Buy to Let in Italy

We owned a small property in the baroque "centro storico" of a small Italian city in Puglia in the far south for 5 years from 1999-2005 and while our experience is thus out of date, and culturally and geographically very different from your "Chianti-shire" dream, some elements of our experience might be relevant.

Capital Appreciation?
We used it as a holiday home, and didn't plan to rent it out, and as it only cost 33,000 euros, it didn't represent much of a risk, but on the strength of that time, I'd flag up a couple of cautions.

If you plan this as a long term investment, don't bank on values rising or you even being able to realise the value of your investment fast (i.e to sell or liquidise your asset). So if the return doesn't cover the mortgage, you might struggle to get out with your shirt.

As you will have seen from basic research on Google (e.g. https://www.globalpropertyguide.com/Europe/italy/price-change-10-yearsn the south ) there has been negative inflation, i.e. prices have dropped over the past ten years, in Italy compared with steady growth in UK and meteoric rises in some countries (like there was in the UK in the late 20th Century). We were really lucky to sell when we did, as places used to stick on the market for years. And, having spent E5-7k on rewiring, kitchen and plumbing, in effect lost money by selling for 36,000 Euros, but, because the pound had plummeted against the Euro in that time, made a nice little profit when repatriating the money back to Sterling.

Italy's economy is a basket case, so I can't see that position changing in years to come. In fact if the Populists, Rightists and neo-Nationalists continue their electoral success, they could even crash out of the Euro or go the way of Greece?

Letting fees
We did offer it to local Brit friends who were trying to start up a rental business, but in effect, we lost a few Euros on that because fees, linen, cleaning, publicity, meet and greet etc, soaked up the meagre rental income they achieved. (But then it was just a town centre one-bed apartment with no pool or grounds; presumably you plan to buy something more attractive? Although that implies lots more cost and risk?)

The up-side?
The process of buying was much more straightforward than in the UK; the "immobiliare" (agent) was obliged to act more professionally and accountably that UK EAs and provide translations and assurances that the title was sound, and once you committ to buy, the vendor can't back out without penalty. But maybe we got lucky.

Local bureaucracy was a bit of a nightmare (it took months and at least six visits to "Aquadotte Pugliese" - or whatever it was called - to sign a water contract) but the Town Hall seemed wholly incapable of collecting the local eqauivalent of Council tax so we gave up trying in the end after severl fruitless attempts; maybe Toscan is more digital than Puglia.

In summary?
Having owned small second home and BTL flats in UK however, I would be inclined to examine what you really want to achieve however? If it's a lovely holiday in the sun; fine - but even in Puglia, it froze occasionally in winter in our inland city, and we didn't have central heating. We eventually worked out that as flight prices and car hire rates rose, and restaurant meals stayed stubbornly high in price (unlike the less touristic areas of Spain- where they tumbled in recession) it was cheaper to simply rent or take short holidays.

If its rental income and capital appreciation, I'd feel more comforatble in UK- and even that varies by region. We pumped the 36k Euros from Italy into an (obviously much dearer) English sea-front flat in Kent; but after deciding to rent that, we found % return on capital was low because local wages and rents were so poor. So we flogged that too after 3 years, spent exactly the proceeds on a slightly cheaper BTL in south suburban London; and increased the rent return massively from £600 pcm to £900!

Which funds quite a few European holidays and has returned 60% capital growth; I shall be pleased to pay CGT when we eventually sell; we wouldn't have got that on an overseas property, and at least I understand UK laws, fees and systems.

Sorry that I've not really answered your "anyone done this" Q. But do the risk analysis before committing!

Maybe go over and rent there yourself for a few weeks off season before you buy? And there might be other benefits; at least it forced me to learn a few words of Italian at part time classes to keep the grey cells active. Buona fortuna!

I think you'd be best off posting in an Italian holiday type forum.

If you can find a mproperty and get an agreement with the vendor, then using the Rent to Buy scheme COULD be the right way to go for you, but you should note that properties sold under such agreements tend to be higher priced than "normal" sales, but you would first have to find someone willing to sell to you under such a scheme.

The Italian Rent to Buy scheme does work, but you need to negotiate very carefully with the vendor and make sure what was agreed is actually written in the contratto which both vendor and buyer sign.

Buyer needs to negotiate deposit - which can be any agreed amount from 10% of agreed property price - and monthly rent and agreed proportion of outstanding balance at end of the term.

The agreed amount can be split into 2 parts, part 1 is the agreed monthly payment in addition to the rent, and part 2 is the agreed final payment at the end of the term, payment 2 can be anything from zero upwards and MUST be paid to gain full ownership of the property.

Also, you will find that the Italian government will want their share of taxes, fees and charges at the start, not at the end of the contract when the renter/buyer finally takes full ownership.

One of the posters above mentioned water - in the cities, you have to go to the water company's offices and ask them to give you a supply if it's been turned off.

What happens is they turn up at your property and fit a water meter then turn on the supply, usually within a couple of days.

One interesting point is that, if you don't get nall the right permissions for renting the the Financial Police have the power to confiscate the property and sell it off, but I understand that this very rarely happens - there was a case about 5 years ago somewhere south of Florence - in Tuscany - where the estate owners were transferring property between themselves and renting out to family and basically evading taxes and charges on various rents and transfers, the FP got wind of it and eventually confiscated the entire estate, total value about 45million euros, all lost to the state.

As regards to the weather, they have in the last month had a lot of snow in Tuscany which caused some surprise, rivers and streams are even now runnig high with all the melted snow and rain, they are not used to the stuff, they have bins on the side of the road and people just help themselves to grit from them to spread, I don't think the authorities do it like they do here in the UK.

Back to rent to buy - if you do go for it, get a good translator and very carefully scrutinize the contract before signing to make sure there is nothing unexpected and everything is written down as agreed, and MAKE SURE you understand the penalties and consequences if either side break the contract terms.

Hi,

I have a gite in France that I bought using a French mortgage - using BNP Paribas ... this doesn't show up on UK credit rating.

I do rent it out - but only to cover the costs of the mortgage.

If you are interested in buying somewhere - make sure that it is easy to get to - so near an airport etc.

France might be easier - as you can get to it from ferry ports in the UK.

But don't expect to make any real money!

Mark

This is the Italian version of Rightmove - the link shows properties for sale in Tuscany but they don't show whether or not seller would accept the rent to buy scheme, should you want to go down that route.

https://www.casa.it/vendita-residenziale/in-toscana/lista-1

If you do browse, bear in mind my comment above about Nuda Proprieta

If you click on Affitti it will show rentals, which can be had long term from about 450 euros per month, depending on location and size - usually if you rent then the only fees you pay to be a renter are deposit which is agreed with the owner and could be anything up to 3 months' rent, and if you rent through an agency the total you pay the agency is one month's rent which is their commission, which the owner also pays as well.