A recent tax overhaul in Italy has slashed homebuyers’ costs by up to 15%. Combined with the country's ceaseless attraction it means there has rarely been a more opportune time to invest in Italian property. Yet as with any property purchase, there are simple steps to follow to ensure everything runs to plan. Here are the 10 most important:
1) GET TO KNOW ITALY
Tuscany remains overseas buyers’ favourite part of Italy. Yet other areas such as Le Marche, Calabria and Abruzzo are far cheaper and also have spectacular countryside and coastlines. 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 45 into a weekend simply turns into a feat of endurance. By the halfway mark, chances are you will remember little of the first few.
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) DON’T OVERBURDEN YOURSELF
The novel and movie Under The Tuscan Sun led droves of overseas investors to embark on converting a run-down rustic into the ideal vacation home. Great on paper but get ready for the toil, sweat and expense involved. Restorations can cost some US$190 a sq ft. Another gaffe is to buy more property than you need. A sprawling villa with pool and five acres sounds dreamy but don’t forget the upkeep involved.
5) GET AN AVVOCATO
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 use a lawyers’ directory such as hg.org.
6) FAMILIARISE YOURSELF WITH THE PROCEDURE
Once a price is agreed the purchaser makes a proposta irrevocabile with a payment of around 5% to take the house off-sale for two weeks. If the purchaser’s surveyor and/or lawyer are happy with things so far both sides sign a compromesso, in which buyer and seller fix a deadline to finalise the deal. A further sum is paid, taking the buyer's total downpayment to about a third of total purchase price. There are heavy penalties if either side pulls out at this stage. The following step is to sign the final contract (rogito) in front of a notary, who scrutinises all papers and sends them with the Land Registry.
7) FACTOR IN EXPENSES & FEES
Budget for fees, commissions and taxes to add up to 10% on the price of resale homes and up to 15% for new constructions.
Typically, that could be up to US$280 an hour for the solicitor, up to US$2100 to a surveyor, US$7,000 for a notary and 3% to the estate agent.
On new-builds, there is 4% VAT if within 18 months you register for official Italian residency – a relatively straightforward process. Failing which, it is charged at 10%. For previously inhabited homes 3% of the cadastral value is charged if the buyer takes out residency within a year and a half. Otherwise, 10% of cadastral value. Cadastral value is determined by the Land Registry based on attributes such as location, property size, etc and is far less than the property price.
8) GRAB THE BEST CURRENCY DEAL
Over the course of 2009 the Sterling-Euro rate veered from a £1/Euro 1.185 peak while troughing out at £1/Euro 1.059. 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 offer more impressive 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 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 maintain value over time because of limits on new construction in these parts of the country.
10) MAKE AN EFFORT IN ITALIAN
Or as the Italians would say: Cercare di parlare la lingua!. Remember that in contrast to North-West Europe, a mere 28% of Italy speaks English, one of the lowest percentages in Europe. Don’t be afraid to make a fool of yourself as your efforts, no matter how awkward, will go down well with Italians.
The author works for property for sale Italy website Homes and Villas Abroad, who advertise nearly 3,000 Italian homes. Her areas of expertise include Sicily property and affordable Tuscany property..
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