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    • 83dons
    • By 83dons 5th Apr 18, 11:12 AM
    • 48Posts
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    83dons
    Buy to Let in Italy
    • #1
    • 5th Apr 18, 11:12 AM
    Buy to Let in Italy 5th Apr 18 at 11:12 AM
    Hello I am looking for some advice in how to go about securing a property in Italy to use as a holiday home for a few weeks a year and to let out for the rest of the time as a holiday apartment (ie for weeks or months at a time). My problem is that I do not have the funds to buy a property outright in Italy so I was planning on looking into getting a mortgage or some form of rent to buy agreement whereby I can let out the property with the aim being to fully fund the mortgage/rent payments from the monies gathered in (or in addition to a regular monthly payment from myself). This way I can eventually pay off the property and own it and can also benefit from having a holiday home for some of the year. Can you provide some advice on the best ways to go about this please?

    A little more information is that I am 41 and have a reasonably well paid job in the health service in Scotland. I already have a mortgage on my own property but have a fair bit of disposable income left each month I could be using. I do not have any savings really to use at the moment towards such a property and definitely cannot buy outright. I have much experience in marketing and web design etc so am fairly confident I could market and find interest to rent out the property once I have it for the dates we will not be using it. I have basic Italian language and currently learning it. The area I would be looking at would likely be Tuscany most likely somewhere in a small village with reasonable close access to the major tourist sites such as Pisa, Lucca, Florence etc by car or train or bus.

    I virtually no knowledge of what is available for UK citizens in Italy for these purposes so would appreciate any advice on this idea.
Page 1
    • eddddy
    • By eddddy 5th Apr 18, 11:40 AM
    • 6,130 Posts
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    eddddy
    • #2
    • 5th Apr 18, 11:40 AM
    • #2
    • 5th Apr 18, 11:40 AM
    I'm going to give quite a biased view on this - because I know quite a few people who own (or owned) property in other EU countries.

    Try looking at it this way...
    • Read the posts on this forum about all the problems people can encounter buying / selling / letting property in the UK
    • Imagine if the people hitting these problems were Italian - with only a basic understanding of English, and no knowledge of UK laws

    You will be in that situation in reverse...
    • Having to sign complex Italian legal documents - which you probably won't understand
    • Having to deal with Italian property and letting laws - which may be very different from UK laws
    • Having to deal with Italian estate agents, solicitors, letting agents, property management companies, repair companies, insurance companies, utility companies

    And realistically, there's likely to be a queue of people who regard inexperienced foreign buyers/property owners as a 'soft-touch' - who are perfect for ripping-off.

    But like I say - I'm a bit biased.
    Last edited by eddddy; 05-04-2018 at 11:43 AM.
    • steampowered
    • By steampowered 5th Apr 18, 11:51 AM
    • 2,411 Posts
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    steampowered
    • #3
    • 5th Apr 18, 11:51 AM
    • #3
    • 5th Apr 18, 11:51 AM
    This doesn't sound like a good idea to me.

    You will be putting an enormous amount of money at risk (you need a big deposit for BTL mortgages) by investing in a highly leveraged investment (i.e. want to use debt to buy the investment), in a country you aren't familiar with, with no certainty that the income received will cover your running costs and costs of paying off the mortgage.

    I think you are better off looking at this purely from an investment perspective. Use the money you have saved in the most efficient way possible. Try to keep the emotion / holiday home aspect out of it.
    • cloo
    • By cloo 5th Apr 18, 11:58 AM
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    cloo
    • #4
    • 5th Apr 18, 11:58 AM
    • #4
    • 5th Apr 18, 11:58 AM
    I presume there might be some reputable companies out there that might help you, perhaps look online but you'll need to find some assurance that recommendations are genuine. If you can have assistance from someone who knows what they're doing it's not a bad idea, otherwise risky.
    • 83dons
    • By 83dons 5th Apr 18, 12:14 PM
    • 48 Posts
    • 1 Thanks
    83dons
    • #5
    • 5th Apr 18, 12:14 PM
    • #5
    • 5th Apr 18, 12:14 PM
    Hi thanks for the feedback so far. I am aware of the difficulties involved such as language barrier, legal documents etc. I was more looking to get hold of some actual details here perhaps from people who already have gone down this path. There must be literally thousands of folk from the UK that have properties in Italy that are buy to let and financed in this way. I am interested in the detail here - what deals are available, how italian law affects the deals, what sort of costs I would be looking at etc. That way I can decide whether my own income can cover all the running costs without even the need for the rental income. If so then most of the financial risk will be accounted for. I had heard there was 2014 italian government scheme which allows rent to buy in particular as I believe it is not easy for a non italian citizen to get a basic mortgage. It is more exploring ways I can use the disposable income I have every month towards something that is useful now for me. Saving it up then buying is clearly more sensible but what is the point of buying a place in 20 years time when there is less opportunity to enjoy it. I have the money now to pay this up and once you factor in rental incomes then it should pay for itself easily in that area.
    • davidmcn
    • By davidmcn 5th Apr 18, 12:18 PM
    • 7,366 Posts
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    davidmcn
    • #6
    • 5th Apr 18, 12:18 PM
    • #6
    • 5th Apr 18, 12:18 PM
    You'd probably be better to look at Italian-specific forums - here we're mainly talking about UK property, and it's the location of the property which is more relevant than the nationality of the property owner.
    • D_M_E
    • By D_M_E 5th Apr 18, 1:30 PM
    • 1,437 Posts
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    D_M_E
    • #7
    • 5th Apr 18, 1:30 PM
    • #7
    • 5th Apr 18, 1:30 PM
    The first thing you need to buy a property in Italty is a Codice Fiscale - Italian equivalent of a UK National Insurance or tax code - without it you will not be able to purchase.

    You need to check that there are no family disputes with the property and check that the person selling has authority to sell, so you need an avocato (solictor) and architect and both of these will set you back about 4000 euros or so on top of any other fees.

    Mortgage - to get one in Italy I think you have to be resident there but you could possibly raise the purchase price by increasing your UK mortgage and using the excess for your Italian purchase.

    Buying in Italy - expect to pay up to 20% of the property purchase price in fees, taxes and charges, for example if you buy through an immobilliare (Italian estate agent) then by law both buyer and purchaser pay them commission of 4% to 6% of purchase price, the notaire (person who registers the new owner with Italian land registry) gets about 2%, etc etc

    You also have to register with the local commune (council) and get permission from them to rent, you also, when you take up residence, get a visit from the local police to make sure you are actually living in it.

    You also have to register with the refuse collection office who will bill you based on the square meterage of the property, register for an electricity supply with probably ENEL, gas if the property is connected to the mains - if not then there are various laws regarding the use of bottled gas (someone blew up an apartment building some years ago while using a gas cylinder) - did I mention that you will probably only get a max electricity supply of 3Kw which is a lot less than in the UK?

    Also, if the property is miles away from anywhere then you would probably need an Italian registered vehicle - you cannot take your UK one on an extended trip, you would probably invalidate your insurance if you did - and to get your name on an Italian vehicle costs a fortune, in some cases more than the cost of the vehicle.

    To pay bills you would need an Italian bank account and if you are going to get one of these you should really buy your own forest in order to be able to supply the tress required to make the paper needed to print out the bank's terms and charges and also you need to practise your signature in readyness for all the paper signing needed.

    That will do for now - all a little off topic but gives you some idea.
    • AnotherJoe
    • By AnotherJoe 5th Apr 18, 1:34 PM
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    AnotherJoe
    • #8
    • 5th Apr 18, 1:34 PM
    • #8
    • 5th Apr 18, 1:34 PM
    My brother did this in Spain, which from a complexity POV I'd imagine was similar. A lot more complex than in the UK, you need a solicitor to manage various aspects as well as an agent, there's all sorts of taxes. It was an admin nightmare.After a lot of hassle he sold up, at best he may have broken even though i doubt it.

    I can see why you'd do this if you lived there say 6-9 months of the year and let it out the rest. For a few weeks a year though, id' just rent a place, and do without all the hassle, and invest teh money i would have put into a BTL elsewhere.

    You did say you were doing this as an investment, what makes you think this is the best way of investing?
    • D_M_E
    • By D_M_E 5th Apr 18, 1:42 PM
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    D_M_E
    • #9
    • 5th Apr 18, 1:42 PM
    • #9
    • 5th Apr 18, 1:42 PM
    I forgot - don't look at buying a property advertised as Nuda Proprieta

    This means that you will be buying the property BUT you will be giving the owner the property rent free for the rest of their life, you only get the property when they die and that is why it looks and is cheap, up to 70% less than similar properties.
    • agrinnall
    • By agrinnall 5th Apr 18, 3:15 PM
    • 19,913 Posts
    • 15,623 Thanks
    agrinnall
    There must be literally thousands of folk from the UK that have properties in Italy that are buy to let and financed in this way.
    Originally posted by 83dons
    What makes you think that? I suspect it's not the case at all, and that most people from the UK who have bought property in Italy have done so either because they live there and are on hand to deal with the inevitable issues, or they have bought without a mortgage.
    • 83dons
    • By 83dons 9th Apr 18, 3:36 PM
    • 48 Posts
    • 1 Thanks
    83dons
    The first thing you need to buy a property in Italty is a Codice Fiscale - Italian equivalent of a UK National Insurance or tax code - without it you will not be able to purchase.

    You need to check that there are no family disputes with the property and check that the person selling has authority to sell, so you need an avocato (solictor) and architect and both of these will set you back about 4000 euros or so on top of any other fees.

    Mortgage - to get one in Italy I think you have to be resident there but you could possibly raise the purchase price by increasing your UK mortgage and using the excess for your Italian purchase.

    Buying in Italy - expect to pay up to 20% of the property purchase price in fees, taxes and charges, for example if you buy through an immobilliare (Italian estate agent) then by law both buyer and purchaser pay them commission of 4% to 6% of purchase price, the notaire (person who registers the new owner with Italian land registry) gets about 2%, etc etc

    You also have to register with the local commune (council) and get permission from them to rent, you also, when you take up residence, get a visit from the local police to make sure you are actually living in it.

    You also have to register with the refuse collection office who will bill you based on the square meterage of the property, register for an electricity supply with probably ENEL, gas if the property is connected to the mains - if not then there are various laws regarding the use of bottled gas (someone blew up an apartment building some years ago while using a gas cylinder) - did I mention that you will probably only get a max electricity supply of 3Kw which is a lot less than in the UK?

    Also, if the property is miles away from anywhere then you would probably need an Italian registered vehicle - you cannot take your UK one on an extended trip, you would probably invalidate your insurance if you did - and to get your name on an Italian vehicle costs a fortune, in some cases more than the cost of the vehicle.

    To pay bills you would need an Italian bank account and if you are going to get one of these you should really buy your own forest in order to be able to supply the tress required to make the paper needed to print out the bank's terms and charges and also you need to practise your signature in readyness for all the paper signing needed.

    That will do for now - all a little off topic but gives you some idea.
    Originally posted by D_M_E
    Hi thanks for this it is the first informative reply I have got so far!

    Would the following scheme introduced by the Italian Government in 2014 provide a better option than all the red tape involved in trying to purchase direct or get a mortgage setup? It sounds like the ideal solution if a trusted agent can be used to negotiate with the selling agents initially. The max 10 year term may make this a little outside my budget but it sounds like a good idea.

    I would be interested to hear from anyone that has managed to set this up as to their experiences.

    http://www.italymagazine.com/featured-story/rent-buy-revolutionary-way-purchase-your-dream-home-italy

    https://www.gate-away.com/news/rent-to-buy-a-house-in-italy-how-does-it-work/

    https://www.bestitalianmortgage.com/italian-rent-to-buy/
    • AlexMac
    • By AlexMac 9th Apr 18, 4:59 PM
    • 2,032 Posts
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    AlexMac
    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!
    • AlexMac
    • By AlexMac 9th Apr 18, 5:06 PM
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    AlexMac
    Sorry- that link got mangled;
    It was
    https://www.globalpropertyguide.com/Europe/italy/price-change-10-years

    but I guess you can use Google yourself!
    • AnotherJoe
    • By AnotherJoe 9th Apr 18, 5:07 PM
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    AnotherJoe
    I think you'd be best off posting in an Italian holiday type forum.
    • deannatrois
    • By deannatrois 9th Apr 18, 5:16 PM
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    deannatrois
    I think waiting until you have some savings, considering you have a large disposable income as you say, might be a good point to start. Then it becomes a possibility rather than a pipe dream.
    • D_M_E
    • By D_M_E 9th Apr 18, 6:02 PM
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    D_M_E
    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.
    • D_M_E
    • By D_M_E 9th Apr 18, 6:12 PM
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    D_M_E
    Also, I see that one of the posters above has referred to the Italian political scene and the current tripartite - there are other parties - agenda.

    One of the parties has stated that they want to exit the euro and got a lot of support for that policy and, if that were to happen my prediction is that Italian property prices will, I think, lose half their value overnight and whatever currency they eventually decide on - new Lira? - I think will be half the current value Italy attaches to the euro, so an immediate 50% devaluation, methinks. That's all in the future, nothing decided or out in the open yet.
    • isplumm
    • By isplumm 9th Apr 18, 9:00 PM
    • 1,837 Posts
    • 773 Thanks
    isplumm
    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
    We’ve had to remove your signature. Please check the Forum Rules if you’re unsure why it’s been removed and, if still unsure, email forumteam@moneysavingexpert.com
    • steampowered
    • By steampowered 9th Apr 18, 10:56 PM
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    steampowered
    It is more exploring ways I can use the disposable income I have every month towards something that is useful now for me. Saving it up then buying is clearly more sensible but what is the point of buying a place in 20 years time when there is less opportunity to enjoy it. I have the money now to pay this up and once you factor in rental incomes then it should pay for itself easily in that area.
    Originally posted by 83dons
    You need to run the numbers to work out whether this is a good investment, or not.

    Even if you can do this you will need a substantial deposit, let's say 25% of the value of the property plus 10% of the value of the property for taxes/costs.

    Let's say the property cost EUR 100k, that would be EUR 35,000.

    The decision you would have to make is whether the EUR 35,000 plus the returns you'd make from a conventional investment would be enough to cover rental costs at a similar villa.

    It is also a big assumption to say that rental income would cover the cost of paying the mortgage plus the substantial costs you would face (letting agent fees, management fees, cleaner costs etc.). Rental income may well not cover these costs.
    • D_M_E
    • By D_M_E 10th Apr 18, 12:48 PM
    • 1,437 Posts
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    D_M_E
    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.
    Last edited by D_M_E; 10-04-2018 at 12:50 PM.
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