Insider Tips for Buying A Property in Italy
In a recent survey, we asked clients what their top tips would be for ensuring that Italian property purchases run smoothly.
Here is a selection of replies, which we hope might be helpful if you are planning to buy real estate in Italy.
In Italy you exchange legally
binding paperwork and money at a much earlier stage,
once your offer has been accepted, so it’s crucial to have the right people on
your side. Under Italian law you have to use a public notary, a ‘notaio’, but
they are not at all the same as a UK solicitor. While they handle the
conveyancing or searches, they don’t give you any legal advice. Notaries are
actually employed by the government and are responsible for collecting relevant
taxes owed at completion. The vendor and buyer often share a ‘notaio’ but I’d
advice you to appoint your own. Despite what anyone tells you, I’d recommend
you consult a solicitor to advise you on matters such as price negotiations,
inheritance, how to structure your purchase and tax issues. Choose a bilingual
solicitor who is experienced in dealing with Italian property purchases and the
associated legal, estate planning and tax aspects.
It’s not just about buying the property. Don’t ignore inheritance planning!
Under Italian law you have to leave a portion of your estate to your children (or your parents if you have no children), you can’t just leave your property to whoever you want, whether that is your spouse or the local dog rescue centre. There are ways around this, but they have legal and tax implications so it is important to seek professional advice if for any reason you do not wish to leave your Italian home to what are known as, reserved heirs. There are several ways to structure property transactions in Italy, which is great, but you can’t change the ownership structure later on, so it’s important to consider this before you buy. There are also inheritance tax implications so again getting professional advice before you sign anything is important.
You have to be canny with your cash.
Firstly, make sure you get your offer right. It’s surprising how many people who have an accurate idea of prices where they live in the UK will make an offer in Italy based on what they feel is right rather than market knowledge. It is easy to research prices across Italy online on various property portals and agency websites. Your estate agent can advise you too as they will also have a good idea of the price the vendor would be willing to accept. We wanted complete peace of mind and preferred to have someone working purely on our behalf, so we asked De Tullio Law Firm to help us and they did an excellent job. They advised us all the way through our Italian real estate buying experience. They saved us a great deal of money with sound legal advice and help with foreign exchange specialists. De Tullio Law Firm also helped us look in to taking out an Italian mortgage. We decided not to go down that route in the end, but it would have been an option.
Make sure your estate agent is qualified.
The Italian estate agency system is regulated and offers a safe environment in which to buy and it is easy to make sure your agent is one of the good guys. Check that your estate agent has professional insurance and is registered with their local chamber of commerce. Still, it’s a huge thing to sign legal documents if like us, your Italian is not great. From personal experience, it’s a good idea to have a lawyer look over paperwork before you sign anything.
Take care who you give your money to. Never give it directly to the
seller, always to the notaio or to your estate agent so long as they are
insured to take such payments. And never be tempted to pay ‘under the table’ to
avoid taxes on the purchase by declaring a lower sale price. Even if you get
away with it at the time, you will have to pay higher capital gains taxes when
you come to sell as the difference between the price you paid (or declared
you’d paid) and the price you sell at will be higher.
Although surveys are not common in Italy, that doesn’t mean you don’t have to have one.
We’re glad we had a survey done. Our surveyor found quite a few issues with the structure and planning permission – things that we couldn’t see just from looking over the property. We were able to use these issues to negotiate on the price of our house. Make sure you choose an independent surveyor, not someone recommended by the vendor or an estate agent and choose a surveyor who understands the peculiarities of Italian buildings. Get a complete survey covering structural, zoning, building permits, termites, lead paint, asbestos, natural and industrial risks, gas/electrical/water installations, septic tanks and energy efficiency ratings. You could also ask a builder to look over the property for you, especially if you are planning any renovation work.
Renovations can be a great opportunity, but they can turn in to a money pit.
If you are looking for a renovation project in Italy, it is important to understand the likely costs and timescales involved, to avoid them spiralling out of control. Get at least a couple of quotes before you sign for the property, and make a realistic plan for how you will proceed – will you use an architect and, or geometra, a project manager, Italian builders and artisans, or do the work yourself? Planning permission is also key; you can get your lawyer to insert a condition into the preliminary sales contract (compromesso) stating that the purchase is dependent on planning permission being approved. We have renovated a couple of buildings in Italy, but wouldn’t have undertaken the projects without seeking legal advice beforehand.
Choose a reputable developer if you decide to buy off-plan in Italy.
Looks great on paper? A chance to design certain elements yourself? That’s what we thought, but buying an off-plan property in Italy is not for the faint-hearted. There have been so many stories of things going very wrong with off-plan real estate. If you are thinking of buying off-plan, having your own lawyer is a must. Italian law is very complex and like in English, legalese is a completely different language. It is crucial to establish that the developer is reputable before you sign any papers or hand over any money – do the developers have a bank guarantee for example? Bear in mind that in Italy developers don’t receive funding from the bank until a certain amount of properties have been signed up, so check how far the development has progressed (has planning permission been approved or building work started?). Never sign anything until you have taken legal advice and never ever hand over all the money at the start of the process, even if a developer is pressuring you – payments are made in stages, with the final payment due when the property is completed. Penalty clauses can be inserted into the contract for late delivery, but you really need a lawyer.
On top of the asking price, you need to budget for additional costs.
This is really important to think about. Notary and estate agent fees can easily add up to 15% of the price. Notary fees include various Italian State taxes like stamp duty as well as their actual fees, set on a sliding scale according to the value of the real estate. Estate agency fees are at the agency’s discretion. Don’t forget to account for mortgage fees too, if applicable, as well as costs such as solicitor’s fees and surveys. Also think long term about property taxes, maintenance and running costs.
Do your homework before you buy…
– read specialist magazines, consult websites – take care they are reputable though as online advice can be a little misleading or even incorrect, and attend Italian property exhibitions. Make sure you understand what you are undertaking – not just the buying process and costs involved, but everything else, from how you will access your property to what the running costs will be, including property taxes, utilities bills and service charges in apartment blocks. Italy is a great place to be and a safe place in which to buy a property – as long as you take care with your research beforehand and use reputable and registered professionals to help you.
If you are thinking of or in the process of buying a property in
Italy and have a question, please get in touch for a FREE