If you are considering buying property in Italy, this may be the right time to do it: throughout 2014, housing prices have continued to fall, by about 0.7% on new houses, and 1% on resale/existing homes. At the same time, sales have picked up and the trend is expected to continue throughout 2015. In addition, mortgage rates are at historic lows and government bonds (the typical investment used as an alternative to property investment) yield an extremely low interest rate: these factors together signal that this is a good time to buy.
However, don’t rush into it and carefully assess all the pros and cons. Below are some pointers and tips to help you in the process.
While the average discount from the original asking price is 15%, it should be noted that there is a difference between higher value properties in major Italian cities and new houses, for which the discount tends to be lower than 10%, and properties located in the suburbs or resale homes that need some restoration work, where the discount percentage is higher, at 20%. It is always reasonable to present a counter-offer, but avoid keeping the negotiation going for too long if there is real interest in the house or you may risk losing it to another buyer.
Buy a new or resale home?
Buying a house that has just been built or nearing completion has pros and cons.
Here are some of the pros:
- Better energy performance, therefore cheaper to operate;
- New appliances, therefore cheaper to maintain (fewer repairs);
- Ability to customize some of the finishing touches as there is some flexibility during the construction phase;
- Higher rationality of the spaces;
- Almost always comes with at least one parking space;
- For 10 years, the buyer will not have to sustain extraordinary repair costs.
Here are some of the cons:
- There is little room for negotiation on the price;
- The purchase cost is not only higher, but is burdened by higher taxes (you pay the VAT on the actual price, not the registration tax on land value);
- You pay higher property taxes (Tasi and IMU, if applicable).
On the other hand, resale homes tend to more available and less expensive, but usually require some renovation work and upgrades.
Here are some of the pros on resale homes:
- Less expensive;
- More easily available;
- You will benefit from tax breaks for extraordinary/emergency maintenance and energy efficient construction: you can claim 50% of your expenses up to €96,000 in ten years in the case of maintenance, and 65% for energy efficient upgrades.
Here are some of the cons:
- Usually require some renovation work;
- Require more maintenance as appliances are older and may break or wear out;
- They are less energy-efficient and therefore more costly to operate (unless you install the upgrades, which means added cost);
- Somewhat dated design.
Major precautions to take before signing the deed
Have the home inspected! If you hire the services of a serious professional real estate agent, you should be in good hands as the agency will have carried out all necessary inspections and checks. If the house you’re buying is new, your agent will also need to verify that the builder has signed a surety to guarantee the amounts paid or to be paid before the deed. You will also need a licensed professional to go over the contract detailing all the work to be carried out and materials to be employed during construction for the correct execution of the work.
If the home you’re buying is used, you need to make sure that the vendor has the right to sell and that there are no outstanding mortgages that could block the sale. If buying a used home inside a condominium, you will need to verify that there are no outstanding condominium fees from the previous owner.
Stay tuned for the second installment in this series, to be published in two weeks.
In the meantime, consider these six things before buying property in Italy.
And start browsing our Properties for Sale section!