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Proceed With Caution Before Buying Italian Property

Sep 2, 2008
Unlike most European countries Italy so far has few property developers aiming at attracting foreign nationals. So investors will generally be obliged to look for properties on the open market.

Your first decision will be to narrow down the area in which you wish to purchase, checking on its letting potential and that there is an airport nearby with convenient take off and landing times to and from appropriate destinations.

In your property search it is advisable to use a reputable estate agent - all Italian estate agents must have a licence to trade, issued by the local town hall, and must pass oral and written examinations. Set out your requirements and plan a property inspection visit via the agent.

Besides location, your main consideration will be how much the property will cost and what are the costs of purchasing. You can get an idea of property prices by looking at the Residential Landlord properties for sale pages.

Once you have found a property you wish to purchase you should engage a reputable lawyer and if you feel comfortable with the arrangement, put in place a power of attorney that allows him or her to act for you in your absence. Leave a deposit with the lawyer so that he or she can exchange contracts once the searches have been completed.

Before signing any purchase documents it is essential to make enquiries at the Local Registry and Deeds Registry, as well as at the local municipality so as to ensure that the vendor has a registered title to the property and that the chain of title is unbroken. Make sure that there are no mortgages or charges against the property and that planning permissions have been obtained, building regulations complied with, municipal taxes paid and, if the property includes agricultural land, that there are no pre-emptive rights of adjoining landowners. To do this it is advisable to employ a local surveyor who will be prepared to carry out most of these searches.

The first formally binding step in the purchase transaction is made by signing the contract (contratto preliminare or compromesso) drawn up by the vendor or his or her estate agent. This creates a legally binding commitment to purchase on the terms stated.

The deposit paid when signing, of between 10 per cent and 30 per cent of the agreed price, will be forfeited if the purchaser does not complete the deal. If the vendor reneges he or she has to compensate the proposed purchaser by the return of twice the deposit.

Transfer of ownership is subsequently completed when the two parties sign the conveyance or transfer (atto di compravendita) before a notary who oversees the deal and ensures that the transfer takes place according to law.

Notaries are public officials who act for neither of the parties. Their duties are to draw up the deed, see to the payment of any capital gains tax and outstanding penalties for town planning irregularities, and then to register the document - both for the purpose of the title being brought up to date and for the raising of a tax assessment.

A certified copy of the conveyance document issued by the notary as evidence of title and contains the names of the two parties to the transaction, a description of the property with map references, boundaries, price, receipt for the purchase money, details of rights of way and other easements and warranties that the vendor will be the legal owner, that the property is sold with vacant possession and that it is not subject to any charges.

The documents, or course, will all be in Italian but your own lawyer should be able to guide you through the transaction.

Taxes and registration fees should total roughly about 10 per cent of the purchase price. You must also budget for the costs and fees of you lawyer and surveyor. If you are purchasing from a professional builder you will have to pay VAT in addition to a registration tax.

An Italian bank account is a virtual must for payment of local tax, fuel, water and telephone bills.

The Italian and British governments have a double tax treaty which means that you should not have to pay taxes in both countries. But if you rent out your property you must declare the rental income to both the Italian and the British tax authorities.

Proceed with caution;

* visit the property you plan to buy wherever it is situated;

* do not be rushed into buying a property - vendors will encourage you to make a quick decision and to sign up but it is better to lose the opportunity of purchasing a property which seems attractive than to make a hasty decision that you regret of a long time afterwards;

* before signing any documents or paying over any money seek advice on the contract, the specification and the terms of business from qualified legal experts and from an accountant, and ask the estate agent for English translations of all documents which commit you to a purchase;

* when purchasing an apartment obtain written confirmation of maintenance charges and management arrangements;

* ensure that you obtain a proper title to the property you are buying and that there are no encumbrances, such as a mortgage - your lawyer should make these checks;

* ask for a completion date to be included in the sales contract;

* at an early date, compile a list of costs and taxes that you will be liable to pay;

* make sure that you comply with the fiscal rules of the country - check out the regulations regarding taxation of foreign residents, remember the tax collector will want a share of your 'profits'; and

* check any residence requirements.
About the Author
For further information on property abroad and homes overseas visit Fly-2let.co.uk. For comprehensive information on the UK buy to let market visit Residential Landlord.
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