The London-based Royal Institution of Chartered Surveyors last year singled out Italy as one of the most profitable countries in which to buy a home as its market has kept a stability that has eluded the rest of Europe and the US. This is largely due to banks’ conservative lending, which avoided burdening Italians with unaffordable houses. Only one in 12 has a mortgage, compared with one in five UK residents.
Another fillip, especially for UK buyers is the fact that in 2005-09 Italian property prices soared by almost a third while the Euro strengthened by 27% against the Pound – meaning a British purchaser with an average property in Italy saw its Sterling value go up by nearly two-thirds in that time.
Italian tax changes have reduced purchasing 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 house-buying process, there are commonsense guidelines to stick to to ensure buying your dream home doesn’t become a nightmare. Here are the 10 most important:
1) CONSIDER DIFFERENT REGIONS
Tuscany remains overseas buyers’ favourite part of Italy. Yet other areas such as Le Marche, Calabria and Abruzzo are far cheaper and also have the same heady mix of stupendous landscapes and beaches. Spend a few days at a time 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 viewing properties, there is such a thing as too many. Fifty viewings in a week is exhausting. And by the time you reach the end you’ll have forgotten most of what you saw earlier.
2) GET REAL ON PRICES
One can pick up a stunning property for Euro 250,000. But not if it’s advertised at Euro 500,000. Italian prices have not had the freefall of some other countries, so expect discounts of around 10%.
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) KNOW WHAT'S RIGHT FOR YOU
Frances Mayes’ bestseller Under The Tuscan Sun inspired thousands of overseas buyers to try converting an Italian ruin into their dream home. Great in theory, but be prepared for the hard work and finance it entails. Budget up to Euro 1,000-1,500 per sq m for a total restoration. Whether you go for a fixer-upper or not, avoid taking on more space, land or facilities than you need. A villa with pool set in 10 acres sounds idyllic, but bear in mind the maintenance it will require.
5) ENGAGE A LAWYER
Despite an unfamiliar legal system in an unfamiliar language, some foreign buyers cut corners by blustering their way through the process without a lawyer (avvocato).
The dangers are countless. First, many sign papers they do not understand and are then bound to an irrevocable legal commitment. Second, it means a number of vital checks that a good lawyer would carry out instead go ignored.
They include ensuring the vendor has a registered title and is legally authorised to sell. Where a property is jointly owned by a number of family members, all must agree to the sale And the property must have proper planning permission.
Also, Italian law means any loans, mortgages, utility bills, etc, relating to the house pass to the new owner, so a lawyer must ascertain no such charges remain.
Try to hire a reputable, independent English-speaking avvocato who comes recommended. Or consult a lawyers’ directory such as hg.org.
6) KNOW THE PROCESS
Once buyer and seller decide a price, the buyer deposits around 5% and makes an offer (proposta irrevocabile di acquisto) to “reserve” the property for around two weeks. If his surveyor and/or lawyer give the green light, a preliminary sales contract (compromesso) is signed in which both parties agree a timetable and the buyer makes a second deposit, bringing his payments to 25-30%. Either side risks financial penalties for defaulting at this step. The final stage sees the final deed of sale (atto di vendita), signed in a notary’s office. The buyer settles the outstanding sum with an Italian bank draft.
7) KNOW ADD-ON COSTS
Fees and taxes will usually add 7%-10% to the cost of a resale property and 12-15% for a newly-built property. Typical add-on costs may include around 3% to the the realtor, Euro 500-1500 for a surveyor, Euro 150-200 per hour for a lawyer and up to Euro 5,000 for a notary. For newly built properties, 4% VAT is levied if within a year and a half the buyer registers for Italian residency, a fairly simple procedure. Otherwise the buyer pays VAT at 10%. For previously inhabited properties, the buyer pays 3% of the "cadastral value" if residency is registered for within a year and a half, otherwise 10% of the cadastral value is payable. Cadastral value is decided by the Land Registry based on factors such as number of rooms, location, floor area, etc. It is usually less than 50% of purchase price.
8) GET THE BEST CURRENCY DEAL
Over 2009, Pound-Euro values plunged to £1/Euro 1.059 at their trough and hit £1/Euro 1.185 at their peak. That means buying a Euro 500,000 home would have cost a UK-based buyer £51,500 more at the start of the year than in summer. Hence the importance of using a specialist currency exchange company, who can fix rates for future deals to safeguard against currency fluctuations. They have far better rates than the typical bank and could in comparison mean a £30,000 difference on a £750,000 transaction.
9) THINK RENTAL
Do you plan to let out your property? If so, it is advisable to be close to transport hubs. Aim for 90 minutes at most from the nearest airport. In big 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 over time because of limits on new construction in coastal areas.
10) SPEAK SOME ITALIAN
Try learn some, even if you only plan on using your new home for a few weeks a year. As a rule, the further south you go, the less likely it is people will speak a foreign language, And your efforts, no matter how rudimentary, will go down well with Italians.
Author Resource:-
The author writes for property in Italy specialists Homes and Villas Abroad, who showcase 2,500 homes in Italy. Her other specialist areas include Calabria property and Sicily property.
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