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10 tips when buying your dream Italian home

By: Adriana Giglioli

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Britain's Royal Institution of Chartered Surveyors last year named Italy as one of the most profitable countries in which to invest in property as its market has kept a stability not seen in the rest of Europe and the US. That is because Italy real estate prices did not rise as precipitously as they did in other countries that saw a property bubble and so did not have as far to fall.

Another advantage, in particular for UK purchasers is the fact that between 2005 and Spring 2009 Italian property prices increased by 30% while the Euro strengthened by just over a quarter against the Pound – meaning a Briton with a typical Italian property saw its Sterling value soar by nearly two-thirds in that time.

Italian tax changes have reduced purchasing costs by 10-15%. Allied to Italy's timeless appeal it means there has rarely been a better time to invest in Italian property. Yet as with any property purchase, especially in a foreign country, there are commonsense guidelines to abide by to ensure buying your dream home doesn't become a nightmare. Here are the 10 most crucial:

1) CONSIDER DIFFERENT REGIONS
Tuscany is Italy's best-known region, attracting one in three visitors who comes to the country. It's also it's most expensive. Yet other areas such as Le Marche, Calabria and Abruzzo are far cheaper and also have stunning landscapes and beaches. 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 properties, there is such a thing as too many. Trying to cram 40 visits into a weekend simply turns into a gruelling slog. And by No 35, chances are you'll remember little of the first two dozen.

2) BUDGET REALISTICALLY
Yet Tuscany's picture-postcard allure is undeniable, from the lush rolling hills, vineyards and olive groves of its countryside to historic appeal of its art cities such as Florence, Lucca and Siena. Buying here remains a gilt-edged investment. But bear in mind that apart from a few pockets, such as Garfagnana to the north of the region and Maremma to the south, most of Tuscany is not cheap and in highly sought-after areas such as Arezzo and Siena, you would be doing well to pick up a three-bedroom farmhouse for much less than US$750,000. In addition, don't expect half-price bargains in Italy – discounts of around 10% remain typical.

3) FIND A RELIABLE AGENT
By law all estate agents must have a professional licence, qualification and indemnity insurance and be registered with their local chamber of commerce. Additionally, their website and other publicity material should show they belong to either the AICI (Italian Association of Estate Agents), FIMAA (Federation of Mediators and Agents) or FIAIP (Federation of Professional Estate Agents). When investing in a foreign country it's important to find professionals you can trust, so this is one occasion to be thankful for Italy's fastidious legal framework.

4) 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.

5) TAKE LEGAL ADVICE
Many investors sign documents and then discover they have made a binding commitment. Engage a reputable lawyer with experience of the Italian system. Are there plans to build a sewage works 500 metres away? Unpaid mortgages on the property? Built without planning permission? A good lawyer will avoid such pitfalls.

6) KNOW THE PROCESS
Once buyer and seller decide a price, the buyer deposits around 5% and makes an offer (proposta irrevocabile di acquisto) to "reserve" the property for around two weeks. If his surveyor and/or lawyer give the go-ahead, a preliminary sales contract (compromesso) is signed in which both parties agree a timetable and the buyer makes a second deposit, bringing his payments to 25-30%. Either side risks financial penalties for defaulting at this step. The final stage sees the final deed of sale (atto di vendita), signed in a notary's office. The buyer settles the outstanding sum with an Italian bank draft.

7) KNOW YOUR COSTS
Taxes, fees and commissions can add 7%-10% on top of the price of resale properties and 12-15% for new-builds. Typically, this can include 3% to the estate agent, Euro 150-200 per hour for a solicitor, Euro 500-1500 for a surveyor and Euro 2,000-5,000 for the notary.
For new-builds, 4% VAT is payable if within 18 months of purchase you register for official Italian residency – a relatively straightforward process. Otherwise the rate rises to 10%. For non-new-build properties, the buyer pays 3% of the "cadastral value" if residency is registered for within 18 months. Otherwise the rate rises to 10% of cadastral value. Cadastral value – often far less than the purchase price – is assigned by the Land Registry based on factors such as floor area, number of rooms, etc.

8) 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 save you some £16,000 on a £400,000 deal

9) MAXIMISE RENTAL POTENTIAL
Will your property primarily be a holiday/retirement home or do you plan to rent it out at some stage? If the latter, proximity to transport hubs is vital. 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. Properties near a beach not only rent better, they also keep their value because of restrictions on additional construction near the coast.

10) SPEAK SOME ITALIAN
Make an effort to learn some, even if you only plan on using your new home for a couple of weeks a year. As a rule, the further south you go, the less likely it is people will speak a foreign language, And your efforts, no matter how rudimentary, will go down well with Italians.

Article Source: http://depositarticles.com/

The author is a real estate expert at property in Italy specialists Homes and Villas Abroad. Her areas of expertise include Calabria property and Umbria real estate.

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