An Idiot’s Guide To Buying A Home in Italy
Recent changes in the Italian tax regime have cut house-buying costs by 10-15%. Allied to Italy’s timeless appeal it means there has rarely been a better time to invest in Italian property. Yet as with any property purchase, there are simple steps to abide by to ensure buying your dream home doesn’t become a nightmare. Here are the 10 most important:
1) THERE’S MORE THAN JUST TUSCANY
Tuscany remains overseas buyers’ favourite part of Italy. Yet other areas such as Puglia, Sicily and Le Marche property is are far cheaper and also have spectacular landscapes and azure-blue seas. Spend a few days at a time to see what areas you like best. Ensure you are reasonably close to local amenities, unless you deliberately want to be in splendid isolation. And when it comes to visiting potential properties, there is such a thing as too many. Trying to cram 45 into a weekend simply turns into an exhausting hike. By the time you are halfway through, chances are you will remember little of the first few.
2) GET REAL ON PRICES
Thanks to its picturesque countryside and famous tourist hotspots such as Florence and Pisa, Tuscany will always be in demand – and a solid investment. Yet it isn’t cheap and a farmhouse in central Tuscany can cost the best part of US$750,000. But prices can drop 50% if you head to Garfagnana in northern Tuscany. Despite the global real estate crisis, don’t expect huge 40-50% discounts, with 10% being typical.
3) FIND A REALTOR
Getting taken for a ride by some incompetent cowboy could prove costly. Genuine real estate agents must hold a professional licence, qualification and indemnity insurance and be registered with a Chamber of Commerce. Their publicity material and website should show membership of one or more of the following: AICI (Italian Association of Estate Agents), FIMAA (Federation of Mediators and Agents) or FIAIP (Federation of Professional Estate Agents).
4) DON’T TRY TOO MUCH
Frances Mayes’ bestseller Under The Tuscan Sun sparked a generation of foreign buyers into converting a ramshackle farmhouse into the perfect holiday hideaway. Great on paper but don’t overlook the hard work and outlay involved. Restorations can cost up to US$2,000 per sq m. Another error is to buy more property than you need. A imposing converted barn with pool and 2 hectares sounds idyllic but don’t overlook the upkeep involved.
5) SEEK LEGAL ADVICE
Many investors sign documents and then find they have made a binding commitment. Engage a reputable lawyer experienced in the Italian system. Are there plans to build a sewage works 500 metres away? Unpaid mortgages on the property? Built without planning permission? A good lawyer will avoid such pitfalls.
6) FAMILIARISE YOURSELF WITH THE PROCEDURE
After a price is thrashed out the purchaser submits an offer with a deposit of around 5% to remove the property from the market for two weeks. The next stage, once the buyer’s surveyor and/or lawyer gives the green light, sees both sides sign a preliminary sales contract, in which they both decide on a completion schedule. A further payment is paid, bringing the buyer’s total downpayment to around 30%. Defaulting carries serious repercussions. The buyer may forfeit all monies paid while the seller, if at fault, may have to pay back double the deposit. The last stage is to sign the final deed of sale (atto di vendita) in a notary’s office, who scrutinises all paperwork and lodges them with the Land Registry. The buyer pays the balance, usually by bank draft from an Italian bank. Thus he will need to have obtained a fiscal code from tax authorities so he can apply for a bank account.
7) FACTOR IN EXPENSES & FEES
Taxes, fees, etc amount to an extra 7%-10% on top of the price of resale properties and 12-15% for new-builds.
Expect around 3% to the realtor, US$210-280/hour in legal fees, US$700-2,100 for a surveyor and US$2,800-7,000 for the notary.
For new-builds, 4% VAT is payable if within a year and a half the buyer registers for Italian residency. Otherwise, 10%. For other properties the buyer pays 3% of the cadastral value if residency is registered for within 18 months. Failing which, the charge goes up to 10% of cadastral value. Cadastral value is determined by the Land Registry depending on attributes such as location, property size, etc and is far less than the property price.
GET THE BEST CURRENCY DEAL
Last year, Pound-Euro values veered between a January low of £1/Euro 1.06 and a summer high of £1/Euro 1.19. So a UK buyer weighing up a Euro 400,000 villa could have faced shelling out up to £41,250 more just for taking the plunge at the wrong moment. Hence the importance of using a specialist currency exchange company, who can fix rates for future deals to safeguard against currency fluctuations. They have more impressive rates than the typical bank and could mean a £30,000 difference on a £750,000 transaction.
9) CONSIDER RENTAL
Do you plan to let out your property? If so, proximity to transport hubs is vital. Aim for a maximum 1.5 hours from the nearest international airport. In big towns and cities, consider proximity to public transport as not all visitors will have access to a vehicle. Properties near a beach rent better and keep their value over time because of restrictions on further building in these zones.
10) SPEAK SOME ITALIAN
Try your best to pick up some Italian. Remember that unlike the Netherlands, more than 7 in 10 Italians speak no English, among the lowest figures in Europe. Don’t be afraid to come a cropper as your efforts, regardless of how rudimentary, will go down well with Italians.
The author is an expert in Sicily property at Homes and Villas Abroad.com. Her other specialist areas include Tuscany real estate and Calabria property.