Pros and cons of expat house purchase in Italy

Many would-be expats are choosing Italy for its sheer beauty, laid-back lifestyle and friendly locals, but bureaucracy can be an issue when buying a new home.

At this point in time, Italy is now the only EU member state where house prices are still falling, if only slightly, and mortgage rates are still low compared with other popular destinations. After a good few years in financial crisis, sales are now hotting up and banks are starting to lend again, making the next year or so the right time to buy.

Obviously, the purchasing process is different from that in the home country, but pitfalls can be avoided via research online or in the local community. One immediate problem is the time it will take to find the right property, ensure all is what it seems, arrange finance and sort out bureaucratic requirements. Any process involving banks, lawyers and suchlike takes an eternity in this country, making arranging a comfortable rental for the estimated period the best idea.

Italy more or less shuts down during the hot months of mid-July to mid-September, so arranging your house-hunting spree outside these months may save just a little time between finding your dream home and actually moving in. Even although your chosen home from home seems inexpensive, the hidden charges of VAT, registration tax and other charges can come as shock, especially if you’re non-resident or buying a second home, as these two categories are charged even more. Allowing a full 10 per cent of the actual price should cover them, but it’s still a shock.

At the present time, mortgage rates are low, but getting one also requires added taxes of around two per cent of the amount you’ve borrowed. You’ll also find most Italian banks will insist on your purchase of various insurances including life, property and even a mortgage insurance policy – again adding to the total cost of purchasing. In many Western countries, 20 to 30-year loans are the norm, but the Italian versions usually only last for 10 to 15 years, increasing monthly payments for buyers. For expat retirees on the basic UK state pension, this can cause problems.

Bank of Italy rules disallow total loans including credit cards, car payments and personal loans of more than 35-40 per cent of monthly total incomes, with banks refusing mortgage applications which bump up indebtedness. If you can get round all the above and are still able to buy the home of your dreams, Italy won’t disappoint!