10 Tips for Buying Property in Italy
You know you want to buy a house in Italy. Here's the safe way.
The London-based Royal Institution of Chartered Surveyors last year named Italy as one of the best countries in which to buy real estate because it has avoided the boom and bust of the property bubble seen elsewhere in the world.
In addition, between 2005 and Spring 2009, Italian prices rose 30% while the Euro strengthened 27% against the Pound – meaning a Briton with a typical Italian property saw its Sterling value increase 66%.
Italian tax changes have cut purchasing costs by up to 15%, meaning there has scarcely been a better time to buy a property in Italy. But as with any property purchase, there are simple guidelines to follow. Here are the 10 most important:
1) LOOK BEYOND TUSCANY
Many foreign buyers still think Italy starts and ends in expensive Tuscany. For a cheaper but equally attractive alternative, consider areas such as Le Marche, Calabria and Sicily – all with stunning beaches and landscapes and regular international flights. Spend time in various areas to see which you like best and how close the local railway station, stores, banks, restaurants, etc are.
2) FIND A RELIABLE ESTATE AGENT
All estate agents are regulated by statute and must have a professional licence, qualification and indemnity insurance and be registered with their local chamber of commerce. Additionally, their website and other publicity material should show they belong to the AICI (Italian Association of Estate Agents), FIMAA (Federation of Mediators and Agents) or FIAIP (Federation of Professional Estate Agents).
3) BUDGET REALISTICALLY
With art cities such as Florence, Pisa and Lucca, Tuscany’s appeal is timeless. But if buying here, be realistic. Cut-price bargains are thin on the ground, unless you’re prepared to take on a wreck of a fixer-upper. Another tip: Italian property values haven’t collapsed as they have in other countries, so don’t expect to find Euro 750,000 farmhouses at half-price. Discounts of around 10% are typical.
4) KNOW WHAT'S RIGHT FOR YOU
Frances Mayes’ bestseller Under The Tuscan Sun inspired thousands of buyers to try converting an Italian ruin. However, be prepared for the hard work and finance it entails. Expect Euro 1,000-1,500 per sq m for a complete restoration. And avoid taking on more space/land/facilities than you need. A villa with pool set in 10 acres sounds idyllic, but bear in mind the maintenance it will require.
5) KNOW THE PURCHASING PROCESS
The first stage sees the buyer make an offer with a deposit of some 5% of the agreed purchase price. If his surveyor and/or lawyer cite no problems, stage two sees both parties sign a sales contract (compromesso) and agree a timetable. The buyer pays a further deposit, bringing his total deposit to around 30%. Pulling out at this stage carries severe financial penalties for both sides.
The third stage is the final deed of sale (atto di vendita), signed in the office of a notary, who examines all documentation and lodges it with the Land Registry. If one party does not speak Italian, the deed must be translated. The buyer also settles in full with the seller via payment from an Italian bank. For this, he will need to have obtained a fiscal code from the tax office to permit him to apply for a bank account.
6) USE A LAWYER
Too many foreign buyers still blithely sign documents and find they have agreed to an irrevocable legal commitment. Hire a reputable, English-speaking lawyer with experience of the Italian property purchase system. Are there outstanding loans or mortgages on the property? Plans to build a nearby highway? Does the property have proper planning permission? All vital checks a good lawyer will carry out.
7) KNOW YOUR ADDITIONAL COSTS
If buying a newly built property, budget 12-15% on top for taxes and fees and 7-10% if buying a previously inhabited home.
For new-builds, 4% VAT is levied if the buyer registers for Italian residency within 18 months. Otherwise 10% VAT is payable. For other properties, the buyer pays 3% of "cadastral value" if he registers for residency with 18 months, otherwise it rises to 10%. Cadastral value is determined by the Land Registry and is based on factors such as floor space, location, number of rooms, etc. It is usually less than 50% of purchase price. Other typical add-on costs may include paying 3% of the purchase price to the estate agent, Euro 150-200 per hour for a lawyer, up to Euro 1,500 for a surveyor and up to Euro 5,000 for a notary.
8) DON’T CHANGE CURRENCY AT A BANK
In 2009 the Sterling-Euro rate fluctuated between a January low of £1/Euro 1.06 and a £1/Euro 1.19 high five months later. That means buying a Euro 250,000 home would have cost a UK-based buyer more than £25,000 extra at the start of the year. This is where foreign exchange companies come in. They can fix rates for future deals to guard against currency drops. They offer more favourable rates than a bank and can mean a saving of up to £10,000 on a £250,000 exchange.
9) THINK RENTAL POTENTIAL
Do you plan to let out your property? If so, try to be close to transport hubs. Aim for 90 minutes at most from the nearest airport. In towns and cities, bear in mind proximity to public transport as not all visitors will have access to a car. Villas and apartments near the beach always have superb rental potential. They also maintain their investment value because of limits on new construction in coastal areas.
10) SPEAK SOME ITALIAN
Make an effort to learn some Italian, even if you only plan on using your new home for a couple of weeks of the year. As a rule of thumb the further south you go, the less likely it is that people will speak a foreign language, And your efforts, no matter how rudimentary, will endear you to Italians.
Author Biography
Adriana Giglioli works for property in Italy website Homes and Villas Abroad, which advertises 2,500 homes for sale in Italy. Her other specialist areas include Sicily property and Calabria property.
Buying a house or apartment in Italy isn't difficult. Even I have done it. But there are things to watch out for. Take a look at these 10 tips to help you plan a strategy for buying property before you sign on that dotted line. Good advice from Adriana Giglioli, who works for Property in Italy and speciallizes in two of my favorite regions: Sicily and Calabria.
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