Buying property in Italy isn’t quite a straightforward process. There are quite a few useful things you need to know to ensure the process goes as smoothly as possible and insights from a local property expert can prove invaluable.
This guide is written by Daniel Shillito, co-founder of D&G Property Advice, a consultancy that helps foreign buyers successfully purchase their dream property in Italy.
Daniel knows the process inside out, understands how to avoid possible pitfalls and prevent disappointment. We are sure you will find his insights very helpful.
How long can you stay in Italy, and can you stay longer if you own property?
Italy currently provides no residency or citizenship rights based upon property purchase.
Buying property won’t provide approval for any type of visa to stay in Italy, however, it will provide you with an Italian address, which is a necessary step in applying for residency.
If you are a citizen of a country that has a bilateral visa waiver agreement with the EU, you can come and stay in Italy for 90 days without any visa. This includes citizens of Canada, the USA, the UK, Australia, New Zealand and others. You can view the complete list here.
If your country of citizenship is not on the list, you have to apply for a Schengen visa in your country of residence to be able to visit Italy. The Schengen visa will give you the same 90 days of stay in the country. It’s more than enough for property viewings and location research.
To stay for longer non-EU citizens need to apply for a non-tourist visa which once you are in the country needs to be converted into residency.
You will find more information about your residency options in Italy in our Living In Italy guide, section ‘Residency in Italy for non-EU citizens.’
Non-tourists visas are issued by Italian consulates in your home country. You can get a visa for work, study and for retirement or non-working purposes.
Once you enter Italy with a non-tourist visa you are required to apply immediately for a Permesso di Soggiorno (permit to stay) based upon the visa in your possession.
European citizens can stay indefinitely, however, they do need to register at the local Comune (council office) and meet minimum residency administration requirements.
Can a foreigner buy a house in Italy?
Yes, most foreign citizens can buy a house in Italy, although there are some restrictions for citizens of certain countries who are non-resident in Italy.
All EU citizens are free to buy property in Italy. The same goes for citizens of the countries that have bilateral agreements with Italy concerning a property purchase.
If there’s no agreement, Italy uses the reciprocity rule to allow purchases by foreigners.
The reciprocity rule states that if an Italian can buy in your country according to its own rules about foreign property ownership, then you can buy in Italy.
US, UK, Canadian and Chinese citizens, among others, for example, have no restrictions on buying a house in Italy.
If you are a Swiss national not resident in Italy there will be certain restrictions for you in the same way as Switzerland restricts Italian citizens when they purchase property in Switzerland. For Brazilian citizens not resident in Italy, there are restrictions on buying rural properties.
There are no restrictions if you become a legal resident in Italy before buying a property.
How much does it cost to buy property in Italy?
Property purchase in Italy is quite costly.
A rule of thumb to consider is that around 15% of the purchase price is what you can expect to pay in purchase taxes, Notaio fees, selling agent fees, survey or site inspection costs, legal fees and government taxes.
Ideally, your adviser on the ground in Italy should be able to provide you with a summary of estimated costs and when you can expect to be required to pay them.
Is it difficult to buy property in Italy?
Compared to many countries and especially western developed nations, the buying process is not particularly straightforward in Italy. To many, it will seem a long, unwieldy, and not especially transparent or modern process.
The Bank of Italy notes that statistically, the average timeframe to complete a residential purchase in Italy is 9 months.
The buyer resources you need to assemble are not necessarily easy to identify or source in Italy, and you may be dissuaded to use other professionals by the seller or their agents.
This is why having a trusted property consultant to help you through the buying process can be invaluable.
Buying property in Italy: pitfalls and how to avoid them
Being prepared will reap many rewards and keep you protected from a poor outcome or a very delayed purchase timeframe.
1. Make sure your estate agent is properly licenced and registered
Recently, the head of Italy property portal Cercacasa highlighted that 40% of real estate transactions in Italy occur without a certified agent, and through private owners or unauthorized individuals.
If you follow this path, it exposes you as a buyer to significant risks.
Unauthorized agents do not have any legal or insurance protections in place. They very often use duplicated or fake property listings to attract buyers, and sometimes even charge fees to introduce buyers to owners.
Also, only registered property agents can guarantee the registration of a property purchase contract which takes us to the next important point.
2. Make sure your purchase contract is registered with the local tax office
When you as a buyer sign a formal purchase contract and transfer the deposit, your agent should register the contract at the local tax office.
It is advisable registering the PPC with the Land Registry (Conservatoria registry). This establishes a significant guarantee in the buyer’s favour against possible Seller’s creditors.
3. Sometimes it pays to ask for a second opinion
An overwhelming number of agents in Italy represent the seller, not the buyer. As a buyer, you need to think carefully (for yourself) about their advice before simply taking it at face value.
4. Different culture – different thinking
When it comes to selling agents and owners, it pays to adapt your thinking to learn about the local culture!
Local agents are used to dealing predominantly with local Italians who have grown up knowing them, and knowing what to expect.
Here, again, a property consultant with local knowledge can be of great help navigating you through the cultural intricacies of the buying process.
5. Have an independent professional inspect the property before you sign the contract
Another potential trap for new buyers in Italy is managing the technical inspection process of the property and considering unregulated property renovations.
The Italian market allows sellers to make their property available for sale and promise that any property irregularities will be fixed or ‘made right’ by the date of the proposed closing, or Rogito.
Now, this approach can appear safe, or even an attractive proposition. In reality, however, it’s not so.
This approach can easily mask the nature and extent of required physical changes or paperwork changes, and the costs involved, for example, retrospective planning permissions, local council approvals for recent or current works, or potential demolition.
Discovering these issues too late will impact the sale timing and costs required to ensure the property is in order for a legal title transfer.
Ensuring you appoint independent professionals to inspect the property and advise on both the technical and legal aspects, will help you avoid these pitfalls. It can either steer you away from the property or help you identify any immediate property fixes required to be done by the seller.
Buying property in Italy for €1
The 1 euro home schemes in Italy are attracting a lot of interest.
These schemes are in operation in 30-40 small Italian towns to help resolve problems of dwindling populations and local economies.
This situation has arisen thanks to the departure of successive generations of Italians, leaving many homes abandoned and over time, in disrepair.
The scheme conditions actually vary across these towns as there is no coordination or regulation that requires town mayors to operate their scheme like other towns. Hence there is wide variation in how homes are made available and how the schemes are administered.
Perhaps the greatest area in which this scheme has potential is where foreign investment can not only rescue dilapidated homes through renovation and redevelopment but how it could also support increased participation in the many small, local communities that form the social fabric of these towns.
It is these local communities and their traditional ways of life that make the small villages what they are. New investment is also critical to building and maintaining social programs and charitable enterprises.
More than ever before ‘new locals’ in many small medieval towns and borghi are the new creators, injecting fresh energy into old homes and spaces, and creating new opportunities for themselves and others.
This movement might just be attracting a new type of resident – and not based upon the asking price of the available homes.
What you’re going to find in the €1 towns are homes that are not currently habitable and are expected to be seriously renovated. Many towns require commitments by new buyers to renovate within a certain period of time.
The most essential element when considering a purchase of a home within a 1€ scheme is this: where is your construction crew?
Be prepared to take time, slow down from the pace of living from where you’re coming from, and try not to treat your new project like a renovation makeover requiring a record turnaround time.
Your budget should reflect the costs that it will take to complete a renovation project, including researched costs of all local professionals and the costs of managing the project.
Buying to renovate and renovations incentives in Italy
Are you planning to buy a dilapidated house or a property in need of TLC and renovate it to create your own perfect home? Right now it’s a perfect time to do so because you can get significant tax deductions for renovations.
The purpose of these renovation tax-credit schemes is to encourage investment into upgrading and improving the energy efficiency and sustainability of Italian property.
There are at least 5 schemes available that could potentially help you save money on renovating property in Italy.
The schemes include the Refurbishment Bonus, the Eco-Bonus, the Facade Bonus, the Seismic Bonus and the Eco Superbonus.
Tax deductions offered by the schemes range from 50% deductions for the refurbishment bonus right on up to 110% for the Eco Superbonus.
The Eco Superbonus has gained a lot of attention and led to more than 8 billion euros in claims for qualifying renovations up until September 2021.
It has recently been extended beyond December 2021. Government ministers are working out how the claiming eligibility rules might change for renovations in 2022 and 2023.
Claims can be made whether you live in Italy or not since there exists a mechanism to exchange tax credits for reduced renovations costs with a financier or qualified building company in Italy.
Considering the current demand stimulated by these incentives, renovations need to be carefully planned and managed by trusted professionals in Italy.
Understanding the legal elements when buying property in Italy
Every purchase transaction in Italy requires a notary public (Notaio) to be involved. This figure represents the Italian State and is a neutral party in the transaction.
A notary also collects the government’s purchase taxes on the settlement or closing date.
Sometimes a notary is involved or appointed only late in the purchase process, a few weeks before the Rogito (closing) when all of the parties believe the property and all its supporting documents are in order and the property is ready to be legally transferred to the buyer.
In other cases, you can engage a notary early in the transaction, even at the time of the first offer, if you want to check the offer document and introduce any special conditions.
Either way, one thing is for sure: you as a buyer have the legal right to select and appoint a notary according to your own needs and preferences. This may not seem at first to be an important point, however, it can be more important than you may realise.
When you choose who will be your notary, look at the following:
- Make sure the cost of the services is reasonable. You can get quotes from several notaries to choose the most suitable.
- If you don’t speak Italian, make sure your notary speaks your language. This way it will be easier for you to understand and discuss purchase process issues.
Do I need a solicitor in Italy?
It is not a legal requirement to hire a solicitor when buying a property in Italy. Most Italians conduct a house purchase using only an estate agent and a notary.
However there are many cases when hiring a lawyer can be very useful, especially for larger transactions, and when the purchase is particularly complex with several different titles or complex selling arrangements.
It’s also useful when there are particular considerations regarding estate planning.
A bilingual solicitor will act solely in your interest as opposed to the notaio who represents the Italian State.
Can I get a mortgage in Italy to buy property ?
One question we’re often asked is, can I obtain a mortgage in Italy, from an Italian bank?
If you are looking for a mortgage it’s best to start discussions with a bank or broker before you enter into a property sale contract (Proposta or Preliminare). This way you can obtain some confidence about likely loan approval for your particular circumstances.
A bank or mortgage broker can assess your overall situation before you start negotiating.
Italian banks don’t usually provide pre-approved finance, however, you don’t want to become committed to a property purchase and then find out the bank will not support you. This is why you should engage with your bank or mortgage adviser or broker early in your property search.
Your eligibility for a mortgage in Italy will be driven by three main factors:
- The current bank lending policy & European directives
- The bank’s loan serviceability requirements
- The quality and type of property you have chosen and its readiness to be legally transferred to you
Bank serviceability (or affordability) measures are quite conservative. Affordability calculations take into account all your existing mortgages worldwide, and they won’t necessarily treat investment property lending anything like they do in other countries.
It pays therefore to have your specific situation reviewed before buying with a mortgage.
Make sure that the need for a mortgage is clearly communicated in any offer letters or contracts. This way there will be no misunderstandings and the sellers of the property will be prepared to work with you as you arrange bank finance for the final closing or settlement day.
Your mortgage arrangement is likely to include a bank’s arrangement fee (typically 1% of the loan amount), brokerage fees, the cost of a technical survey of the property, and mortgage registration tax.
You should also be aware that the notaio’s fees will be higher when a mortgage is involved, as they are required to draw up the mortgage deed on the bank’s behalf in Italy.
Is buying property in Italy a good investment?
They say that good investing is a lot about buying at the right price.
If you can buy anything (including real estate) when prices are depressed, or after a major shock has reduced value, then you will be in a much better position to benefit when prices rise again.
Right now Italy is showing relatively lower prices when compared to similar properties in other European countries, and at a time when global housing markets are booming.
As more capital finds its way to Italy, more buyers compete for similar properties and this could naturally create upward pressure on property prices, based upon simple economic principles of supply and demand.
Tax-related factors that contribute to the value of investing in Italy include:
- A favourable capital gains tax regime for personal buyers. There is no capital gains tax once a property is held for at least 5 years.
- Relatively low inheritance taxes compared to many other countries. Property passed down from Italian residents (for example expats retiring to enjoy la dolce vita) is not subject to the same inheritance tax rates as you will find for example in France or in the UK.
The fact Italy currently provides tax incentives to renovate property which are available to non-Italian residents adds to the attraction of investing in Italian property.
All property investors know that value can be added through smart renovations – and in the case of Italy’s tax bonus schemes, potentially significant renovation costs are currently being partly funded by the government.
Italy has many small villages in rural areas, and where there is no strong local demand, prices are unlikely to rise or fall dramatically, so investors need to be aware of the particular location they want to invest in.
Historically, buyers coming to Italy have often arrived with multiple aims in mind – and so good investment returns have not always been the main objective.
Investment return is often considered secondary or at least together with other desires, like reconnecting to Italian ancestry, moving to Italy as a part of retirement plans, or simply a wish to spend regular time enjoying Italy’s envious lifestyle.
Whether you are buying a permanent home, holiday home or an investment property in Italy, this guide will improve your buying journey enabling you to be much better prepared and therefore much more likely to succeed.
D&G Property Advice is not a real estate agent or a law firm and the above information does not represent legal or financial advice. You should seek out advice that is particular to your own specific circumstances and in this way be assured that the advice you follow is relevant and appropriate for you.