The 10 Key Rules For Buying Italian Real Estate
A recent tax overhaul in Italy has slashed homebuyers’ costs by up to 15%. Allied to Italy's timeless appeal it means there has rarely been a better time to invest in Italy real estate. Yet as with any real estate transaction, there are commonsense guidelines to follow to ensure buying your dream home doesn’t become a nightmare. Here are the most essential:
1) LOOK BEYOND TUSCANY
Tuscany is Italy’s best-known region, attracting one in three visitors who comes to the country. It’s also its most expensive. Yet other areas such as Le Marche, Calabria and Abruzzo are far cheaper and also have stunning landscapes and azure-blue seas. Try various locations to see what areas you like best. Ensure you are within easy reach of local amenities, unless you deliberately want to be in splendid isolation. And when it comes to visiting potential homes, there is such a thing as too many. Trying to cram 50 into a weekend simply turns into a gruelling slog. By the time you are halfway through, chances are you will remember little of the first few.
2) YOU GET WHAT YOU PAY FOR
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 GOOD REALTOR
This is one occasion to be grateful for Italian red tape. All realtors must be professionally licensed and qualified, insured and registered at a Chambers of Commerce. Check their website and letterheads to ensure they belong to one of the following respected organisations: FIAIP (Federation of Professional Estate Agents), FIMAA (Federation of Mediators and Agents) or AICI (Italian Association of Estate Agents).
4) DON’T TRY TOO MUCH
The hit movie Under The Tuscan Sun led droves of overseas investors to embark on converting a ramshackle farmhouse into their dream Italian retreat. Fantastic in theory but don’t overlook the sheer graft and outlay involved. A total rebuild can cost nearly US$200 per sq ft. Another mistake is to take on more property than you need. A imposing villa with pool and five acres sounds to die for but don’t forget the upkeep entailed.
5) DON’T SKIP ON A SOLICITOR
For most buyers the Italian process will be unfamiliar, so hire an independent bilingual lawyer (avvocato) with expertise in Italian real estate. Avoid signing documents on your own without knowing what you are committing to. Another consideration: any unpaid mortgages and loans on the house? Plans for a new highway 400 yards away? Was the property built with planning permission? All are vital checks your lawyer will perform.
6) KNOW THE PROCEDURE
After a price is settled on the buyer submits a proposta irrevocabile di acquisto with a payment of around 5% to reserve it for around 15 days. If the buyer’s lawyer and surveyor give the go-ahead, the following stage is when both sides sign a preliminary sales contract, in which a timescale to complete is decided. A further sum is paid, taking the buyer's total downpayment to about a third of total purchase price. Either side risks financial penalties for defaulting at this step. The last procedure is to sign the final contract (rogito) in a notary’s office, who scrutinises all documents and sends 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 ADD-ON EXPENSES
fees, taxes and commissions typically mean around 13% extra on the price of a newly constructed home and about 8% on non-newbuilds.
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 non-new-builds 3% of the cadastral value is charged if the buyer takes out residency within a year and a half. Failing which, the charge goes up to 10% of cadastral value. Cadastral value is determined by the Land Registry depending on variables such as floor area, number of rooms, etc. and is usually less than 50% of purchase price.
8) GET THE BEST CURRENCY DEAL
Last year Pound-Euro values swung 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 give better rates than other financial institutions and could save buyers up to £20,000 on a £500,000 exchange.
9) CONSIDER RENTAL
Will your property primarily be a holiday/retirement home or do you intend to rent it out at some stage? If so, proximity to transport hubs is vital. Aim for a maximum 90 minutes 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 maintain value over time because of restrictions on additional construction in these parts of the country.
About the Author
The author works for property for sale Italy website Homes and Villas Abroad. Her areas of expertise include luxury Sicily property .
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