A Travellers Guide to Italy

Italy, a founder member of the EU, is a relatively young country which was only unified as a nation in 1861. It has land borders with Austria, France, San Marino, Slovenia, and Switzerland while the Vatican City is a separate state within Rome. The country's long coastline, stretching some 7,600km, has contributed to problems with immigration control. Besides deep rooted problems, such as the need to import most raw materials, the country is also plagued by corruption and crime.

The economy is divided by the industrial north and less developed and poorer agricultural south.

As in much of Europe, property prices have been rising. According to the Royal Institution of Chartered Surveyor's European Housing Review 2005, the housing market has been on 'a sustained upward swing for five years'. Last year 'agents were reporting that market activity was still brisk - although it had fallen below its peak'. Most Italian property is sold as freehold although Italian property law recognizes various other property rights and tenures. Usufruct is a right to use the property of another for a fixed period but not to change its nature.

Leasehold rights, which may be for a fixed period of 20 years or more or in perpetuity, allow the lessor to use the property as if he or she were the owner, subject to a requirement to improve the land and pay a rent. Building rights entitle the holder to construct a building on land belonging to a third party, or maintain a building standing on land belonging to a third party. Building rights may be for a limited or unlimited period of time, but if for a fixed period, ownership of the building reverts to the owner of the land on their expiry. Italian property transfer processes have some similarities to France. Based on land registration, the state regulated process involves both purchaser and seller using the same state appointed notary to complete the transaction.

The process begins with a formal and nominally binding offer to purchase arranged through an estate agent. If accepted during the set period of the offer, this is followed by a preliminary contract signed by both parties (at which point a deposit will be paid). Finally comes formal completion. The notary, in front of whom the completion documents must be signed, will verify that the documentation is correct, that the property is free from registered encumbrances and checks the identities of the parties involved. Searches beyond what is included in the registry are unlikely to be exhaustive.

The notary also collects the taxes and duties involved. These vary between Non-resident property purchasers are treated differently to resident purchasers in a number of ways. In particular they will be obliged to pay higher registration fees, although residence can be claimed within a fixed time subsequent to the purchase. Total fees and charges are likely to amount to between 5 per cent and 20 per cent, including estate agents fee, if applicable, registration fees or VAT if a new property, and the notary's fee. Fees in the order of 8 to 10 per cent are also payable on sale of a property.

Some charges are based on the registered value of the property, which is likely to be less that the actual purchase price. This also applies to local property taxes, the amount of which varies from region to region. The Imposta Comunale surgli Immobili is paid by both resident and non resident owners - although the amount is halved for property that is not habitable. In addition there are likely to be charges for local services. Italian taxation is undergoing reform. From the start of 2005 personal tax rates have been set on a graduating scale ranging from 23 per cent to 39 per cent, with a 4 per cent supplement for income in excess of 100,000 euro.

Property owners are obliged to file annual tax returns but are only taxable on income arising in Italy. However, there tax is levied on the notional rental value of the property (based on its registered value) whether or not it is rented out. Both residents and non-resident property owners are subject to Italian inheritance law and tax. But the good news is that currently there is no capital gains tax to pay on property gains.

A Guidline on Restoration Properties in Italy

Undertaking a renovation project in Italy can be very challenging but can also be plenty of satisfaction. Putting your own sign on a property to restore means to bring back to life a home and it is also very important to keep the region's architectural traditions, resulting into a home that reflects your own identity and expectations and at the same time can also fit into its natural surroundings. Restoring is not for everyone, it means time and money. Undertaking a restoration project, of course, is time and energy consuming. For a standard home, assuming the building structure is sound, a complete renovation with a supervision service takes between 6 months and a year.

A good way to save money is to do some of the physical restoration work yourself, but before starting to restore a home make sure you have the necessary technical skills, in order to avoid expensive setbacks, loss of time and poor results. For example, could you restore the roof of your Italian ruin by yourself? Are you able to check the condition of the existing foundations? Don't worry, in case you need some help you can always ask your Italian Real Estate Agency, which usually works with a network of selected partners and professionals, such as architects (Architetto) or Geometra (surveyors), which you must have to sign any restoration projects. We suggest you use an architect, especially if you have particular requests to realize your dream home. However, the use of a Geometra is usually enough to satisfy any standard needs.

The expenses of restoration for an Italian property depend on several factors, mainly on the size, on the structural conditions of the house to renovate and on the quality of materials that you choose. Italy has a very wide variety of great materials and a long tradition of their skilful use. If you have a generous budget, you can restore your dream home using local traditional materials like terracotta floors, wooden beams, travertine, etc. If you have a more modest budget, you can use medium-priced materials that still have very good standards and will allow you to have a high-quality result.

Labour costs and sometimes even prices of materials vary from one region to another. For example costs in Tuscany can go from €1000/1500 per square metre for a renovation that keeps original features using standard quality materials, to €2000/2500 using luxury materials. Umbria is a bit less expensive and prices go from €1200 to €1400 per sq. m.; Sardinia from €700 to €1000, about €1000 are needed in Liguria, from €700 to €1500 in Le Marche and from €400 to €750 per square metre for a restoration in Sicily.

You should also be aware that renovation estimates usually refer to building work alone and do not include plumbing, electrician's fees or finishing costs. You should ask for these separately or at least ask whether they are included. Moreover, a good way to avoid contingencies putting you over your budget, is to choose a property with an agreed fixed-price contract on its restoration work. Finally, you can obviously save a considerable amount of money in the long-term by following the principles of green building that is energy efficient and environmentally friendly. 

Green building incurs higher initial costs, but will save you money in the long run and will reduce the overall impact on the environment. To give you an idea, a restoration using green-building materials that incurs a 15/20 per cent increase in costs on normal restoration, can save you up to 50/60 per cent on utility bills; whereas if we consider reconstruction with an upfront investment of 30% more, you can almost forget your bills and save in the region of 90%. At any rate, once the project of your restoration property is done, you will be for sure the proud owner of an Italian home that fully reflects your taste and your identity.