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From Rome to London, details of the Vatican’s property empire revealed

Prestigious addresses in Paris, London and Geneva and 3,000 properties across Rome: the Vatican has revealed more details of its real estate empire, a source of income - and scandal.

Published: 21 February 2021 10:01 CET
From Rome to London, details of the Vatican's property empire revealed
Photo: Andreas Solaro/AFP

Nunzio Galantino, who was brought in two years ago by Pope Francis to centralise the Vatican's assets, says he is tired of “sensationalist” stories about the riches of the papacy.

“When people say that most real estate in Rome belongs to the Catholic Church and the Vatican, it's simply not true,” the bishop, who heads the Administration of the Patrimony of the Apostolic See (APSA), told AFP.

Yet the extent of the properties held by the Vatican are still eye-watering, while the management of one particular London development sparked a major scandal in the heart of the Catholic Church.

A century of investments

The investments date back to 1929, when the Vatican City State was founded as an independent territory in a deal with Italy that included compensation for lands seized from the former Papal States.

Among the church assets taken was the huge Quirinale palace, once home to 30 popes but now the residency of the Italian president.

Then pope Pius XI decided to use the money to invest in property, including abroad, “to ensure the freedom and independence of the Church”, Galantino said.

APSA has for years managed 737 properties in the heart of Paris, around the boulevard Saint-Michel, Odeon or the Champs-Elysees, covering almost 56,000 square metres and worth an estimated 595.5 million euros. 

In London, it has 27 properties – among them addresses in St James's Square, Kensington and New Bond Street, covering some 4,600 square metres and worth about 108.5 million euros.

Meanwhile in Switzerland, notably in Geneva and Lausanne, the Church has 140 properties covering 16,000 square metres and worth more than 91 million euros.

Priceless Italian assets

Back in Rome, the Vatican constructed entire buildings, notably on two main streets converging on St Peter's Square, including the famous Via della Conciliazione.

Today, APSA also directly manages the rental of 2,400 apartments and 600 offices and shops in Italy, which brought in 99 million euros in 2019.

Some 15 percent are let on the open market, 30 percent at subsidised rates, notably to staff and pensioners, and the rest are occupied by Vatican institutions or loaned out for free to schools or universities.

Image: Daniel Leal-Olivas / AFP

One of Galantino's goals is to improve “the performance” of the Vatican's property assets, noting that some apartments are empty and others dilapidated after years of use.

But he insists that far from being mercantile, the Holy See recently allotted a property for the pope's charity work, noting that one sumptuous building on one of Rome's most sought-after hills is used for training for the clergy.

Galantino says it is hard to put a value on the Vatican's Italian holdings, not least because buildings such as St Peter's Basilica are priceless, but it is likely to stretch to several billion euros just for the properties on the rental market.

In addition there are hundreds of apartments managed by a ministry overseeing the Church's missionary activities, bringing in another three to four billion euros, according to economic daily Il Sole 24 Ore.

APSA is still drawing up an inventory of its Italian holdings, which Galantino hopes to complete by spring.


Dodgy deals

Pope Francis has also recently brought under the control of APSA the London properties acquired by the powerful Secretariat of State – the central administration of the Vatican – in circuitous deals through Italian intermediaries.

They notably include 60 Sloane Avenue, in the heart of London's exclusive Chelsea district, bought in two stages from 2014.

An Italian financier who acted as a Vatican intermediary in the deal was arrested last year on corruption charges, although subsequently released.

The previous year, Vatican police launched an extraordinary raid on the Secretariat of State's offices.

And last year, a senior official in charge at the time of the deal, Cardinal Angelo Becciu, was abruptly fired.

The Church was also embarrassed after the Malta-based investment fund that manages another of its London property portfolios, comprising five luxury apartments, used the proceeds to invest in a film about gay music star Elton John, 'Rocketman'.

The pope has said he wants to withdraw from these investments as quickly as possible, to minimise any risk to the Church's reputation.

Property scandals are nothing new. Last month, the Vatican courts sentenced a former head of the Vatican Bank, the IOR, to nine years in prison for embezzlement and money laundering relating to corrupt real estate deals.

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PROPERTY

Five pitfalls to watch out for when buying an old house in Italy

Tempted to snap up a little slice of Italy at a bargain price? The older the house, the more potential issues you'll need to be aware of.

Published: 29 March 2024 10:17 CET
Updated: 29 March 2024 12:03 CET
Five pitfalls to watch out for when buying an old house in Italy

Italians themselves may have very little interest in buying or fixing up Italy’s many unwanted old houses, but international visitors are often swept away by the charm of these rustic buildings in romantic settings.

It’s easy to see why. The quirky structures, period details, and picturesque surroundings – not to mention low asking prices – inspire countless people worldwide every year to investigate buying an Italian home of their own, often as an investment or retirement property.

MAP: Where in Italy can you buy homes for one euro?

International interest in cheap Italian property has only intensified in recent years, with dozens of idyllic villages advertising ‘one euro’ homes and other low-cost property offers aimed specifically at foreigners.

Savvy buyers are aware that non è tutto oro quel che luccica (all that glitters is not gold), and quickly realise that these long-neglected buildings really cost somewhat more than one euro to buy and renovate. Still, some of The Local’s readers tell us these offers are worth taking advantage of.

But whether you’re looking at spending a couple of thousand euros or much more on your dream Italian property, there’s always a lot to consider – including some issues that you’re unlikely to experience when buying a home in your home country.

These unexpected issues can turn the Italian dream into a bit of a nightmare, and sometimes lead to buyers having to abandon a purchase, losing money in the process.

But if you’re aware of potential pitfalls in advance, you’re far more likely to be able to complete the purchase process with no major problems at all.

Property taxes and fees

Of course you’ll be expecting tax as part of the property purchase process, but Italian property taxes are particularly steep.

Experts say the total cost of buying in Italy will add approximately ten percent to the purchase price, and advise prospective buyers to budget accordingly.

There’s stamp duty, which is between two and nine percent of the cadastral value (valore catastale) of the property, with a minimum threshold of €1,000 even on the cheapest homes. Plus VAT at four or ten percent, land registry tax, and, if applicable, mortgage tax.

You can also expect to pay between one and five percent of the purchase price as a fee to the estate agent. In Italy agents work for both the buyer and seller – and collect compensation from both parties once the deal is done.

Then you’ll likely need a couple of thousand euros for the notary, plus a similar fee for any other agents you use, such as a mortgage broker, plus legal fees if a lawyer is involved.

See more about the ‘hidden’ costs of buying property as a foreigner in Italy.

Bickering relatives

It may sound unbelievable to non-Italians, but it’s not unusual to find that even the smallest old properties, or parts of them, are legally divided up between dozens of family members due to Italy’s inheritance rules.

One buyer The Local spoke to found herself having to deal with 22 people, all relatives, who each turned out to own a share of a small property she was buying in Mussomeli, Sicily; one of the first places in the country to sell off old properties for a euro.

Toti Nigrelli, the mayor of Mussomeli, said “having to negotiate the sale with multiple owners” was normal.

While this buyer impressively managed to negotiate the deal with all 22 parties, in many cases similar sales fall through because relatives – distant cousins, great-aunts, long-lost nephews – are often not on good terms, disagree over the sale, or can’t be traced.

At the very least, you will need to check the property’s records carefully to make sure there are no surprises in store – such as long-lost relatives who might turn up to claim the property back after you’ve bought it.

A trullo house before renovation in Cisternino, Puglia. AFP PHOTO / GIUSEPPE CACACE

Illegal builds

Another thing that often astounds foreigners who buy property in Italy is the enormous number of illegal builds – homes that were built entirely without permits – on the market as well as the even greater number of houses featuring modifications which were never officially approved or recorded.

Illegal housebuilding in Italy is often thought of as a decades-old issue, but recent data shows that, in 2021, 15 houses were built illegally for ever 100 authorised. Illegal building is twice as common in the south of the country as in the north, and thousands of cases are detected every year – though few people are ever prosecuted.

If you buy a house with undeclared modifications, the buyer is usually held responsible for paying to regularise the paperwork with the town hall. If you catch this issue early enough – and not all sellers or estate agents will inform you about them – you may be able to negotiate for the seller to cover these costs before you make an agreement.

If however you end up unknowingly buying a house built without the correct permissions, or if you never regularise any unauthorised changes, the property will likely prove very difficult to sell on.

This is one of many reasons why buyers need to carefully check the catasto (land registry or cadastral records) of a property themselves, and have a notary check everything is in order.

Conservation rules

When you initially view and fall in love with that charming stone house in the historic centre of a gorgeous Italian hilltop town, rules and regulations are probably not the first thing on your mind.

But it pays to know that old homes featuring frescoes, loggias or ancient stone cellars, as appealing as they are, are often protected by Italy’s cultural heritage authority – meaning more red tape for their owners.

One reader was forced to give up her dream of buying a portion of a two-floor 1700s building in the village of Civita Castellana, Lazio, because it needed renovation work to make it livable – but the frescoed walls, decorated fireplaces and elegant stonework entrance were vincolati (under restrictions) due to Italy’s historic conservation rules.

READ ALSO: Tuscany or Basilicata? How Italy’s international property market is changing

In many cases, this means renovation work can’t be carried out at all, or will be subject to reams of paperwork and close monitoring from authorities known as the sovraintendenza belle arti. To make things trickier, rules can also vary by local authority.

If you think a property you’re interested in might be subject to these rules, it’s always wise to consult the local sovraintendenza at an early stage. And of course, you’ll want to get hold of the records of the property from the catasto (land registry).

Resale prices

The high taxes and costs involved in buying and selling a property in Italy are often said to be one reason why, for most Italians, the concept of climbing the property ladder doesn’t really exist in the way it does in some countries.

Italy’s property market is unusual in Europe in that house prices on average are relatively stagnant. With the exception of some types of property – such as new-build apartments and luxury homes – overall prices have risen little over the past decade.

This is partly because the Italian market is weighed down by a large volume of old, neglected properties in need of major work – hence schemes like the one-euro sales and the (formerly popular but now-unavailable) 110 percent ‘superbonus’ for renovations.

But overall, if your main motivation for buying an old Italian home and renovating it is profit, you’ll need to consider that the resale potential may not be what you’d hope. The exceptions to this are at the pricier end of the market, in most major city centres, and in tourist hotspots.

See more in The Local’s Italian property section.

Do you have any more tips on buying a property in Italy? We’d love to hear from you in the comments section below.

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