the home. The second is a promise to sell: the owner undertakes to sell you the property at a price fixed in the contract, within a set time limit.

The contract often calls this second part an «option», meaning the right to choose whether to buy. Check carefully whether the clause obliges you to buy or only gives you the possibility of doing so. The two cases make a big difference.

How it works step by step

• You sign the contract with all its clauses: rent, sale price, time limit and initial sum.
• You pay a sum at the start, often called deposit (caparra) or advance payment (acconto). The name matters, as we will see later.
• You pay the rent every month. The contract may say that part of the rent is deducted from the final price. If so, it must be written clearly.
• At expiry you choose whether to buy. If you buy, the final step is the notarial deed (rogito) before the notary. If you do not buy, the rental ends according to the contract's rules.

Example. Agreed sale price: €100,000. Rent: €800 a month, of which €200 is deducted from the price, if the contract provides for it. Initial deposit: €10,000. After three years you will have paid €28,800 in rent, but only €7,200 of that money goes towards the price. Including the deposit, the total deducted from the price is €17,200, and at the notarial deed €82,800 remains to be paid, plus taxes and notary fees.

Pay attention to that figure: €21,600 of rent does not come back to you as an advance on the price. It is the cost of living in that home. Factor it in before you sign.

What it really costs

Costs fall into three groups.

• The rent, which you pay every month for the whole period.
• Registration of the rental contract, to be done within 30 days. The registration tax (imposta di registro) is 2% of the annual rent, with a minimum of €67. For a landlord who is a private individual there is also the flat-rate rental tax (cedolare secca), a substitute tax at 21% on the rent, which replaces registration tax and stamp duty. Example: €800 a month makes €9,600 a year; registration tax at 2% is €192; with the flat-rate rental tax at 21% the tax is €2,016.
• The taxes and costs of the purchase, paid at the notarial deed. For a purchase from a private seller, the registration tax is 9% of the price, or 2% if it is your first home (prima casa), plus fixed mortgage and cadastral taxes. Example: price €100,000, first home, €2,000 registration tax plus €100 in fixed taxes, that is €2,100.

Notary fees depend on the work carried out and there is no mandatory tariff. Ask for an estimate before signing the preliminary contract (compromesso preliminare).

How much does the estate agent earn in a rent to buy?

The estate agent is an intermediary: they put the parties in contact. Under the Civil Code, they are entitled to a commission (provvigione) from each party if the contract is concluded thanks to their intervention (art. 1755 c.c.). If the amount has not been agreed, professional tariffs or the customs of the Chamber of Commerce (Camera di commercio) apply.

Here lies the delicate point. In a rent to buy the contract has two parts, rental and commitment to sell, so it is not always clear when it can be said to be «concluded». For this reason it is worth asking for three things in writing:

• on which part of the contract the commission accrues: rental, commitment to sell or notarial deed;
• how much is payable, and whether the figure is fixed or calculated as a percentage;
• when it is payable, and whether anything changes if the notarial deed does not take place.

The commission generally accrues on signing the preliminary contract, not on the notarial deed. So if you sign a commitment to buy, the agent can claim their fee even if you then do not reach the notarial deed. Read this clause carefully.

Two checks on the agent. They must be registered with the REA, the Economic and Administrative Register (Repertorio economico amministrativo) held by the Chamber of Commerce. If they are not, they are not entitled to commission (L. 39/1989, art. 6). Also, in the notarial deed the parties must declare whether there was an intermediary and how much they paid (d.l. 223/2006, art. 35, comma 22). For a first home, the commission may give rise to a 19% IRPEF tax deduction on a maximum expense of €1,000.

Deposit or advance payment: what changes if the sale falls through

The initial sum can be of two types, and the name changes the consequences.

• Confirmatory deposit (caparra confirmatoria) (art. 1385 c.c.): if the person who paid it does not proceed, the other party keeps it. If the person who received it does not proceed, the other party may withdraw and demand double. Example: deposit of €10,000. If you back out, you lose €10,000. If the seller backs out, they return €20,000.
• Advance payment (acconto): a simple advance on the price. If the contract does not close, it must be returned, except for any damages.

If the contract only says «acconto», do not assume it is a deposit. Ask the notary or the professional assisting you which of the two it is.

How much does registration protect you?

A preliminary contract can be registered in the property registers (trascrizione). So if the owner sells the house to others or mortgages it, your commitment remains valid. This is stated in art. 2645-bis c.c.: the effect of registration lasts up to one year from the date agreed for the notarial deed, and in any case no more than three years from registration.

If the seller does not sign the notarial deed, you can ask the judge for a ruling that produces the effects of the contract (art. 2932 c.c.). It is not a quick route: better to avoid the problem arising.

Before paying the deposit, ask for a mortgage search (visura ipotecaria). It tells you whether the property has mortgages or foreclosure attachments (pignoramenti). If there are, the sale may not close, or may take a long time to close.

What to check before signing

• The sale price is written in figures and in words, or there is a clear calculation method.
• The time limit for buying is stated, and says what happens if you do not buy.
• You know whether you are obliged to buy or only free to do so.
• It is written whether, and how much of, the rent is deducted from the price.
• The initial sum is called deposit or advance payment, and the consequences are written.
• The owner has title to sell: ask for the land registry extract (visura catastale) and the mortgage search (visura ipotecaria).
• For the commission, there is a written agreement on the amount, the part of the contract and the payment date.

And if you do not pay the rent?

If you stop paying the rent, the owner may apply for eviction for non-payment (sfratto per morosità). This is explained on the page on eviction for non-payment. The sum paid as a deduction from the price may also be lost, depending on how the contract is written: read the termination clauses carefully before signing.

If the rental part follows the rules of the 4+4 open-market lease (contratto 4+4), as often happens, the rules on duration, notice and rent adjustment provided for that type of contract apply.

In practice

• Ask for the agent's commission in writing: on which part of the contract it accrues, how much it is and when it is payable.
• Check that the agent is registered with the REA at the Chamber of Commerce.
• Have the contract distinguish the deposit from the advance payment, and write down the consequences if the sale falls through.
• Work out the total cost: rent paid, the sum deducted from the price, taxes and notary fees.
• Register the rental contract within 30 days, as explained in the guide on how to register a rental contract.

Frequently asked questions

Can I leave rent to buy before expiry?

It depends on what the contract says. If you only have a right of choice, you can generally decline to buy at expiry, but the rent you have already paid remains a cost to you. If you have signed a commitment to buy, leaving may cost you the deposit or other penalties.

If the owner does not sell, what happens?

You can ask the judge to order the sale, under the procedure in art. 2932 c.c. In the meantime, if you have registered the preliminary contract, you are protected against any sales or mortgages to third parties. Ask the professional assisting you to assess your case.

Do I need to have my mortgage already?

It is not mandatory to sign it straight away, but it is useful to know in advance whether the bank will grant the loan on the terms of the contract. If you do not obtain the mortgage (mutuo) at expiry, the deposit could be at stake. Read the mortgage clause before signing.

Sources

• Civil Code, art. 1385 (confirmatory deposit)
• Civil Code, art. 1755 (broker's commission)
• Consolidated text on registration tax, DPR 131/1986
• Law 431/1998 (residential leases)

For further information on rent to buy, the guide on the preliminary contract explains what the document must contain and when it is worth registering it.