Reimagining Real Estate: Repurposing in Italy

Zoning and land use regulations

Prior to any repurposing of a property, the first thing to evaluate is the zoning and land use regulations, which in Italy are mostly regulated at municipal level. The first exercise involves a thorough examination of the specific zoning regulations currently applicable to the property's location (including both general local regulation – the so called “PRG” – and specific urban plans approved for the area). Based on this analysis two scenarios are theoretically possible:

1. the new envisaged use is already allowed based on the applicable regulations: in this case repurposing can be authorized by direct intervention with a simple building permit to be submitted to the municipality, together with the relevant costs to be paid for repurposing (which will vary depending on the new envisaged use);

2. the new envisaged use is not allowed under the applicable regulations: this represents the majority of cases and the process gets more complicated. In these circumstances the repurposing of the property requires – prior to the submission of the building permit – an amendment to the zoning regulation for the relevant area, which is often a long and complicated process that can be summarised as follows:

   1. First, it is necessary to approach the local authorities involved to discuss the project and start negotiating the necessary amendment; it should be noted that this is a highly political step, which makes the outcome of the whole process more uncertain, considering also that the municipality can impose certain burdens and obligations in this regard;

   2. Once an agreement has been reached, it is necessary to obtain a formal amendment to the approved local regulation; this is also a lengthy part of the process, as it usually consists of two internal approval steps and therefore takes several months to complete;

   3. Then, it may also be necessary to enter into a planning agreement with the public authorities, which typically sets out the obligations and costs associated with urbanization works that must be carried out by the parties involved.

Environmental assessment

As well as zoning considerations, conducting an environmental due diligence assessment is a critical step in the property repurposing process. Public authorities require the inclusion of an environmental due diligence assessment as part of the regulatory process to evaluate the feasibility and sustainability of potential repurposing of a property. Risks associated with this (including liability in case contamination is detected) need to be carefully evaluated.

Next steps

The repurposing process of an asset in Italy may be, generally speaking, a long and intricate procedure. Given the numerous legal, regulatory, and community considerations involved, the early involvement of local authorities is always recommended in order to address any potential concerns and ensure that the project aligns with local development goals. We would be delighted to assist and advise you with your repurposing plans. For more information see our new Reimagining Real Estate hub:

Reimagining Real Estate: Maximising the potential of real estate for today and tomorrow - Hogan Lovells Engage