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 better time to invest in the Italy real estate market. Yet as with any property purchase, especially in a foreign country, there are simple steps to know to ensure buying your dream home doesn't become a nightmare. Here are the 10 most crucial:
DON'T GET HOOKED ON 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 vistas and azure-blue seas. 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 potential homes, there is such a thing as too many. Trying to cram 45 into a weekend simply turns into an arduous marathon. By the time you are halfway through, chances are you will remember little of the first two dozen.
BUDGET REALISTICALLY
One can pick up a stunning property for US$300,000. But not if it is advertised at US$600,000. Italian prices have not had the free-fall of some other countries, so expect discounts of around 10%.
FIND A REALTOR
Getting taken for a ride by some incompetent cowboy could prove costly. Genuine real estate agents must hold a professional license, 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).
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.
USE AN AVVOCATO
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.
FAMILIARIZE YOURSELF WITH THE SYSTEM
After a price is settled on the purchaser makes an offer with a deposit of around 5% to remove the property from the market for around 15 days. If his surveyor and/or lawyer give the OK both sides sign a preliminary sales contract, in which buyer and seller fix a deadline to finalize the deal. A second sum is paid, taking the buyer's total downpayment to around 30%. Either side risks financial penalties for defaulting at this step. The last stage is to sign the final deed of sale (atto di vendita) in a notary's office, who scrutinizes all documents and lodges them with the Land Registry. The buyer pays the balance, usually by bank draft from an Italian bank. He will need to have obtained a fiscal code from tax authorities to apply for a bank account.
DON'T FORGET ADD-ON COSTS
Fees and taxes usually add 7%-10% to a resale property and 12-15% for a new-build. Typical add-on costs: 3% to the realtor, US$700-2100 to a surveyor, US$210-280 per hour for a lawyer and up to US$7,000 for a notary. For new-builds, 4% VAT is levied if within a year and a half the buyer registers for Italian residency. Otherwise VAT is 10%. For previously inhabited properties, the buyer pays 3% the cadastral value if residency is registered for within a year and a half, otherwise 10%. 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.
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 the typical bank and could in comparison mean a £30,000 difference on a £750,000 transaction.
MAXIMISE RENTAL POTENTIAL
Will your property primarily be a holiday/retirement home or do you plan to rent it out at some stage? If so, it is advisable to be close to transport hubs. Aim for a maximum 90 minutes from the nearest international airport. In cities, bear in mind how close your property is to public transport as not all holidaymakers will have a car. Villas and apartments near a beach always have superb rental potential and maintain investment value over time because of curbs on further building in these parts of the country.
TRY THE LANGUAGE
Try your best to pick up some Italian. Be aware that unlike North-West Europe, more than 7 in 10 Italians speak no English, among the lowest figures on the continent. Don't be afraid to make a fool of yourself as your attempts, no matter how gauche, will be welcomed by locals.
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