BUYING IN ITALY
Italy is a favourite for holiday homeowners and those seeking a slower pace of life, surrounded by countryside, nature and a rich history. It is also renowned worldwide for its excellent food and wine! Some of the most popular regions include Tuscany, Campania, and increasingly, the unspoiled beauty and relaxed lifestyle offered by Puglia.
WHERE TO BUY
For those wishing to move to Italy, one of the most important questions is which part to move to? The whole of Italy is justifiably famous for its beauty, but if you have no job to go to, no relatives to seek out and no family history to determine location, then the choice is wide open. Scenery is obviously one factor to consider. Do you want the Alps or Dolomites on your doorstep? Do you prefer gentle, rolling hills or are you more of a forests person? Or is your dream to open your balcony windows and gaze out across the blue Mediterranean sea?
Scenery is not the only consideration. The more developed north offers a better chance of work, the centre offers plenty of infrastructure and a larger community of English-speaking expats while the south offers fresher air, almost guaranteed sunshine and plenty of space in which to relax.
If the type of property you are looking for is important then that too can have a bearing. You will not find many tuscan farmhouses in Sicily and you would be unlikely to find a derelict masseria to renovate in Milan!
WHAT TO BUY
New buildings are no more than 20 years old. One of the main advantages of this type of property is that it is a very low maintenance and it ideal if you do not want to be bothered with the inevitable work involved with an older property.
If you are looking to buy a new build in a big city, it will almost always be part of a condominium, and you will almost certainly be buying an apartment. You should be aware that in Italy nearly all property is sold freehold. So, you will own a proportional part of the freehold of the condominium and be responsible for general maintenance, the roof, lifts, etc. New build houses are not uncommon in rural areas either, but because they are less common than older properties, they almost always find a ready market.
There are several other types of property available to inhabit in Italy; these are discussed in depth in our guide.
Buying vs Renting
There are a number of established agents who specialise in renting properties – not just for holidays but also for visitors who, by circumstance or desire, need to base themselves in one place for a few months. If this is the case then you need to be prepared for a fairly bureaucratic process in setting up the rental agreement through an agency. There will be various service charges made, over and above the rental costs itself, and any rental contract over 30 days must be registered at the local tax office, costs for which are shared between the landlord and tenant. Normally, as long as rent isn’t paid in advance at any greater than two monthly instalments then the landlord is entitled to request a deposit equivalent to between one and three months’ rent. Long-term rentals utilities, such as gas, electricity and water, are usually charged to the tenant separately and in addition to the rent, however there are some cases where the rent is inclusive of all or at least some of these utilities. With a signed agreement or contract you will have opportunity for recourse should anything need rectifying for you as a tenant, but reading the small print will be an absolute ‘must’ to ensure you have a complete understanding of the terms of arrangement.
If on the other hand you are more confident about owning a home abroad then purchasing a property in your own right can give you more benefit than might at first be obvious. Not only are you making a financial investment you are also giving yourself a chance to earn an income from rental when you or friends and family are not utilising the property. This may also be a way of preparing for retirement and permanent residency at a later stage in life. The buying process in Italy, although sometimes lengthy (depending on where you are and the officials you deal with), is pretty straightforward.
Selling in Italy
The process for selling a piece of property in Italy is quite similar to the US & UK, even if the market is a bit slow. The country’s real estate industry boomed in the 1980s because of the increased demand in second homes among the expats. However, Italy was bad affected by recession in the 1990s and the property market still hasn’t recovered completely. Nevertheless, Italy is a country of home-owners and most of the local population would rather buy a house than rent one. Many expats also invest in real estate once they decide to settle down in this peninsula.
Owners can either choose to sell their properties on their own or may engage the services of a real estate agent for this purpose. Both the options have their own pros and cons.
LIVING IN ITALY
Expats will be happy to learn that state schools are free, even for foreigners living in Italy who aren’t formal residents. This applies to primary schools, secondary schools and even universities; although enrolment taxes do become applicable after students reach the age of 16.
Still, expats planning to live in Italy for the long term should not overlook state schools. A lot of effort is made to integrate expat children through the use of intensive Italian language classes, cultural activities and remedial classes. Furthermore, parents can enlist the help of tutors at home or arrange private Italian lessons – which can still prove more cost-effective than paying the costly tuition typical of international schools.
Private schools in Italy are generally either those institutions run by religious organisations or mandated by ‘unorthodox’ teaching methods, such as Montessori education.
For the most part, the standard of education does not vary greatly between state and private schools in Italy and the same curriculum is usually strictly adhered to. In fact, some Italians consider private schools to be inferior to public schools, but nonetheless, private schools do offer certain benefits that state schools do not. There tend to be more options than in state schools and there is more emphasis on extra-curricular activities.
Italy ranks among the World Health Organization’s top 10 countries for quality health services (by contrast, the U.S. only holds 37th place, despite being the highest spender). However, although medical facilities are considered to be adequate for any emergencies, some public hospitals are reportedly overcrowded and under-funded.
Of course, you don’t have to rely solely on public health facilities. Like many Italians, you can avail of the parallel private medical service—known as the assicurazione sulla salute—that caters for patients covered by private medical insurance.
Boasting a large economy, developed infrastructure, a beautiful setting and a high quality of life, it is little wonder that many expats are attracted to the idea of working in Italy. According to the IMF, Italy has the eighth largest economy in the world and the fourth largest in Europe. There are, however, big disparities between the northern and southern regions of the country.
Italian companies such as Ferrari and Prada are world-renowned, and the country is well known for being a global fashion centre and manufacturer of automobiles. At the same time, this does not give a full picture since there are regional variations and it actually has a relatively small number of international corporations, while small and medium enterprises create the most jobs.
Northern Italy is well developed, industrialised and responsible for the vast majority of exports. Southern Italy, on the other hand, is economically much weaker, far more agricultural and struggles with much higher rates of unemployment. As a result, the majority of expats work in Italy’s northern regions and in Rome, the Italian capital.
There is one thing that is for sure, Italians have large extended families and family is very important. So the majority of social life is spent with family. Italy is alive with interesting sites, a host of great coffee shops and wonderful personalities.
For Italians there is a host of outdoor activities from spending time on the beach with family and friends to wandering the cobbled roads and doing some shopping on the weekend. There is always something to do there and you will never be doing it alone, so be prepared.
Financing Your Property
Prices in many parts of Italy are still low enough to allow many foreign buyers to purchase outright If you would prefer to take out a mortgage to cover the purchase, then you have several options open to you:
- A sterling-based mortgage: by contacting your bank or an independent mortgage broker you can find out what options are available to you with regards to taking out a mortgage on an Italian-based property.
- A mortgage with an Italian bank: most Italian banks are happy to arrange mortgages to non-residents, although banking costs and taxes will almost certainly be higher than for residents. There will be certain costs involved with such a transaction, such as mortgage application fee, mortgage broker fee, mortgage taxes, a property value survey, notary fees, and insurance, as well as translation/interpreter costs if you do not speak Italian. However, if there is an existing mortgage on the property, you may also be able to take it over at no cost no fee.
- Off-shore mortgage: it may be more convenient for you to follow this course of action, in which case an independent mortgage advisor or a financial advisor would be best placed to assist.
You will have to pay taxes where you are tax resident. This needs careful consideration, but with planning and a little forethought you may be able to pay lower taxes. Residency is a question of fact, there is no choice in the matter; it is a question of physical presence. The UK and Italy have different rules for determining the residency of a taxpayer and this can afford a little flexibility.
If you are running a business in Italy you need to consider very carefully how you generate your profits. Perhaps you’ve been in Italy for a while and business is good and you feel it’s time to place everything on a firm footing but you know that taxes are higher than in the UK and you want a way of declaring what you earn as tax effectively as possible.
As an Italian property owner, whether resident or non resident, you must by law file a tax return in Italy. From 1st January 2007 holiday home owners will have a tax liability based on the cadastral income of their property. If you plan to let your property then get professional advice because Italian rules are not generous.
Cost of Living
The cost of living in Italy can fluctuate greatly depending on whether expats live in the north or south. The northern part of the country tends to be much wealthier than its southern counterpart, and thus prices in the big cities like Milan and Rome are considerably higher than those in the rural areas.