10 steps for buying a home in Italy

By: Adriana Giglioli

The UK's prestigious Royal Institution of Chartered Surveyors last year singled out Italy as one of the most stable countries in which to invest in real estate as its market has kept a stability that has eluded the rest of Europe and the US. Why? Italian banks' stringent lending criteria means just 8.5% of Italians have home loans (19% in the UK), hence Italy avoided the easy credit that sparked the property boom and bust elsewhere.

Another fillip, especially for UK buyers is the fact that in the four years to March-June 2009 Italian property prices rose by almost a third while the Euro strengthened by 27% against the Pound – meaning a British purchaser with a typical Italian property saw its Sterling value soar by nearly two-thirds over that period.

Changes in the Italian tax regime have cut 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, especially in a foreign country, there are commonsense guidelines to abide by to ensure everything runs to plan. Here are the 10 most crucial:

1) GET TO KNOW ITALY
Tuscany is Italy's best-known region, attracting one in three visitors who comes to the country. It's also it's most expensive. Yet other areas such as Puglia, Sicily and Le Marche are far cheaper and also have stunning 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) SET A SENSIBLE BUDGET
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 RELIABLE AGENT
By law all estate agents 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 either the AICI (Italian Association of Estate Agents), FIMAA (Federation of Mediators and Agents) or FIAIP (Federation of Professional Estate Agents). When investing in a foreign country it's important to find professionals you can trust, so this is one occasion to be thankful for Italy's fastidious legal framework.

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) TAKE LEGAL ADVICE
Many investors sign documents and then discover they have made a binding commitment. Engage a reputable lawyer with experience of 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) 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 home for around 15 days. 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) DON'T GET SHORT-CHANGED ON FOREIGN EXCHANGE
In 2009 the Sterling-Euro rate veered between a low in January of £1/Euro 1.06 and a high in June of £1/Euro 1.19. 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 a bank and could in comparison save buyers up to £20,000 on a £500,000 exchange.

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) HAVE A GO AT THE LANGUAGE
Try to speak some Italian, even if you use your Italian property only for a couple of weeks a year. The further south you head, the less likely it is people will speak anything other than Italian. Your efforts, no matter how clumsy, will endear you to them.

Article Source: http://www.travelarticlelibrary.com

The author writes for property for sale in Italy specialists Homes and Villas Abroad. Her areas of expertise include Calabria property and Umbria real estate.

Please Rate this Article

Not yet Rated