For everything you need to know about buying property in Italy, here's the Overseas Living buying guide, featuring an overview of the purchasing process and the key points which you will want to take into consideration before packing your bags to view some properties in your chosen region

A land where the high life meets the simplicity of rural living, where a friendly face welcomes you in the square for a good old catch up. A move to this agriculturally rich country can really inspire and remind you of what’s important. Chic ladies strut through the cosmopolitan cities, air kissed greetings and fine clothing prevail in a sophisticated mix of city dwellers. The south brings fine wines, local produce and some real ‘salt of the earth’ Mediterranean people to meet. The dramatic rugged coastlines are contradicted by rolling green hills, historically rich cities with fine glimpses of art. The contrasts in Italy are endless and all here for you to explore.

Contents:

• Country overview
• Property facts
• Buying process
• Area guides

Country overview

Fast facts

Population: 58,145,320 (July 2008 est.)
Capital city: Rome
Major cities: Rome, Milan, Naples, Turin, Palermo, Genoa, Bologna, Florence, Bari, Catania
Languages: Italian
Climate/weather: predominantly Mediterranean; Alpine in far north; hot, dry in south
Location: Southern Europe, a peninsula extending into the central Mediterranean Sea, northeast of Tunisia
Utility costs: There is good range of national companies supplying power and telecommunications. Water is supplied by each different region.

Economy:

• Inflation rate (consumer prices): 2.3 percent (2006 est.)
• GDP (official exchange rate): $1.78 trillion (2006 est.)
• GDP (purchasing power parity): $1.727 trillion (2006 est.)
• GDP (real) growth rate: 1.6 percent (2006 est.)
• Foreign Direct Investment (net inflow): -$2.5 billion

Italy has a diverse economy from the industrially developed north to the relatively poor, less developed, agriculturally dependent south, with high unemployment. The Italian economy is largely driven by small to medium sized companies producing high quality consumer goods. Other sectors that are also strong in the economy are the Service, agriculture and construction.

The over high tax burdens, rigid labour market and over generous pension structure is something that the Italians will be addressing in the following financial year.


Property Facts

• Main property markets
• Ownership and restrictions
• How safe is my contract?
• Mortgages

Main property markets
All property bought in Italy is on a freehold basis.

Forms of ownership/restrictions
There are many ways in which to own a property in Italy. This includes sole or joint ownership. Co-ownership is another very popular way to buy. This is when you own and co-own to enjoy the whole real estate. For example, the apartment is solely yours but you have a responsibility to maintain communal areas.

An alternative is to buy via a company structure; this has potential tax benefits, however it can be a time consuming, and lengthy process, with strict legalities.

Restrictions
Italy has a lot of requirements to meet when investing in its property market, some of which can seem rather confusing. In theory there are no restrictions on foreign buyers, just a lengthy process to endure.

Buyers must be aware of the restrictions before entering into a contract, to ensure no nasty surprises a year or so into purchasing your new property.

Easements (the rights of third parties use on land)
Easements limit the rights and uses of property in Italy. This is irrespective of ownership.

Protected land
Land is quite often protected by heritage, environment, or set aside for military use- Always check the deeds

Family law and Matrimonial property regime
There are strict laws on inheritance and third parties can sometimes have the rights of pre-emption.

Foreign Companies
Companies can buy here as long as Italians have the same rights in the buyer’s home country.

How safe is it?
The Italian property market is highly regulated making most transactions extremely safe and reputable. Always enlist the advice and practices of a lawyer who is bilingual and ideally has the knowledge of both English and Italian law.

One of the main ‘scams’ to look out for when buying in Italy is the tax avoidance scheme (under recording); this is when the price quoted to the notary is lower then the actual sale price paid. This is illegal and holds strict penalties if caught (up to two years imprisonment). Also if the company you buy from (under recording) happen to go bankrupt within two years of purchase, the receivers have the right to challenge the validity of the sale and potentially repossess your property.

Pre-emptive rights are another huge factor to consider when buying in Italy. When you choose your property it is vital to find out if anyone holds pre-emptive rights. If they do, it is advisable to ask them to sign a contract clearly stating they have no intention of buying your property. For, if they were not given first refusal they may evoke their right to buy at a later stage. It is quite common for third parties with these rights to ask for a small fee to sign this contract. It is a small price to pay when looking at the implications that would have the possibility of occurring in the future.

The law of subrogation needs to be looked into as well. This is when any debts, mortgages, taxes etc stays with the property and is passed onto the new owner.

Mortgages
Obtaining an Italian mortgage is possible, however, the lending system in Italy is less developed then that of England. It is therefore advisable to maybe seek a mortgage from an English loaner. If you choose this route, do remember that although the value of your property will remain fixed in Euros, the price will vary as the exchange rate fluctuates and increases.

• Italian banks – 75 percent for foreign buyers
• UK Remortgages – 75-96 percent of your UK property as equity release
• Off Shore lenders – 75 percent of bank loan or Italian property

The buying process

Buying in Italy can be a very lengthy process and a thorough understanding of all tax and legal matters should be sought before deciding on a property. Having said this though, thousands of Brits opt for a stress free life every year and buy without problems. The complexities and red tape issues surrounding property in Italy mean it is very advisable to enlist the work of a solicitor early on in your house hunting, preferably one who has a good working knowledge of both English and Italian law, also one who is bilingual if you are not.

Another huge factor to consider is how you are going to finance your move; this includes taking into account all costs, from legal representation to relocation.

• Choosing an area
• Viewings
• Legal representation
• The sale
• Legal matters
• Total costs

Choosing an area
Italy has some of the most awe-inspiring scenery in Europe and each area has something different to offer. Before deciding on where you would like to live, you must determine why you are buying. An investment could be in a completely different area to relocation. Do your research thoroughly and check out many different areas; this will not only give you a thorough understanding of what you can get for your money, but you may be pleasantly surprised by an area you hadn’t even thought of.

Viewings
Not everyone has time to spend weeks trawling the Italian countryside in search of their new home, thankfully a lot of research can be done via the internet, but as stated before, it is extremely important that you physically view any potential before committing to buy. An Italian estate agent will always arrange a viewing for you, or you can contact the vendor privately if this option is available. When viewing your new home it is advisable to go armed with a list of questions and items to check out. It is also recommended to take pictures to jog your memory on your return to the UK.

Legal representation
Once you have decided on your new home, legal representation is a must. Conveyance is strictly governed by Italian law and notaries (notarios) are the only legal persons who can undertake this task. Notaries are government (completely impartial) representatives. Their job is to ensure all necessary paperwork is carried out to the wishes of both the vendor and buyer, to act as a witness and to register the property on the land register. Once the sale is completed they will also ensure all taxes are paid.

As the notaries are completely impartial, it is advisable to acquire the services of a personal lawyer, again who is bilingual and knows both English and Italian law to look after your interests.

The sale
Once you have found your new home in Italy, the process can begin. Firstly a verbal offer is made, and negotiations can begin. It is common for offers of five-10 percent lower than the asking price to be made. Once a price has been agreed, a preliminary contract can be drawn up and a deposit is usually handed over (the amount varies from off plan to an actual build). This is legally binding. The Estate Agent will put together the contract, but do remember that he/she works on behalf of the vendor so it is vital to employ a lawyer who solely looks after your interests. The contract should include all matters relating to the sell, the property and land. Any agreements that have been made verbally should also be committed in writing. At this stage generally if the buyer pulls out they will forfeit their deposit, if the vendor withdraws they will be made to reimburse twice the original deposit paid.

Although surveys are not a legal requirement, it is always worth having one done, this will not only give a transparency for the sale but it will allow you to correctly budget for any renovations and repair work. If you are obtaining an English mortgage, you will need one completed anyway. It is possible to ask the agent whether one has ever been done and if it has, to get a copy.
A legal investigation will then begin. Searches will be conducted on both the property (to ensure it is sellable) and of course, on the vendor (for any debts). This is also the time to make any searches on persons with pre-emptive rights.

The final stages of the sale include the notary doing all final checks and the final papers signed in front of witnesses at the notary’s office. If you do not speak Italian, then by law you must employ a translator or use your legal representative if they are fluent in Italian, to ensure you fully understand what you are signing.

Once this has been completed and the remaining monies and fees less the deposit have been transferred, the notary can register your property and the deeds can be handed over. It can take up to three months for the deeds to come back to you.


Taxes
At the stage of completion you will have to obtain a tax code number, however it is advisable to obtain this number during the preliminary contract stage. This is very similar to the UK National Insurance number and can be sorted out via any Italian consulate in the UK. It can take a few weeks to come through, so early planning is advisable.


Transfer tax: 10 percent of purchase price
Unless this is going to be your main home this reduces it to three percent

VAT: 10 percent
Unless this will be your main home, it reduces to three percent
If it’s thought of as a luxury property it raises to 20 percent

Legal Fees: Around one percent

NB This figures are based on an average


Area guide

Southern Italy
Southern Italy is famed for its rugged coastline, historic towns and simpler pace of life. With places such as Pompei, Sorrento, and Mount Etna to explore, the opportunities are endless. Southern Italy has often been associated with Mafia run towns but nowadays the traditions of large family structures and values are what really count. Low cost airlines often fly into both Naples and Bari allowing easy access to your new home. Property is averagely priced down here and generally falls into the category of rustic farmhouses nestled into quaint hilltop villages.

Central
Italy’s historic capital of Rome is located in the Lazio region, central Italy. The rich culture and architecture that dates back for centuries is well worth exploring. Property can be extremely expensive here, however venture a little way out and real bargains can be found. Again with low cost airlines jetting tourists in daily, commuting back and forth is never a problem.

Northern Italy
Home to Venice, Verona, Milan, Lake Guarda, and so many more breathtakingly beautiful towns and cities. The traditionally richer part of Italy is a popular haunt amongst international travellers. There is an abundance of airports and train stations to get you out and about but the true diversity of places to explore up here will keep you busy for a fair while.