BeanScene Magazine

Buying property in Italy

When you fall in love, it’s only natural to want to share a house together. To do all those domestic things and get to know each other on an intimate day-to-day level. Well, the same applies to a country.

Many who’ve fallen head-over-heels in love with Italy say they only really got to know the country, and to feel embraced into it, after they bought a property here and began making regular visits. Going on holiday is one thing, but owning a home is quite another. You start to become one of the locals, part of the community – even if it’s just a holiday home visited a few times a year. It’s about getting to know all the secret gems that a small area possesses and seeing wonderful aspects of Italian life never really grasped as a tourist.

Italy has beguiled visitors for centuries. And, it wasn’t long before smitten italophiles began securing themselves a toehold.European aristocrats, artists and convalescents began snapping up seaside villas in elegant Liguria from the late 1800s. Hot on their heels in the mid-20th century came movie stars and creative types who set a fashion for buying homes in glamorous Campania – the wind tousling their hair as they cruised the Amalfi Drive, the sun bronzing their limbs as they lazed on the rocks of Capri. But the real foreign-buyer mania – a phenomenon which is still going strong, and makes Italian sociologists write books about it – got going in the 1980s, when the English went absolutely mad for rural Tuscany. Soon half the world started following their example. Rolling hills crowned with bristling cypress trees, a stout farmhouse in honeyed stone ringed by tidy vineyards… a new Italian idyll was born.

The Tuscan quest remains an influential one, and today a country farmhouse is still the type of property most sought-after by foreign buyers.To actually get one in Tuscany itself, you’d need to spend $700,000 (€500,000) or more. Prices are only slightly lower in neighbouring Umbria and even in nearby Marche, which was once hailed as the inexpensive alternative to Tuscany. But, central Italy isn’t the only part of the country with exquisite rural landscapes. You can find charming country homes starting at about $180,000 (€120,000) in beautiful places like Abruzzo, Lazio, Puglia and Campania. They’re even cheaper still in lovely, but little-known Basilicata. Over the last 10 years, thousands of foreign buyers have found an affordable rural paradise in places like these. If your budget is small, be aware that rural property prices all over Italy tend to drop in inverse proportion to altitude. Go for a mountain hideaway if you really want rock-bottom prices. Five-figure sums are common up high.

Before we look at other kinds of property you might buy – city apartments, villas on the seaside or lakeside, etc – it’s worth taking a moment to consider two big factors that make buying a home here so appealing. Local food and wine? Well yes of course, but even more importantly, gorgeous architecture and a rock-steady property market. Italy enjoys one of the best architectural traditions in the world. The long-standing Italian flair for the visual – from art to design, from architecture to fashion – means that even an average Italian home sports at least a modicum of architectural charm. For proof of the Italian genius for building, you need look no further than the English language, which has been inspired over the centuries to borrow countless architectural words from the Italian tongue - balcony, terrace, corridor, arcade, parapet, balustrade, pergola, loggia, portico, cupola and many more. When you buy a home in Italy, you buy a thing of beauty.

 

And, there’s the secure value of that thing of beauty. Italy’s property market is famously stable, with no cycle of mad booms and busts. Slow, steady growth means money is safely spent. When it comes to the business of property, Italians show eminent sense and self-control. They don’t take out mortgages they can’t afford, or rely heavily on “buy-to-let” rent to pay for a property. Italians view homes with a kind of reverence, perhaps because homes are linked to family. They generally don’t view property as a cash cow or a get-rich-quick scheme, and they certainly don’t over-build. Tight laws restrict what can be built and where, in order to protect the beauty of the country and the character of its architecture. The knock-on effect of this is to safeguard the value of existing homes. So, your lovely villa will never be decimated in value by an ugly tower block being built next door.

Italy’s admirably sensible attitude to property is well-illustrated by what has happened in the country since the start of the recent global financial crisis. While property prices tumbled in other European countries, notably Britain, they yawned and blinked and ultimately did nothing dramatic in Italy. Prices stopped rising, but except for some homes in over-priced central Florence, they didn’t actually go down. The most that happened was that some vendors became more amenable to offers below their asking price. In a climate of far fewer foreign buyers, some of those buyers discovered that they could get away with making an offer of five to 10% below the stated price in northern and central Italy, and up to as much as 15% below in southern Italy. In short, it became a buyer’s market. The good news is that this situation hasn’t changed much yet.

 

But, what should you buy, and where? Apart from the farmhouses and rural homes, let’s look at cities. Italy’s lovely cities represent some of the country’s best places to invest. The value of an urban property is secure since people aren’t suddenly going to stop wanting to live in Rome. The holiday rental prospects on a city property can be even better than those on a farmhouse or seaside home because the visiting season is longer. People take short breaks to cities at all times of the year. There might also be medium-term rental prospects with visiting businesspeople or students.

Italy’s most visited cities, Venice, Florence and Rome,  are also, of course, the most expensive for property. The average two-bedroom apartment in Venice asks for around $700,000 (€500,000). You would, however, be able to fill your rentals calendar for ten months of the year, charging around $1,000 to $1600 (€800-€1,300) a week. Rome and Florence are only very slightly cheaper places to buy. More-affordable Italian cities with very good rental prospects include Perugia and Assisi in Umbria – both of which are highly recommended. Perugia has plenty of tourists and students and quite a few international businesspeople sent here on medium-term contracts. The city gives easy access to the glorious Umbrian countryside – in which property is more expensive than in Perugia itself and where a well-situated two-bedroom apartment might ask around $230,000 (€180,000). Assisi is only slightly more expensive, and offers excellent rental prospects by virtue of the countless souls who make religious pilgrimages here year-round, inspired by the animal-loving local boy who became Saint Francis.

 

Then there are the seaside or lakeside properties that also enjoy great rental prospects. And, they make a great place for you to spend time in, too. Lovers of the Mediterranean should definitely consider the island of Sardinia, one of the most beautiful (and unspoilt) coastal places in Europe. Or try rocky, exotic Puglia with its quirky buildings and fabulous food. The golden sands of Marche, Abruzzo and western Liguria are good value, while the rocky coves of eastern Liguria and Campania’s Amalfi Coast are blindingly expensive. For lakes, there’s no beating exquisite Lake Como - although one of its most famous foreign residents, George Clooney, is now selling his villa here. It’s possible to find two-bedroom properties round Lake Como for less than about $284,000 (€200,000). Likewise, on nearby Lakes Garda and Maggiore. But, have you considered warm, tranquil Lake Trasimeno in Umbria? Or beautiful, up-and-coming Lake Bolsena in Lazio?

Yet another another choice is whether you want something old or new. There’s the slick, modern-built property, or it might be a dream to restore a centuries-old building.  Restoring is hugely popular with foreign buyers. Estate agents are well-versed in local bureaucracy and can help secure all relevant planning permissions, as well as recommending builders and craftsmen. Italian building-work standards are very high, and restorers are very conscientious and hard-working. Or, you could buy an old place that someone else has already lovingly restored. Wherever and whatever you choose to buy one thing is sure: it’ll be the beginning of a beautiful relationship.

Further reading:
www.where-to-buy-in-italy.com

Getting a mortgage

The whole idea of buying a piece of Italy might appeal, but how do you go about financing the process? For a start, Italian lenders are used to dealing with foreign buyers. The growth of low cost airlines is also having a flow-on effect with routes to less known destinations now opening up. This has seen the islands such as Sicily and Sardinia, where the rices are 25% cheper than the mainland, enter the property market.

The Italian Chamber of Commerce – Melbourne says that Italian think-tank, Nomisma, has forecast rises in property values again from next year. The Italian market has weathered the financial storm because prudent mortgage lending means there is far lower household and business debt.

The chamber says that exchange rate fluctuations means that it makes sense to get a mortgage in Italy. The Italian system has no self-certification mortgages, so to apply for one proof of earnings is needed. Employees must produce three months of wage slips and six months of bank statements. The self-employed must show three years of audited accounts, 12 months of business bank statements and six months from your personal account. Your net income and outgoings will be assessed and will have to remain under 45% for any chance of a mortgage approval. Banks will not take any account of a property’s potential rental earnings. Generally, banks will give up to 80% of the purchase price with a maximum term of 40 years. However, if you are doing a restoration project or building a new property, the maximum loan is usually 70% of the final value of the new home or 80% of the cost of restoration work. But, funds will only be released as the work progresses.

For a new property, the first payment will be released once 50% of the work has been completed, which is typically when outside walls and roof are finished. Surveyor’s reports will be requested to confirm this.

Mortgages can be interest only and repayments offer a choice of variable, fixed-rate or a combination of both.