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PROPERTY

Italian property roundup: Best time for Americans to buy and a private island on sale

Fancy owning your very own slice of Sicilian paradise? From a private Italian island on sale to why now might be the best time for Americans to buy property in Italy, catch all the Italian property news you may have missed in The Local's weekly roundup.

Published: 19 January 2022 16:43 CET
Like the idea of owning your very own island in Italy? One just happens to be on sale now.
Like the idea of owning your very own island in Italy? One just happens to be on sale now. Photo by Samuel Ferrara on Unsplash

Why now might be the best time for Americans to buy property in Italy

American dollars are buying more euros than around a year ago, meaning increased Italian property purchasing power with US dollars.

Throughout 2021, the euro has steadily decreased in value against the US dollar, as can be seen in this graph. The current strength of the dollar means that you’ll need less cash to buy a property in euros than you would a year ago.

Based on today’s rate, a property in Italy selling for €100,000 would require $113,478 dollars.

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A year ago the same cost in euros would have required around $123,000 dollars. 

Even on a relatively low house price, that’s a saving of around $10,000. The margin of course gets bigger if you’re dealing with higher value properties. Going up to a property worth €300,000 would mean an extra $27,000 in your pocket in 2022, compared to last year.

If the dollar holds strong and the European Central Bank don’t raise their interest rates, now could be a real opportunity to harness the strong dollar.

A Sicilian island is on sale for €10 million

Imagine the difference in US dollars for a ticket item this big. Isola Lunga (also known as Isola Grande), the largest island in the Stagnone – the largest lagoon area in Sicily – is on the market for €10 million. (That’s around $100,000 cheaper this year compared to a year ago in dollars).

The island stretches 10km and the portion of the island for sale is 88 hectares, which is also home to some disused buildings that can be renovated.

Sicily’s blue sea. A part of that could be yours surrounding your own island. Photo by Antonio Sessa on Unsplash

The Isola Lunga Nature Reserve is a wellness paradise, full of awe-inspiring landscapes and is home to biodiverse flora and fauna.

A dirt road runs through the island, meandering through coastal forests and on one side there’s a white sand beach called ‘Tahiti’ for the beauty and transparency of its sea.

For those interested in purchasing their very own piece of Italian island paradise, the listing and photos can be seen on real estate agent Sotheby’s website.

More help for those under 36 to buy their first home

In the government’s approved Budget Law for this year, tax incentives for the ‘first home bonus’ for young people – in this instance categorised as under 36 – have been extended for the whole of 2022.

The scheme is aimed at young people hoping to get on the property ladder, which offers tax cuts and help with mortgages.

READ ALSO: Under 36? Here’s how Italy plans to help you buy a house

The idea behind the bonus is to eliminate VAT on taxes relating to deeds transfers and the mortgage on the purchase of a home, thereby helping young homebuyers secure a mortgage.

It’s worked well so far with a boom in mortgage applications from young people under 36, according to data from MutuiOnline.

First home mortgages are up 44 percent compared to 2020, with the under 36 incentive scheme reported as a driving factor in the increase.

The report found that 80.6 percent of mortgages requested by this age group in 2021 were for the purchase of their first home. In the last quarter of 2021, nine out of ten mortgages requested by young people were for first homes.

The most popular terms were those of over 25 years, increasing from 46.3 percent in 2020 to 56.6 percent in 2021.

The average amount requested by young people reached an all-time high last year, at €141,800 – as well as for mortgages with a Loan-to-Value of over 80 percent. That’s 44 percent more than in 2020.

READ ALSO: Do you have to be Italian to claim Italy’s building bonuses?

Italy has seen a boom in mortgage applications from those under 36. Photo: Jens Neumann / Pixabay

According to the figures, a young person under 36 applying for a mortgage is on average 30 years old, wants a mortgage term of around 27 years and earns €1,758.

In case you missed it

After renovation plans hung in the balance for homeowners hoping to take advantage of the government’s hugely popular superbonus 110 at the end of 2021, the Italian government has provided some relief by extending the measure into 2022.

The superbonus on single family homes has been approved for the whole of this year, as published in the Budget Law 2022 on December 30th, 2021.

Italy introduced the ‘superbonus 110‘ in May 2020 to kick-start a sluggish economy following the impacts of the pandemic and to breathe new life into the nation’s many neglected properties. It offers homeowners a tax deduction of up to 110 percent on expenses related to making energy upgrades and reducing seismic risk.

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Even though the deadlines are different depending on the property type, single unit homes can benefit from the superbonus throughout the whole of 2022.

30 percent of works must be completed by June 30th 2022 to be able to claim for the whole year, however.

If less than this amount of construction work is carried out by then, no more superbonus will be made available for that property from June until December 2022.

The news gives more time to those who’ve been stuck in queues due to builder shortages and bureaucratic delays and who potentially faced the possibility of this bonus not being continued for this category past 2021.

Other types of buildings have even more opportunity to claim the bonus. Condominiums, owners of buildings consisting of two to four units and third sector organisations will be able to take advantage of the benefit until 2025, with a sliding scale: 110 percent remains valid until 31 December 2023, dropping to 70 percent in 2024 and 65 percent in 2025.

For more information on how the superbonus applies from 2022 onwards and the new deadlines, check HERE.

And there’s a raft of other building bonuses included in the Budget Law 2022. See HERE for how else you can get help with the costs of renovating and upgrading your property.

If you have any tips, stories or thoughts on what we should include in the next edition of the property roundup, we’d love to hear from you. Email us here.

See more in The Local’s Italian property section.

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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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