Where angels fear to tread
Thursday October 19, 2006Barbara McMahon
Whether it is a converted pigsty or a grand palazzo, buying a house in Italy is a big financial and emotional investment. Too many people are seduced by the dream of a private idyll among the olive groves and vineyards and rush into buying a property without doing enough research. The most common mistakes are buying a house that is too big, buying in the wrong area and taking on a restoration that is too complicated and expensive. Prospective buyers need to avoid these pitfalls but there is no reason why they should not fulfil their dream, as long as they do enough research before buying. There are huge rewards for those who do take the plunge.
Cowboys and well-meaning amateursAs well as setting a budget you need to define what you want from your house in Italy. Is it only for family and friends or do you want rental income? Do you want a habitable house or to restore a ruin? Should you buy in the country or in a town or village? Are you looking for a small plot of land or olive groves and vineyards and all the cost and maintenance that involves? It is a useful exercise to sit down with members of your family and ask each of them to visualise their ideal house in Italy. There is likely to be general agreement about such things as the minimum number of bedrooms required and the importance of a swimming pool, but you may find that different members of the family have unrealistic and conflicting ideas of what you can afford. It is best to get all this out in the open at the beginning. Now draw up another wish list incorporating your family?s essential requirements.
Searching for a property is not a holiday. Do not be sidetracked by long, boozy lunches or detours to local art galleries and museums. These visits to Italy, with flights, accommodation and car hire, will cost money that you will not be able to recoup. Regard them as the beginning of your investment and make them count. Do not isolate yourself in big tourist hotels. Stay in local ?agriturismi? or small, family-run hotels. It gives you a better understanding of the area and you will be able to ask lots of questions.
There are a lot of cowboys and well-meaning amateurs out there. Look for a FIAIP ?Federazione Italiana Agenti Immobiliari Professionali ? sign that denotes that an estate agent has passed professional exams and is well-versed in Italian property law.
Italy is well-known for its bureaucracy but this can work in the buyer?s favour since it is quite straightforward to see title deeds, liens, etc. on property and land registers. As long as you deal with a reputable agency, buying a house in Italy is perfectly safe. The following information will help you navigate the house-buying process.
Legal advice or notItalians do not use lawyers when they buy property. They depend on the services of estate agents and a notaio, the public official who is responsible for completing the sale. Foreign buyers can do the same but may feel vulnerable without independent, bi-lingual legal advice. It is a matter of personal choice but when in doubt, seek your own advice.
GeometraA figure who is part architect, surveyor and site foreman, a geometra will liase with a commune, the municipal authority that approves or rejects building plans, and will give technical advice on all aspects of a property. A geometra can be useful if a buyer is contemplating the purchase of a house that is already restored. He will survey the property and report on its condition. He can also inform prospective buyers about what they can and cannot do. For example, he will know if it is permissible to enlarge a property or to install a swimming pool.
Compromesso di venditaOnce both sides have agreed a price, buyer and vendor sign a preliminary contract of sale, or compromesso di vendita. The compromesso is the single most important document when buying a house in Italy. It is a legally binding document. Written in Italian and English, it will describe the house and the land that is to be sold. Up until a few years ago, it was quite normal to sign a compromesso on the vendor?s kitchen table, but this is not advisable now. A compromesso should be signed in a notaio?s office because he will have done all the preliminary searches and checked that everything is in order. Once it has been signed, buyer and vendor are legally committed to the sale, as defined in the document.
DepositAt this stage the buyer will hand over a deposit, or caparra, of 10-30% of the purchase price. There are two types of deposit. The penitenziale caparra means that if the buyer withdraws from the sale after signing the compromesso, he or she will lose the deposit. If the vendor withdraws, he or she has to pay double the deposit as a penalty. The most commonly used deposit is the confermatoria caparra, which gives more protection to the buyer. In the event that the vendor wants to withdraw, the buyer can ask for further damages or seek a court hearing to enforce the sale.
NotaioThe notaio is the public official responsible for completing the sale, collecting the taxes and registering the transfer of the property. He is not there to represent either the buyer or the vendor, only to act as a witness for both sides. He is there on behalf of the state to check that the property is the vendor?s to sell, that it is not part of a contested will and does not have any charges against it such as a prior mortgage or unpaid taxes, and that the property is as described on the land and building registers and conforms to local planning regulations.
Atto di acquistoThere is usually a space of between six weeks and three months between the signing of the compromesso and the atto di acquisto, or final contract. This must be done in the notaio?s office and is usually quite a formal occasion with buyer, vendor, at least one independent witness, estate agents and all other parties involved in the sale. The notaio reads out loud the atto ? or deeds of sale ? so that both sides are clear about what is being bought and sold. If the buyer does not speak Italian, the law demands that an interpreter is present to translate for the buyer and to give him a copy of the deeds in his own language.
Declared valueThe practice of under-declaring the value of a property in Italy (saying that it is worth less than its value) was regarded as an acceptable, if strange, way of reducing purchase (registration) tax for both buyer and vendor. As of June 2006, the system has changed and is now much more transparent. Estate agents are now obliged to put the true cost of a property on the sale documents but both sides will pay tax based on the rateable value of the house and land, or catasto, which is about a third of its real value.
CostsThe total cost of buying a house in Italy is 12% of the purchase price. This is broken down in the following way. The buyer will have to pay purchase or registration tax, which is 10% of the price if the property is urban and the buyer is non-resident in Italy, or 18% on agricultural property. This tax comes down to 3% if the buyer is resident or says he will become resident within 18 months of signing the final contract. If the buyer says he will become resident and then either doesn?t or does but sells the house within five years without buying another within two years, the state has the right to claw back the 7% difference. The notaio?s fee is between 1% and 2.5% of the value of the house and estate agency fees are usually 3% of the purchase price, plus IVA of 20%.
Making a willPeople with holiday homes in Italy should make a will in their home country, since that law will prevail in the event of death. Foreigners who are resident in Italy will be subject to Italian law. This stipulates that assets are shared by immediate family members, in proportion to their importance in the family hierarchy.