Green lease law and regulation in Italy

  1. 1. Issues regarding the building itself
    1. a. Requirements under public building law regarding energy efficiency.
    2. b. Do the regulations applicable under a) only affect new buildings or have all the buildings be provided with energy efficiency facilities?
    3. c. Does the market pay any attention to energy certificates?
    4. d. How popular is certification of buildings (LEED, BREEAM, etc.)?
  2. 2. Issues regarding the use of the building
    1. a. Can the landlord push on the operating costs (mainly for electricity, water, heating) to the tenant following consumption or does that need to be established by the lease? Is there a distinction drawn between different types of buildings (e.g. residential, office, commercial, etc.)?
    2. b. Does a landlord have the right to perform construction measures to improve the energy efficiency of a building (also against the intention of the tenant). Is there a distinction drawn between different types of buildings (e.g. residential, office, commercial etc.)?
    3. c. Does a landlord have the right to receive a reimbursement of the costs for the measures under b)? Is there a distinction drawn between different types of buildings (e.g. residential, office, commercial, etc.)?
    4. d. If the respective rights mentioned in b) and c) do not exist by statute, but need to be established by the lease contract: Does a standard for such regulations exist (and what is its content)? Please give examples of typical regulations. 
    5. e. Which other obligations regarding sustainability (building materials, energy efficiency, waste management etc.) exist? If they need to be imposed by the lease agreement: does a standard for such regulations exist (and what is its content)? Please give examples of typical regulations.
  3. 3. Allocation of costs; incentives to improve sustainability of buildings or its use.

1. Issues regarding the building itself

a. Requirements under public building law regarding energy efficiency.

The national legal framework regarding energy efficiency of buildings is currently set forth in Legislative Decree no. 192 of 19 August 2005, as subsequently amended and modified (Decree 192/2005). This implemented Directive 2002/91/CE into Italian law.

The provisions of Decree 192/2005 have been further implemented by:

  • Presidential Decree no. 59 of 2 April 2009 (DPR 59/2009), setting forth the general criteria, methods of calculation and minimum requirements in relation to energy performance of buildings, heating systems and systems for production of hot water for sanitary purposes ; and
  • Ministerial Decree of 26 June 2009, providing guidelines and procedures for the application of energy certification of buildings (the Guidelines).

A third decree, still to be approved, is meant to regulate in detail qualification and independence requirements of certification bodies and professionals. Pending the approval of such decree, those matters continue to be regulated by interim provisions introduced in Decree 192/2005 in 2008 or by regional laws.

Broadly speaking, Italian energy efficiency regulations aims at improving energy performance of building in two ways:

  • by requiring compliance with minimum energy efficiency and performance requirements during design and construction. Detailed provisions in that regard were introduced by DPR 59/2009 with regard to insulation, heating systems and hot water production. Additional regulations are still to be issued to set requirements for air conditioning systems and lightning;
  • by imposing a requirement to obtain energy efficiency certificates, showing the energy performance of a building or a part thereof (unit, apartment, etc), mainly for new buildings, in case of works on the property or in connection with its disposal.

In addition to the above pieces of legislation, energy efficiency of buildings is also regulated at regional level and most regions have adopted specific laws which may provide for stricter requirements.

b. Do the regulations applicable under a) only affect new buildings or have all the buildings be provided with energy efficiency facilities?

Energy efficiency requirements
Compliance with minimum energy efficiency and energy performance requirements is required for all new buildings (including in case of demolition and reconstruction) as well as for major renovation works of existing buildings. Part of those requirements would also apply in case of replacement of systems and equipments installed in existing buildings or certain (extra-ordinary) maintenance works. Except for the above cases, there is currently no general obligation for a property owner to carry out works on an existing building to improve its energy efficiency.

Energy efficiency certificates
According to the Guidelines, energy efficiency certificates (so called Attestati di Certificazione Energetica-ACE) must be obtained in connection with the construction, renovation or disposal of buildings.

In general, with regard to construction or renovation works, ACEs must be obtained in the following cases:

  • construction of new buildings;
  • demolition and re-construction of existing buildings;
  • major renovation works on existing buildings; and
  • works on existing buildings which are aimed at improving energy efficiency and for which public subsidies or incentives (including tax allowances) are sought.

ACEs are also required for public buildings (including buildings occupied by public entities) in connection with contracts for management and maintenance of heating or air conditioning systems (contracts entered into or renewed after 1 July 2007). Finally ACEs must be obtained in case of disposal of buildings (or parts thereof: exceptions apply) for a valuable consideration.

The above requirement applies not only to straightforward sales but also to contributions in kind as well as to the creation of rights in rem (excluding mortgages). It should not instead apply to property transactions carried out as share deals.

In the case of disposal of buildings, Decree 192/2005 also requires that specific provisions are included in the relevant contracts confirming that the transferee has received all relevant information and documents regarding the energy efficiency of the property.

With regard to leases, the current provisions of Decree 192/2005 do not require the landlord, when entering into a new lease, to obtain an ACE for the property. However, if an ACE had been (or should have been) already obtained for other reasons (e.g. renovation works, earlier acquisition of the property), the landlord is required to provide to the tenant with the same information and documents regarding energy efficiency of the property that would be required in the case of disposal and a specific provision to that effect must be included in the lease contract.

It should be noted, that further to the national legislation discussed above, that regional laws may impose stricter requirements and, for instance, require, in relation to leases, that ACEs are obtained and delivered to the tenant in any case. Applicable regional laws and regulations should therefore always be considered to ensure full compliance of contracts with all applicable provisions of law.

c. Does the market pay any attention to energy certificates?

Because of the requirements described above, there is a greater awareness of energy efficiency issues, not only amongst developers, investors, professionals and other real estate industry operators but also by the general public. Energy efficiency and the “green building” concept are in fact becoming more and more popular selling points, in particular for new developments.

Awareness of energy performance of properties is likely to grow further as property agents will be required, from 1 January 2012, to include in their adverts information on level of energy efficiency of properties, as resulting from ACEs.

LEED certification was recently introduced in Italy through the establishment, in 2008, of the Green Building Council Italia, a branch of Green Building Council. According to the GBC online database, in Italy there are currently 7 certified projects and almost 70 registered projects.

A number of national certificates and certification protocols have also been developed, including in particular ITACA, energy efficiency measurement protocols developed by ITACA, the Italian institute for procurement transparency and environmental compatibility, along with CNR, the National Research Committee and iiSBE Italia.

2. Issues regarding the use of the building

a. Can the landlord push on the operating costs (mainly for electricity, water, heating) to the tenant following consumption or does that need to be established by the lease? Is there a distinction drawn between different types of buildings (e.g. residential, office, commercial, etc.)?

Although specific provisions regarding costs for utilities are included in lease contracts, this matter is also regulated by statutory provisions of law. In particular, Article 9 of Law no. 392/1978 (“Lease Law”) outlines a list of utilities (including water and electricity supply, heating, air conditioning) whose service charges are to be borne by tenants of any type of property (replacement and extraordinary repair costs would instead be typically borne by landlords).

b. Does a landlord have the right to perform construction measures to improve the energy efficiency of a building (also against the intention of the tenant). Is there a distinction drawn between different types of buildings (e.g. residential, office, commercial etc.)?

In general, unless specific provisions are included in the lease contract, a landlord is not entitled to carry out works to improve the energy efficiency of a property during the course of the lease, if they interfere with the occupation and use of the property by the tenant, unless they are required to ensure that the property remains suitable for occupation or other urgent reasons (see paragraph c. below). However, the landlord may refuse to renew the lease contract upon expiry of the first term of 4, 6 or 9 years, depending on the type of property, for the purposes of, inter alia, carry our renovation works (which may include measures aimed at improving the energy efficiency of the property).

c. Does a landlord have the right to receive a reimbursement of the costs for the measures under b)? Is there a distinction drawn between different types of buildings (e.g. residential, office, commercial, etc.)?

According to Article 23 of Lease Law on extraordinary maintenance and repair, when works are carried out on a property that are of an urgent nature and required to ensure that the property may continue to be used for the intended purpose or to prevent major damages affecting its use or however material repair works are carried out, the landlord is entitled, after the works, to seek a rent increase not exceeding the amount determined by applying the legal interest rate (currently 1.5% p.a.) to the cost of such works.

d. If the respective rights mentioned in b) and c) do not exist by statute, but need to be established by the lease contract: Does a standard for such regulations exist (and what is its content)? Please give examples of typical regulations. 

Both matters are regulated by statutory provisions. 

e. Which other obligations regarding sustainability (building materials, energy efficiency, waste management etc.) exist? If they need to be imposed by the lease agreement: does a standard for such regulations exist (and what is its content)? Please give examples of typical regulations.

According to Legislative Decree no. 28 of 3 March 2011 on promotion of energy from renewable sources (Decree 28/2011), implementing in Italy Directive 2009/28/EC, from 31 May 2012 projects for new buildings or major renovation works must provide for use of renewable energy to cover energy needs in relation to heating, electricity and air conditioning (from 20% in 2012 to 50% after 1 January 2017. Regional law may impose stricter requirement and higher percentages).

3. Allocation of costs; incentives to improve sustainability of buildings or its use.

A number of programs have been launched at national or local level to improve energy efficiency of buildings and in general their sustainability.

For instance:
tax incentives are available for works aimed at improving the energy efficiency of buildings. In particular, a tax credit (equal to 55% of costs incurred, spread over 10 years) is currently available for:

  • works on the outer structure of existing buildings;
  • installation of solar panels for production of hot water for domestic or industrial use;
  • replacement of air conditioning systems;
  • energy improvement works on whole buildings, provided that the resulting energy performance of the building exceeds certain minimum legal requirements; and
  • ad hoc premiums, on top of so called feed-in tariffs, are available in case of installation of photovoltaic plants on buildings combined with adoption of systems for a more efficient use of energy (requirements and conditions apply).