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PROPERTY

Five things non-residents need to know about buying property in Italy

With taxes, bureaucracy and sometimes distance to consider, buying a house in Italy can be a long-winded process - especially for foreign citizens living elsewhere.

Five things non-residents need to know about buying property in Italy
Looking for a place in Italy to call home? There are a few extra things non-residents may need to know. Photo by Andrew Scherle on Unsplash

Contrary to popular belief, there are few legal restrictions for non-residents when it comes to buying property in Italy.

There is a wealth of options in Italy making buying cheaper, and sometimes easier, such as the one-euro homes offers or the nuda proprieta system.

READ ALSO: Can you still buy Italy’s one-euro homes in 2024?

While there is a lot to consider, such as additional costs and a language barrier if you are not fluent in Italian, buying a property in Italy allows many non-residents to escape – at least occasionally – to a Mediterranean climate and immerse themselves in the culture. 

So how do prospective buyers go about finding their ideal properties in Italy, and what are the necessary factors to consider before you start?

Find out if you have the right to buy in Italy

Most countries allow their citizens to buy property in Italy and vice versa. However, you might still want to check if your country has a reciprocal agreement with Italy on purchasing property.

If not, there’s a chance you might not be able to buy, as per article 16 of the Decreto Regio which states that foreign nationals have the same civil rights as Italian citizens on condition of reciprocity.

For example, Canada recently passed the Prohibition on the Purchase of Residential Property by Non-Canadians Act, which says foreigners cannot buy in Canada unless in special circumstances. This appears to go against Italy’s reciprocal agreement, so if you are planning to buy in Italy from Canada, you may need to get advice from a lawyer.

This does not apply if you are from a European Union country or a European Economic Area country, in which case you have the same rights in this situation as an Italian citizen.

Start the property search

Once you’re sure you can buy, the exciting process of finding your Italian home can begin, although if you’re not physically in Italy this can be trickier.

Popular Italian property search sites include immobiliare.it or idealista.it. There are also numerous agencies around Italy specialising in serving the international property market, which you should be able to find online once you’ve narrowed down your search area.

READ ALSO: Five clever ways to find a cheap home in Italy

As with any property search in your home country, important factors to consider when looking at listings include the state of the property, the extent of any renovations needed, the purchasing deposit (which is usually around 10 to 20 percent of the sale price), and the size of repayments on a mortgage, should you need one.

The type of property you buy will also impact the amount of tax you’re liable to pay, though tax is always higher on second homes in Italy than on primary residences. See a guide to the taxes you’ll need to pay here.

Get your paperwork in order

Even as a non-resident, you will need to get an Italian tax code (codice fiscale) in order to pay your housing deposit, plus any other taxes due after the property purchase (more on that below).

To get an Italian tax code, you can apply at the Italian tax office (Agenzia della Entrata) in Italy, or at your nearest Italian consulate in your home country.

READ ALSO: Everything you need to know about having a second home in Italy

A word of caution: the first option may be tricky if you are not well-versed in Italian, and you may need to make an appointment first.

Be aware of the lengthy mortgage process

Yes, as a non-resident without Italian citizenship you are eligible to get an Italian mortgage via an Italian bank. But you’ll have to open an Italian bank account to do so, and your tax code (as mentioned above) will be necessary for this too.

According to Studio Legale Metta, a non-resident is able to apply for a mortgage of 50 to 60 percent of the overall property value. The application process should take around ten weeks.

The steps include: a personal solvency check to review your financial information, a pre-approval mortgage application, a property compliance check where a surveyor inspects the property for an evaluation report, a title check where a notary reviews the property title, a final mortgage approval and, a funds release. 

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

Before the process even starts, you will more than likely have to provide documentation such as bank statements, tax returns, passport copies, credit reports and criminal records, all of which may have to be translated into Italian.

A lot of banks also ask for the borrower to be present at the final signing, so take into consideration travel costs and times when applying.

A notary is always needed

Whether you’re Italian, a foreign national residing in Italy, or a non-resident, the services of a notary are always necessary in any property purchase.

Notaries in Italy cost a lot, but they are crucial to you getting your keys, and even more crucial if you need a mortgage.

Without their sign-off on any of the documents, the sale may fall through. But they do a lot more than simply signing: they conduct the legal transfer, prepare the deed of sale and check the title if you go down the mortgage route. It’s also possible to transfer money for the sale through the notary’s escrow account.

Please note that The Local is unable to advise on individual cases. For more information on applying for a mortgage in Italy as a non-resident, consult a qualified financial advisor.

Planning to buy a property in Italy? Read more in The Local’s Italian property section.

Member comments

  1. A notary in our town was of the mistaken opinion that Italians could not buy in Australia and that therefore under the reciprocity rule, Australians could not buy in Italy. But a more experience notary from the provincial capital knew better, so it pays to pick your notary with care.

  2. An Australian, I bought a house here during the pandemic. I had a codice fiscale and knew my legal rights (mindful of Italian contradictoriness); however, on the day of the contract-signing, the notary declared I could not buy the house. Anguish. The agents found another notary. Thousands of euros later, I had to pay the first notary – for nothing. Every single party involved demanded payment in cash – an outrageous idea in Australia. So, proceed with absolute caution, is my advice.

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PROPERTY

Is now a good time to buy a home in Italy?

If you're looking at buying Italian property, is now the right moment? Falling interest rates and a sluggish market mean it may be as good a time as any, experts say.

Is now a good time to buy a home in Italy?

High demand, low supply and a recent cut in interest rates mean more potential buyers could soon be entering the Italian property market, pushing prices further upward.

This may not seem like the ideal time to buy property – but if you’re already considering a purchase, experts say it may be better to pull the trigger now.

Here’s a more detailed look at why right now may (or may not) be the right time to snap up the Italian home of your dreams.

Lower mortgage rates

Italian mortgage rates are now falling after two years of steady increases. The trend, first recorded at the start of 2024, shows no sign of reversing again as we near the end of the second quarter of the year.

Lenders are confident that the European Central Bank (ECB) will soon move to further decrease inflation, meaning that Italian banks are now starting to offer mortgages at lower rates again.

READ ALSO: Can I get a mortgage in Italy as a foreigner?

Higher inflation had since 2022 pushed rates up amid the cost of living crisis, making it more expensive to buy a house and slowing down Italy’s real estate market almost everywhere except for in the larger cities.

According to monthly reports from ABI, the Italian Banking Association, from November to April the average rate on new mortgages fell from 4.5 to 3.79 percent.

This decrease of 0.71 percentage points seems small, but has a significant impact on a mortgage of hundreds of thousands of euros, experts say.

“On a new 25-year loan of 150,000 euros, the corresponding saving on the monthly installment is 60 euros per month,” Guido Bertolino, head of business development at mortgage comparison portal MutuiSupermarket, tells Il Post.

Of course, this doesn’t bring interest rates back down to the low levels seen until early-mid 2022, when they averaged around 1.5 percent.

Italy’s average interest rates on new and existing mortgages. Image: Il Post

Rates are expected to fall further later this year following ECB announcements – but, depending on the type of mortgage you’re in the market for, experts say it may be better not to wait for this to happen.

“When our clients call us and ask if it is worth waiting for further rate reductions to get a mortgage, what we explain is that future cuts will impact variable-rate mortgages only,” Bertolino says.

“On fixed-rate mortgages the reduction is already evident,” he says.

Slow sales

Another advantage to buying now, Bertolino points out, is that better mortgage rates will likely get the property market moving in a few months’ time – and house prices are expected to rise as a result.

The Italian real estate market is coming out of a complicated two years, in which sales have been down because of the increase in interest rates.

READ ALSO: Five clever ways to find a cheap home in Italy

Many would-be buyers are believed to have postponed the purchase while waiting for rates to go down. Data from Italy’s Revenue Agency on completed transactions shows that residential property sales were down 10 percent from the previous year.

The total average time needed to sell a house in Italy also increased slightly from five and a half to six months, the data showed, which suggests that it is taking longer to find a buyer.

What’s happening with house prices now?

The short answer is, not a lot: as has been the trend for Italy’s property market for many years.

According to official statistics bureau Istat, in 2023, house prices increased by an average of 1.3 percent: this was mainly driven by a 5.6 percent in the prices of new build homes, which remain a small part of the total number of properties available on the Italian market. Otherwise, prices remained more or less stable.

The other driver of increasing prices is location. Demand – particularly among investors – remains concentrated in large cities, according to Marzio Breglia, president of the Scenari Immobiliari research centre.

“Since 2020, the price of homes in the centre of Milan has increased by 15 percent, three times more than the Italian average,” he tells Il Post.

However, he points out, this is “less than in other major European cities: In Berlin they grew by 27 percent and in Paris by 20. And so did the rents.”

READ ALSO: Five things non-residents need to know about buying property in Italy

Another sector still seeing steady growth is the international market for second homes – so if you’re looking to buy from an agency specialising in this type of property, you may notice that prices per square metre are higher than average.

But Italy’s property market for the most part remains bogged down by a large number of older properties which can prove difficult to sell.

Some 54 percent of Italy’s housing stock is aged over 50 years, which is above the European average, according to analysis of Eurostat data by Italian financial newspaper Il Sole 24 Ore in 2021.

The rural location of most such properties, plus the amount of renovation work required, generally means there’s little interest from Italian buyers.

This does mean however that international buyers who are looking to buy outside of the most popular areas may find such properties on sale at surprisingly low prices.

For anyone looking to sell an Italian property in the coming months, whether asking prices are stagnating or rising will depend on the property’s location, condition, and type.

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