Sept. 5, 2016
About Italy and Italian property market is written many articles, which created certain stereotypes.
As for the foreign buyers of "concrete gold", while saying "Italy" many of them remember the old borgo for sale in some communes of Sicily for a symbolic price of €1. How much can really cost such a facility, and about other news and features of the Italian market we speak to Christine Gudim-Levkovich, owner and legal representative of the real estate sale company in Italy CasaSolariS-Alta Marea S.r.l.
Italian magnet for buyers
Italy is in the number of countries with many cultural and historical attractions. In addition, it is extremely attractive because of the unique climate and friendliness of the citizens.
Currently in the real estate market of Italy there is a unique situation:
- so many choices and an excessive offer from the sellers,
- certain difficulties in obtaining financing from banks,
- weak demand from potential buyers.
All this has led to the fact that property prices in some parts of Italy declined over the last 10 years by 50%. Accordingly, now buyers have the opportunity to purchase housing at prices, which were hard to imagine 5-10 years ago – even below the cost of construction of the object.
Mostly people from CIS countries prefer large cities, where there is the opportunity for future employment and education of the younger generation.
At the same time, due to an extensive offer on the real estate market of Italy, wealthy people with unlimited financial resources can implement their dream. They can buy castles and villas that belong to the category of rare and unique objects. I mean villas like "Villa Feltrinelli", "Villa Carlotta" and others - they are in many ways of the superior level than villas purchased in Como in recent years by some celebrities and businessmen.
The objects of greatest interest for the investor “of an average hand", cost from €20 000 to €70 000. Basically it's an apartment or a full-fledged 4-storey building located in the heart of Piedmont: Alessandria, Torino, Novara, Cuneo.
In Milan today for €20 000 or more it is possible to buy a small apartment that requires renovations. The standard price for 1-bedroom apartment in some areas of the city dropped to €50 000 - €60 000.It can be a 1-bedroom apartment that require minimal repair.
In the city center prices for secondary housing is still quite high (from €4000 - €5000 per square meter). But there are pleasant surprises, for example, today in one of the most promising areas of Milan, Isola, it is possible to purchase at a price of €5000 per square meter an apartment in new housing built using modern construction technologies. Comfortable 1- or 2-bedroom apartment of 50-60 square meters costs €250 000 - €300 000, garage to be paid separately.
In the area of Piedmont for €70 000 - €100 000 euros you can buy a 4-storey house/villa with panoramic mountain views and an extensive area of 250-350 sq. m (great for a large family). These are the areas of Novara, Alessandria, which main advantage is the nearby Malpensa airport in Milan (40-100 km), and 80-150 km from the sea.
In resort areas such as Liguria, Tuscany, Emilia, Romagna, Sardinia, the situation on the real estate market is in constant motion and not homogeneous. For example, if we talk about Sardinia, after the flood of 2013, prices in some areas dropped to a record 66%. This, of course, is about the unique economic situation on the market which happens extremely rarely and is a good opportunity for investors with experience.
About possibility of acquisition of real estate for a symbolic price of €1.
Where from on the sites of agencies and real estate portals appear the objects for €1? Some villages have been deserted for one reason or another (for example, after the earthquake of 1968). The Italian Commune of Sicily (Ganji and Salemi) first started to put these properties on sale for a nominal fee.
Buying a house for €1, the buyer takes the obligation to pay the registration in the Cadastral Division, taxes on housing, as well as notary services. In addition, the future owner must fully restore a property for 2 years from the date of signing of the notarial deed, which is a really difficult condition.
This initiative, according to general opinion, can be a stimulus for the development of the local economy. It allows the Municipality to fund the treasury due to the issuance of construction permits and tax collection.
The buyer has to start reconstruction of the object within 2 months from the date of issuance of a building permit. The average acquisition cost together with the registration and creation of the project may range from €6,000 and more, depending on size and condition of object (at least €500 per sq m). So, I urge all stakeholders to calculate carefully the apparent advantages of this kind of transactions.
The objects having cultural and historical value
A preferential right to purchase real estate objects of historical or cultural value has the Ministry of Cultural Values of Italy. The period, during which the Ministry may exercise this right, is 60 days.
Restoration work must be performed by specialized companies under supervision and only after receiving authorization from the Ministry. Alterations, modification of architectural features and original qualities are unacceptable. In addition, in practice, not everybody can afford such a purchase, as the cost of restoration works in some cases may exceed the price of the object.
Historical prices for villas on the lakes range from €75 000 per villa under restoration and to €10 million for the castle is in excellent condition for sale with antique furniture and art objects.
The process of buying
Before making the deal you need to get a individual tax number (in tax office in Italy or the Italian Consulate at the place of residence). The first stage is the signing of the Proposta di acquisto ("Offer to purchase"), the validity of which may be from 15 to 45 days. It specifies basic conditions. Then is paid a deposit, confirming the seriousness of the buyer in the amount of 5% -10% of the total amount of the transaction.
The second step could be the signing of the Preliminary contract by a Notary (Contratto Preliminare), which creates a legal framework on the rights and obligations of the parties. Money left to the realtor should be added to the Deposit. Its size can be up to 33% of the transaction amount. The introduction of interim payments is based on the mutual agreements of the parties.
When signing the Notarial deed (Atto notarile), the purchaser becomes the full owner and is given the keys of the property. The signatures on the deed are put in the presence of a notary, whose responsibilities include preparation and control of required documentation and verification of payment of the remaining amount, registration fees and taxes.
In accordance with the European legislation, to obtain financing to purchase real estate of residential type the following conditions has to be fulfilled:
- owning the property not less than 3 years;
- the presence of income in Italy (not less than 2 years);
- the amount of monthly payments to the Bank can not exceed 33% from monthly income.
But in spite of the conditions listed above, which are difficult to foreign buyers, is possible flexible system of payment (from 2 to 5 years) with the consent of the seller and under certain financial guarantees for payments. Payments can be done in 1/2/3/6-year periods.
Residence permit when buying property
Many buyers who decided to buy property in Italy in some time start thinking of getting a residence permit with the right or without the right to work. The main conditions to apply at the Consulate of Italy are:
- availability of premise for accommodation (purchased or rented);
- sufficient financial resources or a source of steady income in Italy.
For example, the purchase of a small hotel with 8-10 rooms for €130 000 - € 200 000, allows to obtain autonomous residence permit with the right of labor activity on the territory of Italy.
Till 31.12.2016 is possible to apply an online request to the Ministry of Internal Affairs of Italy while following one of the conditions:
- the possibility of autonomous labor activities;
- the existence of a labor contract;
- implemented investment in compliance with the established limits and financial details (elite residence permit);
- special qualifications of the applicant a residence permit.
After receiving a positive answer from the Ministry of Internal Affairs and the Consulate of Italy the further procedure of the residence permit takes from 20 to 90 days. You will need a valid passport, documents of the property and documentation of extensive financial and economic resources.
Text – Alena Eliseeva, ee24