8 tips on buying a home in Italy

Given Italy’s unwavering attraction that pulls in 40 million visitors annually; its centuries of culture and tradition; and the relative strength of the US dollar and other top global currencies against the euro, there has scarcely been a more ideal moment to buy real estate in Italy.

Indeed, many real estate experts forecast that demand for real estate in Italy, in particular from overseas buyers, to stay buoyant over the forthcoming 12 months.

So, if you intend to acquire a holiday home in Italy, here is a selection of basic guidelines to abide by:

1) DO YOUR GEOGRAPHICAL RESEARCH: Tuscany is overseas buyers’ favourite stretch of the country, attracting nearly 35 per cent of people who come here. As a consequence it is also its dearest.

There are other areas such as the south, which are far less expensive and also boast the same majestic landscapes and azure-blue seas. As an example, the Sicilian housing market has fallen by approximately 20-30 per cent since the start of the financial crisis.

Try various locations to see what areas you like best. Make sure you are within reasonable distance from local amenities, unless you deliberately want to be in splendid isolation. One tip is to take a look at a website such as where-to-buy-in-italy.com.

2) WHAT CAN YOU AFFORD? Despite the current world financial backdrop, the Italian real estate industry has not fallen apart like its Spanish counterpart.

A couple of years ago there was a much publicised offer to sell one-Euro homes in the Sicilian town of Salemi. But that was a one-off. Because the country did not go through the real estate boom of the first decade of the century, its prices did not suffer the same kind of plummet when the crisis hit.

As we had to tell one US client last year, just as US$65,000 wouldn’t get you a two-bedroom property in Upper East Side Manhattan, it won’t in the centre of Venice either. There are great deals to be had. But don’t expect them everywhere.

3) GET A RELIABLE AGENT: Italian law says all real estate agents must have a licence,  qualification and the appropriate insurance and be registered with a chamber of commerce. Their their website and prove they are signed up to either the AICI (Italian Association of Estate Agents), FIMAA (Federation of Mediators and Agents) or FIAIP (Federation of Professional Estate Agents). When investing abroad it’s important to avoid being ripped off, so this is one occasion to be grateful thankful for Italy’s scrupulous red tape.

4) SEEK LEGAL ADVICE: 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.

5) GET TO KNOW THE PROCESS: Once a price is settled on the purchaser makes a proposta irrevocabile di acquisto with a downpayment of some 5% to reserve it for around 15 days. The next stage, once the buyer’s surveyor and/or lawyer gives the green light, sees both sides sign a compromesso, in which a timescale to complete is decided.

A further sum is paid, taking the buyer’s total downpayment to around 30%. Defaulting carries serious repercussions. The buyer may forfeit all monies paid while the seller, if at fault, may have to pay back double the deposit.

The following step is to sign the final deed of sale (atto di vendita) in the presence of a notary (notaio), who examines all paperwork and lodges them with the Land Registry. The buyer pays the balance, usually by bank draft from an Italian bank. Thus he will need to have obtained a fiscal code from tax authorities so he can apply for a bank account.

6) KNOW YOUR ADDITIONAL COSTS: Fees, taxes and commissions amount to an extra 7%-10% on top of the price of resale properties and 12-15% for new-builds.

Usual add-on costs might be around US$250 an hour to a lawyer, up to $2,000 for a surveyor, anything from US$2,750 to US$7,500 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.

Otherwise, 10%. For other properties 3% of the cadastral value is charged if the buyer takes out residency within a year and a half. If not, the levy rises to 10%. Cadastral value is decided by the Land Registry based on variables such as floor area, number of rooms, etc. and is far less than the property price.

7) TAKE CARE OF THE CURRENCY DIFFERENCE: You would not think making a significant purchase in your country without ascertaining the total price. However countless investors commit the same blunder in agreeing to acquire an Italian property with no idea what the price in euros equates to in their own currency.

This is where a specialist foreign exchange dealership is your best friend. It means you can secure a specific exchange rate half a year ahead, giving you peace of mind.

Yet ignoring foreign exchange ups and downs can be costly. For example, between the middle of 2011 and 2012, for a US citizen set on a Euro 500,000 property, the difference between the top and bottom of that cycle would top US$122,000. On no accounts use your high street bank, regardless of how long you have been a customer or – much worse – a currency exchange office at an airport.

8) MAKE AN EFFORT TO GIVE THE LANGUAGE A SHOT: Arm yourself with some useful Italian words. 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 efforts, no matter how clumsy, will be warmly received by locals.

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Four key foreign exchange tips for buying a home in Italy

Do you plan to buy property in Italy?

Love the idea of owning a villa in Tuscany, somewhere you can jet off to when it all gets a bit hectic at home?

Then, part of the process of buying that dream Italian house is exchanging currencies. If you’re in the UK, that’ll be pounds into euros, and if you’re in the US, you’ll start with US dollars of course.

But how do you get the best exchange rate so as to maximise your euro total and get the best possible price? Below are some tips to make the “transferring money abroad” bit of buying your dream home as painless as possible.

1. Research the exchange rates ahead of time.

If you need to have money in your Italian bank account to complete the downpayment on your house in August, start to research the foreign exchange rates in March. This is because it gives you a big window in which to see how the rates are going, decide what rate you think you can reasonably achieve and change currencies at the right time for you.

If on the other hand you leave it to the last couple of weeks, you’ll be stuck with the available rate, regardless of whether it’s good or bad.

2. Find out where the exchange rates have been.

To know whether the exchange rate you’re getting is good or not, you need to know where they’ve been in the recent past.

To find this out, you can either call a foreign exchange broker and ask (if they’re worth their salt, they should have no trouble telling you) or research the rates yourself.

In the latter case, Google Finance is invaluable. Just enter the currency pair you want to change (so if you’re in the UK, that’s pounds to euros, or GBPEUR) and it’ll return not only the latest exchange rate, but also those stretching back a decade. Perfect to see how the euro’s been performing.

3. Don’t assume your bank will offer the best rate.

In a lot of cases, people use their high street banks to transfer foreign currency because they’re familiar and people use them for all their other financial dealings. But in spite of this, don’t assume your bank will offer you the best exchange rate.

In fact, it’s common for banks to offer rates up to 4 per cent worse than those available from specialist brokers. That might not sound like much, but if you want to transfer £1,000 for instance, it will cost you £40 more to reach the same euro total. In other words, this fee can quickly add up.

4. Make sure you use a properly regulated service.

Regardless of where you change currencies, make sure you use a service that’s directly authorised by the Financial Services Authority in the UK (or, if you’re in the US, its equivalent.)

This is important because, if the company is FSA-authorised, it will maintain your funds in a designated client account, ring-fenced and protected. This is vital for your financial security.

To find out if a company is directly authorised by the FSA, meanwhile, either you can contact them or check on their website.

This is a guest post from PETER LAVELLE. If you have any questions about sending money to Italy, don’t hesitate to contact his company, the foreign exchange specialist Pure FX.

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Italian property group eyes prestige London buildings

It’s often more been common for British property hunters to descend on Italy in search of bargains.

But Sorgente, the Italian real estate conglomerate, is turning the tables as it eyes a string of “trophy” purchases in London.

It already has in its portfolio Rome’s Piazza Colonna, left, and New York’s Flatiron building, below right, and in June shelled out £167million to add the Queensbury House in Mayfair, central London, to the list.

Now the group – which manages US and European property investments for Italian institutional investors – is in negotiations with other institutional investors about raising capital for a £400million fund to buy additional trophy assets in the UK capital.

Its UK Historic and Trophy Buildings Fund will make up around 25 per cent of the £1.6 billion the company plans to set aside to purchase historically or architecturally significant properties across Europe and in the US.

Sorgente’s principal targets in London are landmark addresses in the capital’s prime Mayfair, West End and City districts.

But it is prepared to widen the net further and consider more modern commercial and office properties that have a global recognition factor.

Research commissioned by the group has demonstrated that over the past quarter of a century, such high-value properties in New York, Paris, Milan and Rome – ones that stand out for their architectural appeal, history, prestige location or iconic status – outperformed the rest of the real estate sector regardless of conditions in the wider market.

Sorgente director-general Stefano Cervone argued that such properties boasted a more impressive risk-return profile because they are unique, maintain their intrinsic value better and appeal to investors the world over.

“They are much more liquid as assets than a lot of others on the market as they attract a global investor and will always command a premium to other top-grade property,” he said.

“Tenants also want to stay in them as they develop an attachment to the building and want their company to remain linked with it.”

If you enjoyed this article, why not browse through our range of prestigious properties, characteristic farmhouses and affordable beach villas and apartments?

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Italian homes are tops for Brits in new property-swap fad

Italy is Britons’ top overseas choice for a new holiday craze – house-swapping.

Just under 3.5% of UK adults – an estimated 1.7 million – plan to take their vacations on the cheap this year – by agreeing to temporarily exchange homes with a family in a spot they would like to visit.

Joint top of the favourite foreign destinations are Italy – whose rich tradition offers countless Italian entertainment opportunities – and Spain, the choice of 15% of house-swapping vacationers. Some 12% plump for France and 10% the United States. Domestically, Cornwall, the Lake District, Devon and Scotland are the spots that head the list.

The number of people taking part in the trend has doubled since 2010. More than half of them cite the economic downturn as the No1 reason that they give a stranger the run of their home – and frequently car as well – for the chance to to spend a free week or two abroad in return.

The practice highlights how the economic downturn has altered Britons’ vacation habits. Figures from the Office for National Statistics show that people in the UK made 10 million fewer trips abroad in 2009-10 than in the preceding 12 months – the sharpest drop for more than 30 years.

House-swappers first of all need to register with a website or agency and supply photographs of where they live – and indicate whether their largesse will extend to leaving their home-exchange partner the keys to the family car.

Ed Kushins of HomeExchange.com – which with nearly 40,000 homes is one of the largest such websites – pointed out: ‘"Costly hotels are out. Apartments and houses and are in. They’re more appealing, more comfortable and less costly."

A note of caution, though. Some 24% of holidaymakers who have tried the practice say they returned to find their homes had suffered some kind of damage in their absence.

Lloyds TSB Insurance, which carried out the survey, said vacationers tempted by the trend should register only with reliable house-swapping websites. And it said its research highlighted the need for householders to ensure their properties had adequate cover beforehand.

Paul Spillane, in charge of the insurers’ home claims department, said: "House-swapping could become one of the trends of 2011 as it is the sort of break that caters for so many different tastes."

Of course, rather than simply swap homes, you may want to buy a property in Italy. Our picks this week are farmhouses in Umbria and beach houses in southern Italy.

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Calabria town’s lifeline from 200 refugees

An Italian mayor has revitalised his shrinking ghost town  – by encouraging more Third World immigrants.

Riace, just four miles from Calabria’s Ionian coast, is home to 1,700 inhabitants – but it has seen thousands others leave for northern Italy or as far afield as Germany, the US and New Zealand. The result was an area in such decline that it had no bars or restaurants  shop, not enough children to fill classrooms and large swathes of houses were left vacant for decades.

But Mayor Domenico Lucano has stemmed the exodus by attracting more than 200 foreigners with a scheme in which some abandoned homes in the Calabrian town have been turned into free accommodation for them while other properties have been converted into craft shops in which they work unpaid.

He said: “This was a ghost town before… There was the perception our destiny had already been written. Psychologically speaking, everyone had already packed their bags, ready to leave."

One newcomer to have benefited from the scheme is a woman known only as Lubaba, currently employed making glass ornaments. She was pregnant when she fled her native war-ravaged Ethiopia in a tiny boat crammed with 250 others. She said of her ordeal: “The journey was awful. We were squashed like sardines and the sea was rough. I was desperately thirsty but there was nothing to drink."

Mr Lucano’s initiative has also provided €700-a-month jobs for around a dozen locals, employed in the workshops selling handicrafts to tourists. It means residents no longer have to leave the town to look for work.

The Italian state provides around €20 a day for each refugee to cover accommodation, food, medical expenses, training and their kids’ education. The Mayor argues that is barely a quarter of what it would cost Italy to house the immigrants in a detention centre.

The seeds of his idea were first sown in 1998, as he drove along a coastal road in Riace and saw a boatload of 300 Kurdish refugees wade ashore. He helped to organise accommodation for them. Six years later, as Mayor, he decided they could be the new lifeblood of the dying town. Mr Lucano – recently voted the world’s third best mayor in a contest – now looks back and says: “The wind brought us a special cargo. Who are we to turn it away?"

Along with the immigrants have come their youngsters, who are also helping to transform the face of Riace. Among the children’s first tasks is getting to grips with learning a new language, which they are managing with remarkable ease.

Mr Lucano, himself a teacher, looked on approvingly at a group of them in a classroom. He said: “Kids are very quick. It only takes them five or six months to become proficient. They make me proud and they give me hope that this place has a future. In 2000 our school was shut because we had so few pupils. Now it’s flourishing."

Enjoyed reading this article? Then why not browse through our Calabria beach apartments for sale, part of our vast range of houses on sale in Italy?

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