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House Purchasing Advice

An Italian property expert offers advice on how to safely buy a property in Italy and ensure you avoid some everyday mistakes.

Recent changes in the Italian tax regime have cut house-buying costs by 10-15%.

Allied to Italy's timeless appeal it means there has rarely been a better time to invest in the Italy real estate market. Yet as with any real estate transaction, there are simple steps to stick to to ensure buying your dream home doesn't become a nightmare. Here are the 10 that should top your list:

1) THERE'S MORE THAN JUST TUSCANY

Tuscany remains overseas buyers' favourite part of Italy. Yet other areas such as Puglia, Sicily and Le Marche are far cheaper and also have the same heady mix of stupendous vistas and clear blue waters. Try various locations to see what areas you like best. Ensure you are not too far from local amenities, unless you deliberately want to be in splendid isolation. And when it comes to viewing potential purchases, there is such a thing as too many. Trying to cram 45 into a weekend simply turns into a feat of endurance. By property No35, chances are you will 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 REALTOR

Getting taken for a ride by some incompetent cowboy could prove costly. Genuine real estate agents must hold a professional licence, qualification and indemnity insurance and be registered with a Chamber of Commerce. Their publicity material and website should show membership of one or more of the following: AICI (Italian Association of Estate Agents), FIMAA (Federation of Mediators and Agents) or FIAIP (Federation of Professional Estate Agents).

4) DON'T TAKE ON TOO MUCH

Don't over-commit yourself. The idea of renovating a rustic ruin may sound romantic but are you prepared for the work and expense? Complete restorations can cost up to Euro 1,500 per sq m. Other common errors include buying property far bigger than you strictly need. A large farmhouse with pool and 5 hectares sounds fantastic, but don't ignore the maintenance involved.

5) ENGAGE A LAWYER

Despite an unfamiliar legal system in an unfamiliar language, some foreign buyers cut corners by blustering their way through the process without a lawyer (avvocato).

The dangers are countless. First, many sign papers they do not understand and are then bound to an irrevocable legal commitment. Second, it means a number of vital checks that a good lawyer would carry out instead go ignored.

They include ensuring the vendor has a registered title and is legally authorised to sell. Where a property is jointly owned by a number of family members, all must agree to the sale And the property must have proper planning permission.

Also, Italian law means any loans, mortgages, utility bills, etc, relating to the house pass to the new owner, so a lawyer must ascertain no such charges remain.

Try to hire a reputable, independent English-speaking avvocato who comes recommended. Or consult a lawyers' directory such as hg.org.

6) GET TO KNOW THE PROCESS

After a price is thrashed out the purchaser submits a proposta irrevocabile with a payment of some 5% to take the house off the market for around 15 days. If the buyer's lawyer and surveyor give the go-ahead, the following stage is when both sides sign a compromesso, in which they both decide on a completion schedule. A second deposit is paid, bringing the buyer's total downpayment to around 30%. Either side risks financial penalties for defaulting at this step. The last step is to sign the final contract (rogito) in the office of a notary, who scrutinises all paperwork and lodges them with the Land Registry. The buyer pays the balance, usually by bank draft from an Italian bank. He will need to have obtained a fiscal code from tax authorities to apply for a bank account.

7) KNOW YOUR ADDITIONAL COSTS

Fees and taxes usually add 7%-10% to a resale property and 12-15% for a new-build. Typical add-on costs: 3% to the realtor, US$700-2100 to a surveyor, US$210-280 per hour for a lawyer and up to US$7,000 for a notary. For new-builds, 4% VAT is levied if within a year and a half the buyer registers for Italian residency. Otherwise VAT is 10%. For previously inhabited properties, the buyer pays 3% the cadastral value if residency is registered for within a year and a half, otherwise 10%. Cadastral value is decided by the Land Registry based on factors such as number of rooms, location, floor area, etc. It is usually less than 50% of purchase price.

8) GET THE BEST CURRENCY DEAL

Over 2009, Pound-Euro values plunged to £1/Euro 1.059 at their trough and hit £1/Euro 1.185 at their peak. So a UK buyer weighing up a Euro 400,000 villa could have faced shelling out up to £41,250 more just for taking the plunge at the wrong moment. 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 a bank and could in comparison save you some £16,000 on a £400,000 deal.

9) CONSIDER RENTAL

Do you plan to let out your property? If so, it is advisable to be close to transport hubs. Aim for a maximum hour and a half from an international airport. In big towns and cities, consider proximity to public transport as not all visitors will have access to a vehicle. Villas and apartments near a beach rent better and keep their investment value over time because of restrictions on further construction in areas near the coast.

10) TAKE A CRACK AT THE LANGUAGE

Give Italian your best shot. Be aware that in contrast to the Netherlands, fewer than 3 in 10 Italians know English, among the lowest percentages on the continent. Don't be afraid to make a fool of yourself as your attempts, no matter how ham-fisted, will go down well with locals.

AUTHOR BIO

The author writes for property in Italy specialists Homes and Villas Abroad, who showcase 2,500 homes in Italy. Her areas of expertise include Sicily property.