In a country of homeowners like Italy, home rental is gaining the limelight due to the particular historical and economic moment. The loss of purchasing power of families and the rise in interest rates on mortgages are in fact pushing many Italians to prefer renting to buying a house, while landlords for their part use rents to supplement their incomes, asking for more guarantees from the tenants: these are the main findings that emerge from theRental Observatoryconducted by Nomisma on behalf of CRIF, in collaboration with Confabitare.
Rentals: growth prospects for 2024
According to the study, carried out to explore the propensity of Italians towards real estate rental solutions and the willingness of owners to rent out their homes, sector operators expect a decline in the number of sales for the first six months of 2024, while on the on the rental side, expectations are for stability, both for contracts and for rents.
In 42% of cases, tenants find themselves considering renting because their current economic condition represents an obstacle to purchasing a home. A condition that is even more relevant in particular for single-parent families and individuals with presumed low or non-existent income (housewife, unemployed person on redundancy pay, workers and pensioners). For entrepreneurs, managers and employees, however, renting appears to be a temporary solution, while families with children and those with greater economic resources often opt for renting because they have not yet managed to identify and purchase the “ideal home”.
Renting a house: from a temporary solution to a permanent choice
The share of those who consider rent as a temporary solution is equal to 25.7% of tenants. On the contrary, for some categories, such as single-parent families, pensioners and freelancers, home ownership is not convenient in terms of the expenses to be incurred (maintenance, extraordinary expenses, home insurance…).
The loss of purchasing power, the erosion of saving capacity and the rise in applied rates have effectively eliminated a considerable portion of the potential demand for home purchases with significant consequences on mortgages granted and on the number of sales. The purchase of a home has thus gradually fallen out of the plans of families so much so that, in 2023, the difficulties encountered by families in financing the purchase of a house caused 7.3% of demand to shift from purchase to rental, accentuating the pressure on the sector.
Who are the tenants in Italy
There are some sociodemographic characteristics which make the use of leasing more widespread: this is the case of the number of members of the family unit: 30% of the largest families (5 or more) live in a rented home. On the contrary, single-member families encounter difficulties in purchasing a home – probably due to a lack of economic resources, thus turning to a greater extent on the rental market. Family composition and age are also crucial in turning to the rental market. In fact, the single-parent families with at least one minor child in approximately 30% of cases they live in rent, just as approximately 1/3 of single people under 65 live in non-owned homes. This is destined to worsen since – according to the most recent Istat forecasts on families – in 2040, almost 39% of families would be made up of people living alone, particularly in the higher age groups (increase of 1.2 million single women and over 600 thousand single men).
Landlords: preferred rental agreements
In general, there is a greater propensity to rent for those who own more than one home (in addition to that of residence or holiday use), i.e. those who have realistically purchased homes for investment purposes and with the intention of obtaining additional economic income. For 61% of landlords, in fact, the first reason behind the choice to rent a home is precisely the possibility of integrating income with an annuity. On the contrary, those who own a single home tend to prefer short-term tourist rentalsmotivating the choice above all with the lack of adequate protections in traditional rental contracts (especially in the event of default by the tenant) and the fewer constraints inherent in this business.
Regarding the use of home ownership, in addition to that of home or holiday, 51% of property owners declare that they have currently rented homes, 10% use the home for short-term tourist rentals, above all due to the difficulties of eviction on long-term rentals (for 85% of those who resort to short-term rentals) or due to having fewer constraints (69% of cases) . There remains 30% of owners who have not yet rented out their properties but intend to do so shortly and 10% of owners who have no intention of renting anything out due to negative experiences had in the past (38% of those who do not intend to rent the house) or for possible future family needs (22% of cases).
Renting a house: the problem of reliable tenants
Among the reasons explaining the distrust of some landlords is first and foremost the difficulty in finding reliable tenants (28% of landlords), or the fact that the current legislation provides greater protection for tenants (26% of cases).
Landlords show a strong interest in the economic, employment and family situation of tenants, examining details such as pay slips, type of work and the actual composition of the family unit. At the level of guarantees In 80% of cases a security deposit is required, especially for workers, followed by a guarantee from a parent or relative (in approximately 25% of cases, which reaches 48% for students).
Landlords, a particularly heterogeneous group in terms of income from work and not necessarily belonging to high income brackets, complain above all about a high average default rate by the tenants and the long and uncertain procedures required by the regulations to be able to regain possession of the property in case of need. On the other hand, tenants suffer from the lack of investments and improvements on the home and the difficulties in finding a rental property exacerbated by the fact that many houses are not made available for rent.
Furthermore, considering that both landlords and tenants agree that the arrears are mainly due to unexpected expenses, 360° financial planning is necessary, which goes beyond just verifying the tenant’s income, to identify a sustainable rent that can help reduce episodes of arrears or delays in rent payments. From this perspective, a reliability certification service economic situation of the tenant, who can thus demonstrate that he can respect his payment commitments while identifying the sustainable average monthly rent, could support the rental market in overcoming an “impasse” which today often seems insurmountable due to the different needs and points of view of the two parties involved in the transaction. In this sense, Crif provides the “Affittabile” service, which on the one hand allows the subject to certify the level of reliability of the subject in respecting payment commitments, and on the other hand identifies the sustainable average monthly rent, to prevent the risk of arrears.
