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Overview of the Italian property market
- Low-cost flights have opened up Italy to visitors and property buyers
- Countryside, coast, mountains and cities – there’s a massive choice of Italy property for sale
- There are many parts of Italy with very cheap properties
- Just because a property is expensive, do not think that it can’t make a great investment
Brits have been buying property in some parts of Italy for many decades but particularly since the boom of the 1960s. For most of this time, demand from the UK has been predominantly for property in the regions of Tuscany and neighbouring Umbria, with thousands of derelict farmhouses being renovated into some of Italy’s most desirable and expensive properties. Many Brits have ended up relocating permanently to this idyllic countryside.
The Italian Property Market
Property prices in Italy are usually quoted in ‘euros per square metre’. Like any other property market, in Italy it is impossible to give a definitive guide to what prices should be in any given town or region – with great diversity in the type, age, size, condition and location of property it is very difficult to give an accurate ‘like for like’ comparison.
With such a range of landscapes, climate and culture throughout Italy, it is rather difficult to compare, say, a three-bedroom farmhouse in Le Marche with a three-bedroom farmhouse in Valle d’Aosta – the two areas are quite different and a home buyer is unlikely to ‘switch’ areas purely based on price.
Certain regions, or areas within regions, have long been popular with overseas property buyers, for example, Tuscany and Umbria, and prices will tend to be higher there compared to a similar property in a lesser known region. When buyers started to find themselves priced out of Tuscany property, they started looking to neighbouring Umbria and prices have risen dramatically there as a result. More recently, with Umbria property prices so high, Marche property has become popular.
With improved travel connections, other parts have been opened up to intrepid buyers of property in Italy. With low-cost airlines servicing previously remote corners of the country it becomes viable to have a holiday property in, for example, Apulia in the southeast, where property prices have traditionally been low but are now creeping upwards with the increased demand.
Overall, capital appreciation in the Italian property market has been steadily rising thanks to a sluggish stock market, and with demand from overseas property buyers in particular on the increase, a well-considered Italian home will continue to reap rewards for many years. As ever, efforts in research and taking expert advice will go a long way to ensuring that a home in Italy will be a happy and rewarding purchase.
The Choice of Property in Italy
The rural regions are still the dream of many looking to buy Italy property, but the proliferation of low-cost airlines to a host of regional Italian airports has not only opened up the rest of the country to more British visitors, but makes a property in Italy a viable holiday destination rather than a permanent lifestyle change.
Some of these ‘newly discovered’ regions of Italy offer a great choice of property at very reasonable prices, both restoration projects and habitable homes, including new-build property. Renovation costs are relatively cheap in Italy, meaning a renovation property in Italy is an excellent way to see a healthy return on your total investment.
Italy’s cities have history in abundance; the likes of Rome, Florence and Venice have been attracting tourists for centuries and continue to be some of the most culturally rich cities in the world. University towns and the commercial power of Milan and Turin provide another aspect of property ownership: investment in properties that provide short- or long-term rental returns from professional and academic tenants.
The ski resorts of the Alps and Apennines have often been considered ‘budget’ locations for winter sports enthusiasts but in this competitive market there is a constant need to upgrade facilities and provide good value for money. Many of these resorts now recognise the importance of year-round tourism and the need for amenities that bring in visitors during the summer months, a major consideration for property buyers relying on rental income.
Buying Property in Italy - Summary
With such a wealth of property in the countryside, on the coast, perched in the mountains and set in one of its historic cities, the overseas property buyer with an eye for buying property in Italy has never had this much choice to realise their dream.
The Process of Buying Property in Italy
- While the amount of Italian red tape is well known, and bureaucracy tends to move rather slowly, buying a property in Italy is actually pretty straightforward – if somewhat time consuming
- Once you have found a property you may consider taking out a euro mortgage to help finance your purchase.
- The general rule in Italy is that you can borrow up to 80 per cent of the purchase price while your total mortgage payments and other commitments must not exceed approximately 35 per cent of your gross income.
- A variety of mortgage products are offered and the opening of an Italian bank account is compulsory.
- Before going ahead with the purchase check that you are paying market value for the property.
- Make sure that the property is what you are really looking for before you sign a "Compromesso" since this is legally binding.
- Include get-out clauses in the preliminary contract for any areas that have not been fully clarified and always use a geometra or technical expert to check that the paperwork relating to the property is in order.
- It is also advisable to have the property surveyed.
- Before you sign the rogito (deed of sale) you will need to get a codice fiscale. This can be obtained through the Italian consulate in the UK.
- The signing of the rogito is usually done in the presence of the vendor, estate agent, notary and mortgage lender.
Buying Property in Italy - Fees ' Taxes
- Real Estate in Italy is subject to three different taxes (Imposta Catastale, Imposta sul Registro and Tassa Ipotecaria), which total ten per cent
- New-build property is subject to ten per cent VAT
- If the buyer is resident taxes can be lowered to three per cent for an existing property, and four per cent for a new-build property
- Cultivated land is subject to a land transfer tax at a rate of 18 per cent
- Purchases between individuals have the transfer taxes calculated on the cadastral value, which is usually substantially lower than the market value
- Purchases where the vendor is a company attract taxes calculated on the actual market value. Both purchaser and vendor are liable for the
transactional taxes, it is usual the taxes to be paid by the purchaser - Capital Gains Tax is payable on the difference between purchase price and the re-sale price, however it is not due when the property is sold after five years. Foreign buyers may be liable in their home country.
Hotspots to Buy Italy Property
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Calabria property
Dubbed 'The Sunny Heart of Italy', historically, Calabria has been a poor region and it is still a predominantly agricultural society. Thus, prices of Calabria property are generally low. It is, however, the perfect place for sun worshippers. -
Puglia property
The sunny and scenic southeast of Italy has been opened up thanks to regular low-cost flights to Bari and Brindisi. Prices of property in Puglia have been rising significantly but they are still competitive by Italian standards -
Tuscany property
A perennial favourite. Though prices of property in Tuscany are very high, there are cheaper areas if you look. The lifestyle and tourism means that whatever you spend, the area will always be a good long-term investment -
Umbria property
Prices are nearly on a par with Tuscany, but nevertheless the climate and landscape are as wonderful as ever – a terrific place to relocate or buy a holiday home. Tourism means letting potential is very good.
Key Facts
Health
The Italian health service is much better than its reputation. For the most part, Italy’s health service is cheap and pretty good, with English-speaking medical staff widely available. That said, many Brits still prefer to take out private health insurance when visiting
Travel
All major airports in Italy are very well connected, with year-round cheap flights available from most regional airports around the UK. Some destinations do not, however, have direct links with the UK as yet, but this could well change in the future
Top Tip for Buying Property in Italy
Be careful when considering taking out an Italian mortgage. Most are only offered on a repayment basis (interest-only mortgages like those common in the UK are not generally available) and are usually for 15 years, rather than the 25 years offered in Britain
Some information contained herein may have changed since it was first published. Homes Overseas strongly advises you to seek current legal and/or financial advise from a qualified professional.
