Your dream of owning a home in Italy seems to be drawing nearer, and you are rightly researching as much as possible so that you can make informed decisions. Something else you are well advised to do is to consult with an independent Italian real estate lawyer from the outset. The Italian property buying process is quite different to the system you may be used to in the UK, and of course you are likely going to face language barriers and numerous cultural differences when it comes to Italian legal procedures.
A specialist Italian property lawyer will steer you away from the common pitfalls, and will also be able to provide you with valuable advice on various aspects of your purchase, some of which may help you reduce the amount of inheritance tax payable when you leave the property to your heirs in the future.
It is advisable that you liaise with your lawyers in your native language, because you will need total clarity on every point that is discussed. Giambrone’s Italian property lawyers are located in both the UK and Italy. They speak fluent English and possess in-depth technical knowledge of Italian property law. They work only in your best interests, and are not affiliated with any property agents or developers, so you can rest assured of their guaranteed independence.
The following information has been compiled by our experts in order to introduce you to the most commonly asked questions about buying a property in Italy. Of course, should you wish to talk to an Italian real estate lawyer from our dedicated team on an individual basis, you are most welcome to contact us.
What are the main differences between buying property in Italy and in the UK?
Whilst there are no restrictions on foreign ownership, buying a property in Italy is considered quite a complex process, with many procedures unique to the Italian market.
The importance of engaging legal assistance at the start cannot be emphasised enough, because even though the process is regulated, it is biased in favour of the seller.
It is not usual for Italian nationals buying property in Italy to seek legal representation in the way that is commonplace in the UK. However, as a non-resident, in order to protect your interests in an unbiased manner, it is highly recommended that you do engage lawyer.
The process varies from that of the UK in that as soon as you have found a property you wish to buy and have made an offer, you need to accompany that offer with a one per cent deposit. Unfortunately, this deposit only binds you as a buyer, the seller can still accept other offers at this stage. More about the process in its entirety is covered further in this guide.
Another difference to note is that under Italian law, the real estate agent for the seller generally receives commission from both buyer and seller, often in the region of two and half to three per cent, although alternative arrangements can be agreed. Agents in Italy must be registered with their local Chamber of Commerce and have a minimum level of qualifications.
What are the common issues experienced when buying Italian real estate?
One of the biggest issues reported by foreign buyers of Italian property, and by Italian real estate lawyers, is that of delays. Depending on the circumstances, it is not unusual for the process between having an offer accepted to exchange of contracts to take several months. This is more often the case when buying rustic property or farmland. If planning permissions are amiss for example, there will be much red tape to get through, and as planning regulations vary considerably from one region to another, there could be a great deal to navigate.
This is another reason why it is absolutely imperative to engage an Italian property law firm from the start, even before you make an offer. They will be able to check that there are no outstanding debts or mortgages attached to the property which you could unwittingly take on with the purchase; they will also look into issues such as planning permission, so that you are fully informed before you put down your one per cent deposit.
What is involved in the process of buying Italian property?
As prevously mentioned, the process begins when you have an offer accepted and the one per cent deposit has been paid. It is good practice at this point to specify a time limit by which you wish to reach the next stage, this will limit the possibility of the seller biding their time in the hope that a better offer comes along.
If the seller accepts your offer then he will have his Italian real estate lawyer draw up a preliminary contract, known as a ‘compromesso’. This contract will show the sale price, the deposit required, the date of completion, the property details and land boundaries and any other applicable clauses such as rights of way.
Your Italian property law firm will inspect the contract and advise you of any issues before you sign. At this stage, prior to signing, you should also instruct a surveyor to conduct investigations to ensure that the property is as it has been described and that it is legally fit for sale and for human habitation as well as being compliant with applicable planning and building registry regulations and free of debt. The survey can be organised through your solicitor.
Once you have signed the compromesso, you will be required to pay a further deposit of between 20 and 30 per cent of the sale price. If at any point after this you decide to pull out, then your deposit will not be refunded. If the seller pulls out, he will have to pay you double your deposit.
When the deposit has been paid, the Notary Public will then carry out their responsibilities. In Italy, although selected by the seller, the Notary acts for both seller and buyer. The Notary carries out a title search to confirm the legal existence and ownership of the property and that there are no third party rights, mortgages or other encumbrances. This process usually takes around six to eight weeks, and your Italian property lawyer will on your behalf make independent examination of everything that has previously been undertaken.
When everything is returned to the satisfaction of you and your Italian real estate lawyer, the next stage can commence. The final balance is paid, the deed of sale is signed and witnessed by the Notary, and then the required duties paid before the sale can be officially registered. The Notary will arrange for the utilities to be transferred to your name and will inform the local police of the change of ownership, in accordance with anti-mafia laws.
Prior to completion, you will need to obtain an Italian tax code (codice fiscal), which is something else your lawyer will assist you with.
Are there taxes or stamp duty to pay on Italian property?
You will need to allow in the region of 10 to 12 per cent of the purchase price to cover the various fees and taxes involved in buying a property in Italy.
Aside from the potential real estate agent fee that we have already mentioned could be in the region of two and a half to three per cent, you will also need to pay a form of property purchase tax. On new Italian properties this is VAT and is payable at nine per cent for non-luxury properties and 19 per cent for luxury property. For resale properties there is a purchase tax of 10 per cent for non-residents and three per cent for residents.
Stamp duty (Bolli) is charged at one per cent for both residents and non-residents.
Notary fees are usually around two and a half per cent of the Declared Land Value of the property. Then there are survey fees to add and of course, your Italian real estate lawyer’s fees.
Are there any special rules for non-residents buying property in Italy?
As a non-resident you will need to pay income tax on your property in Italy, which is calculated on the theoretical rental income of the property during the year. You will only be liable for this tax if the income is over a certain amount.
Giambrone Your own Dedicated Italian Property Solicitor to Protect Your Interests
If there is one piece of advice that stays with you during your research into buying a property in Italy let it be this, engage an Italian real estate lawyer from the outset. Remember that without one, there will be no one working solely in your best interests. At Giambrone our expertise in the area of Italian property law is renowned. We are able to assist you in both the UK and in Italy, and our fluent English speaking specialists are at your service from the moment you commence your search, through to completion and in the future as and when you need advice after you have become an Italian property owner.
To talk to one of our dedicated Italian property solicitors, please contact us.