Italian Property at Auction. How To Buy?

Has it ever crossed your mind to purchase Italian property at auction?

If you have ever considered purchasing Italian property at auction, you should know that you can get a good deal.

Buying Italian property at auction could turn out to be a good opportunity to purchase a property for a reasonable price. You could make savings of up to 60 % compared to buying a property on the market.

While buying at auction may have advantages, it is certainly not without risks. It is therefore essential to engage the services of a technical-legal advisor to carry out due diligence.

In order to mitigate or, at least contain the risks that may arise from the purchase, due diligence should start with the determination of the most likely market value of the property and conclude with thorough verification of all the legal, building, planning, cadastral and administrative aspects.

Due diligence is especially important in forced sales, which lack any guarantees against defects.

How do Italian property auctions work?

In general terms, a property auction is a competitive sale. It begins with the presentation of one or more bids with the transfer of ownership going to the highest bidder.

There are two kinds of property auctions in Italy.

1. Disposal of public assets, which follow specific legal rules.

2. Those of a judicial nature.

The latter applies whenever assets owned by a natural or legal person (known as the execution debtor) are seized. These assets then become subject to a forced sale. The expropriation procedure forces the sale of assets by a third party (the executor judge or a delegate). The objective is to liquidate the execution debtor’s assets and maximise the revenue from the sale in order to repay, in whole or in part, creditors.

How to participate in an Italian real estate auction?

There are two types of property auctions in Italy:

Sealed-bid auction

In this case, participants electronically submit their irrevocable and binding bids by 12:00 a.m. on the day prior to the opening of the bids. The Portale delle Vendite Pubbliche – Public Sales Portal is now the predominant system for electronic bids. Bids may also be in sealed envelopes that must meet a number of requirements specifically indicated in the auction notice and on the websites of the courts. In order for both types of sealed bids to be valid, they must be accompanied by a deposit amounting to at least 10% of the offer price.

Open ascending-bid auction

The sale by open ascending-bid auction is not used very often. It provides a secondary and possible method of auction. It is however usually only used in case of an unsuccessful sealed-bid auction.This type of auction is generally only used when it is considered possible to obtain a rather improbable figure, i.e., a price higher than half of the value of the property.

Participants must publicly make at least one bid that is higher than the last declared price. The auction closes when at least three minutes have elapsed since the last bid.

Important things to consider when purchasing Italian property at auction

If you wish to take part in an auction, we advise you to seek legal assistance. This will safeguard you as well as provide support with all the preparatory and subsequent phases of the sale, in particular with regard to the following.

1. Starting price of the sale (the base price at which the asset is for sale).

2. Bid increments (minimum increase in the raise set by the executor judge).

3. Security deposit (minimum amount to pay in order to take part in the auction).

4. Date of the sale (when the auction takes place).

5. Availability of the property (state of the property: if it is vacant and/or subject to constraints such as sitting tenants; the property may be occupied by virtue of a lease or a loan agreement and so on).

6. Town-planning- cadastral compliance of the property.

7. Place of the sale (auctions used to be in the courts or courts of appeal, but as of 2018 they are now mostly and preferably held online on dedicated online platforms; it is, therefore, necessary to register and access the, “Portale delle vendite pubbliche” of Ministry of Justice).

Finally…

At De Tullio Law Firm, we have over 55 years of experience managing all types of Italian property transactions. We have in-depth expertise in Italian and international legal systems and processes.

There are many potential pitfalls and legal ramifications to consider when buying Italian property at auction. We would always recommend that you seek independent professional advice before participating in an Italian property auction.

Buying Italian property at auction can be a good way to buy a property provided you do it safely. If you would like to discuss your situation, please get in touch.

You may also like to read our article with further tips on buying at auction. In addition, you may like to watch our info videos.

Unauthorised Construction in Italy Is A Criminal Offence

Unauthorised construction in Italy is not uncommon

Unauthorised construction in Italy is a common issue that you might have encountered if you have bought, or are in the process of buying, an Italian property.

What constitutes unauthorised construction in Italy?

In general terms, unauthorised construction occurs when someone makes changes to a property without obtaining legally required permission.

Depending on the seriousness of the offence, a range of sanctions is applicable. There are three categories of unauthorised construction offences in Italy.

1) Total violation

Work without a building permit or where the work is in total breach of permission. In other words, there is no permit or the building completely differs from the provisions of the permit.

2) Substantial violation

This is work that substantially diverges from the building permit. The work comprises significant qualitative and quantitative differences compared to the authorised project.

3) Partial violation

Here, work partially deviates from the building permit. That is to say, although the work has authorisation, it is not in accordance with the permit.

Unauthorised construction in Italy is a criminal offence

All of the above violations are criminal offences. As such, they are subject to criminal prosecution as well as sanctions. Building offences are punishable not only with administrative sanctions but may also involve arrest and a fine.

In some cases, where someone has unlawfully developed land not zoned for construction purposes, a judge may order the confiscation of the land and property. The land and property therefore become the property of the local municipality and owner receives neither compensation nor damages.

Article 44 of the Consolidated Law on Construction (Presidential Decree no. 380/2001) provides for fines ranging from a minimum of €10,328.00 to a maximum of €103,290.00 depending on the type of offence. In addition, offenders may receive a custodial sentence of up to two years.

Remedial action is possible

For example, you may have increased the volume of your property or carried out renovation work without following the legally required administrative procedure. Or, perhaps you have inherited a property along with zoning and cadastral discrepancies. In both cases legal remedies are available.

Regarding total and substantial violations of building permits you will need a, “Permesso di Costruire in sanatoria”. This may provide an amnesty (condono) which regularises the property. However, this remedy is not applicable to properties in heritage zones or on land in zones where property development is unlawful.

The process of obtaining a Permesso di Costruire in sanatoria is both complex and costly. It involves paying the municipality the normal fee to obtain a building permit to start a new construction project. In addition, penalty payments may amount to double the fee for a building permit. Precise amounts are set by the Italian Regions in accordance with the Consolidated Law on Construction.

A CILA offers a retroactive remedy for partial violations. CILA stands for Comunicazione Inizio Lavori Asseverata (Notice of commencement of certified works). It is a notice you must submit to the municipality prior to undertaking non-routine work on a property. For example, work that does not change the structure of the building but impacts internal layout.

If you submit a CILA once work has started or after the work has finished, this is a CILA “in sanatoria”. Because it is a communication after the event, it entails a fine. €1,000 if the work is already complete and a penalty of €333.33 euros if the work is still in progress.

Finally …

The Office for Italian Statistics (ISTAT), estimates that nationally, some 20% of Italian properties constitute unauthorised constructions. Even more in the southern regions of Italy. On top of these statistics, many properties partially violate legal requirements. For example, they comprise an unauthorised outbuilding or extension.

When you buy an Italian property, it is impossible to tell if there is any unauthorised construction work just from viewing it. To avoid issues such as finding your property is difficult to sell or even unsaleable later on, you should check municipal planning and zoning records and land registry files to ensure that the whole property has all the relevant consents.

The key to making your Italian property project as safe and smooth as possible is to appoint a legal team that speaks your language. De Tullio Law Firm has a thorough understanding of Italian property law and decades of experience managing Italian property transactions.

Get in touch with us: info@detulliolawfirm.com

You may also be interested in Italian Property: Who Is Liable for Defects in Building Work in Italy?

Procura. Applying A Power of Attorney in Italy

Unable to travel to Italy? Do you need to set up a procura?

Do you need to deal with Italian legal matters but you cannot travel to Italy in person? The solution may be to confer a Power of Attorney. This is known as a procura in Italian.

How does an Italian procura work?

A Power of Attorney (PoA) is a legal instrument. It allows someone (an agent or attorney) to act on behalf of someone else (the principal). A procura specifies exactly what powers a principal gives to an agent.

Generally speaking, if you use a PoA for an Italian property transaction, it is not advisable to grant a PoA to a real estate agent.  This is to avoid any conflicts of interest. As estate agents work on a commission basis, they may have a vested interest in making the sale.

What are the different types of procura in Italy?

There are two types of PoA in Italy.

Procura speciale

The principal gives limited powers to an appointed agent. The agent can only conduct specified tasks on behalf of the principal. For example, for an Italian property purchase, if you cannot be in Italy to complete the sale, you can grant this power to your appointed agent who can then sign the deed of sale on your behalf.

Procura generale

The principal grants a wide range of powers to their agent. In effect, the agent can do almost anything the principal could do.

The principal can revoke either type of PoA at any time.

Does Italy recognise foreign Powers of Attorney?

If you draw up a PoA in your home country, you will need to take steps to get it recognised overseas. To do this, your PoA will require an apostille.

Apostilles certify official documents for international use. Apostilles are valid in all jurisdictions that are signatories to the provisions of the Hague Convention (1961) on the mutual recognition of documents.

Italy, the UK, the USA and Australia are all signatories to the Hague Convention. In the UK, you can obtain apostille services through the Foreign Commonwealth & Development Office. The U.S Department of State is responsible for apostilles in the U.S.A and in Australia you should contact the Department of Foreign Affairs and Trade.

Finally …

A PoA is a sensitive legal matter. You are entrusting the management of some or all of your legal and financial affairs to someone else.

You should only appoint someone you are confident will act responsibly in your interests, has the necessary skills and is competent, reliable and willing to act for you. We therefore recommend that you confer your Power of Attorney on a professional such as a solicitor.

While you are waiting for formalisation of an apostille, we are able to check the validity of signatures. We can provide a provisional confirmation that these appear genuine.

Before you prepare a PoA applicable in Italy, it is worthwhile seeking legal advice from a cross border legal specialist. If you would like to discuss your situation, please get in touch with us at info@detulliolawfirm.com

You may also be interested in Italian Attorney

What Is An Apostille?

How can you ensure official documents are recognised abroad?

What Is An Apostille?

If a document is intended for use in another country, you may require a formal recognition in the form of an apostille. The procedure is generally described as a “legalisation” although it is sometimes referred to as “consularisation”. In order to use an official document overseas, you may therefore require an apostille. What exactly does this mean?

In this article, we are going to explain apostilles and how you can go about getting them.

What is an apostille?

Firstly, an apostille is a stamp that is placed on a document by a designated competent authority. The stamp should read, “Apostille” and confirms that an official source has issued your document and that the receiving country can accept the document as authentic.

Secondly, the Hague Convention (1961) governs mutual recognition of documents between signatories. Therefore, apostilles are valid in countries that have adopted provisions of the convention.

The information in an apostille follows a prescribed format

1. Country of issue

2. Who has signed the document

3. The capacity in which the person signed the document

4. Details of any seal on the document

5. Place of issue

6. Date of issue

7. Issuing authority

8. Apostille Certificate number

9. Stamp of issuing authority

10. Signature of representative of issuing authority

What type of documents require an apostille for use abroad?

All apostilles are similar. However, not all documents are processed in the same way. There is a wide variety of documents that may require an apostille. It is therefore important to prepare properly and submit the correct version for authentication with an apostille.

For example, you may require apostilles for documents of an administrative nature such as, birth, marriage and death certificates or a grant of probate or a power of attorney.

If you are, for instance, doing business overseas, you may require an apostille for official documents. These might include extracts from commercial registers or other registers; patents; notarial acts such as property titles; notarial attestations of signatures. If on the other hand, you want to study abroad, you may need an apostille for school, university and other academic diplomas.

Where can you obtain an apostille?

This depends where your document originated so check that and then apply for an apostille in the issuing country.

Signatories to the Hague Convention designate who can deliver apostilles. For example, in the UK, the Foreign Commonwealth & Development Office provides apostille services. In the USA, the U.S Department of State is responsible. In Australia you should contact the Department of Foreign Affairs and Trade.

The authorities in the receiving country may require a translation. In this case, you will need to get the translation of your document certified rather than the original document. Depending on requirements and the type of document, you may need a translation by a sworn translator.

As the subject of apostilles can be somewhat complex, the Hague website has published a useful brochure, which includes a FAQ: The ABCs of Apostille

Finally …

If you need support with apostilles, please get in touch with us. While you are waiting for formalisation of an apostille, we are able to check the validity of signatures. We can provide a provisional confirmation that these appear genuine.

For over 55 years, De Tullio Law Firm has been providing international clients with independent legal advice throughout Italy. We are specialists in cross border property, inheritance and family law.

 

You may also be interested in Power of Attorney

 

 

 

 

 

Cultural Heritage in Italy. Buying a historic property?

Buying a historic property in Italy?

Italy is rich in artistic and cultural heritage. In fact, the UNESCO committee has declared Italy the country with the most world heritage sites.  These cultural heritage sites comprise cities, towns, and real estate. View the full list of world heritage sites in Italy at UNESCO.

If you are considering purchasing a historic property in Italy, you should conduct specific technical and legal due diligence. Your checks should include property titles, zoning restrictions, building and planning compliance.

To preserve cultural heritage sites and listed buildings, specific heritage conservation regulations are in place. Known as Vincolo Paegistico, the regulations apply to listed properties and zones of historical or environmental importance. Vincolo Paegistico aim to protect listed sites and properties from any work that could damage heritage and aesthetic value. Therefore, any work, construction or modernisation must adhere to the regulations.

How do Vincolo Paegistico regulations work?

To build on land subject to Vincolo Paegistico restrictions you need detailed authorisation. Likewise if you want to make any changes to an existing listed property.

Vincolo Paegistico regulations are wide-ranging. They extend to building amnesties in the event of illegal work, including where work was carried out prior to the building becoming a listed property. They also include regulations regarding minimum distance from protected watercourses. Furthermore, restrictions exist pertaining to demolition and reconstruction.

The latter covers the exterior and interior of a listed property. It can therefore be a complex process to make even minor external and internal changes. This doesn’t mean renovations are impossible.

However, you will only be able to make changes once you have obtained detailed permission for the work. Authorisation will be granted by the Region, provided it does not affect the value or cultural importance of the property. The Region bases its decisions on a binding opinion from the Superintendency of Landscape and Environmental Heritage (Sovrintendenza ai Beni paesaggistici e ambientali).

How do I know if the property is on a cultural heritage list or in a cultural conservation area?

Before you proceed with your Italian property purchase, check whether the property or area is subject to any heritage conservation restrictions. To know exactly whether an area is subject to constraints, you can request a Certificato di sussistenza di vincolo paesistico (Certificate of the existence of conservation constraints). You can obtain this from the office for landscape protection in your respective Province or Region. A useful starting point is to look at the Regional Landscape Plan.

What should I do if my property is subject to cultural heritage constraints?

For any project on a listed building, you must submit detailed plans. If your plans are in accordance with regulations, Cultural Heritage Code (Legislative Decree 42/2004), you should be able to get permission. The provisions within the Code that regulate heritage conservation are Articles 136 and 142. These Articles specifically regulate the issue of authorisation by the competent body (Region). The Region verifies that planned work is compatible with the zoning status of the area / property and then issues the authorisation

Finally …

The key to making your Italian property project as safe and smooth as possible is to appoint a legal team that speaks your language. De Tullio Law Firm has a thorough understanding of Italian real estate law and decades of experience managing Italian property transactions.

Whether you are purchasing a property or planning a property project, we are right by your side. Get in touch with us: info@detulliolawfirm.com

You may also be interested in Buying property in Italy

Can I still buy property in Italy after Brexit?

What is reciprocity?

Sovereign laws, set by individual countries, have always been applicable when it comes to property purchases – even prior to Brexit. For example, when you buy property in England, the applicable law is that of England and Wales. When you buy property in Italy, you purchase according to the laws of Italy.

As members of the World Trade Organisation, both the UK and Italy signed up to the General Agreement on Trade in Services (GATS) in 1995.

Commitments made by the UK and Italy therefore allow UK and Italian nationals to purchase properties in each others’ countries. This is known as reciprocity so there are no barriers regarding market access or treatment of foreign purchasers.

Reciprocal commitments made within GATS, establish a quid pro quo principle when you buy property

 

Essentially, you can invest in Italy so long as your home country allows Italian nationals to invest there.

The Italian Consulate in London recently analysed relevant legislation and consulted with UK authorities on the subject of reciprocity.  They have confirmed that the status of reciprocity for foreigners in the UK is, in principle, maintained following Brexit.

Therefore, ownership of real estate,  establishment of companies, the acceptance of inheritance or gifts are not conditional on citizenship.

However, purchasing property or setting up a company in the UK does not automatically confer the right to reside or work in the UK. The same is valid for UK nationals in Italy. If you want to reside or work in Italy, you will need to obtain an Elective Residence Visa and permits.

Finally …

For over 55 years, De Tullio Law Firm has been providing international clients with independent legal advice. We offer services in all the major fields of Italian law with particular expertise in real estate, residency, family law and inheritance matters. If you would like to discuss your Italian residency situation, please get in touch with us.

You may also be interested in How to get a mortgage in Italy.

New Biometric Residency Card for UK Nationals Living in Italy

Tiny House in Italy. What Are The Rules?

Tempted by A Tiny House in Italy?


Living in a tiny house in Italy

Recently, tiny houses, also known as mini houses, have been appearing on the Italian property market. Purchasing or building a tiny house in Italy may represent an affordable, energy saving and eco-sustainable way of owning property. However, there are legal aspects to consider with the purchase or construction of a tiny house.

Tiny House: Italian norms, regulations and permits

Before purchasing or building a tiny house in Italy you have to consider Italian normative regulations. These regulations differ according to whether you intend to purchase, or build, a mobile or static tiny house.

Mobile Tiny House in Italy

A mobile tiny house is a construction on wheels. It must therefore respect the Italian Highway Code. It may not exceed a width of 2.55m, must have licence plates, insurance and pay road tax. Furthermore, a mobile tiny house will be subject to regular checks by the Italian Ministry of Transport (Motorizzazione Civile).

In effect, you must be able to move your mobile tiny house from one place to another. You must be able to tow it on a trailer by a suitable vehicle such as a pickup truck or a large off-road vehicle.

You can site your mobile tiny house on your own plot of private land. It should have its own photovoltaic panels, chemical toilet and water supply.

Static Tiny House in Italy

For legal purposes, a static tiny house does not have wheels. If you intend to site a static mini house on your own plot of land, you will need to tether it in some way. You will need to construct a platform on foundations that conform with building regulations. This will require obtaining building permission.

Building a static tiny house requires a Segnalazione Certificata di Inizio Attività (SCIA). A SCIA application must be sent to your local municipality whenever you intend to carry out construction work that involves demolition, erection, restoration or extension of a property.

Finally …

If you are considering buying or building a tiny house, or any type of property, in Italy and you are unsure about some aspects of your purchase or construction, do not hesitate to contact us. Get in touch: info@detulliolawfirm.com

You may also be interested in this article about purchasing land and self-build projects in Italy. We you also like to watch our useful info videos.

Buying A Property to Renovate in Italy

Avoid common mistakes when buying a property to renovate in Italy

Buying a property to renovate in Italy is a common scenario. It is also a common scenario for these projects to end in heartache.

At De Tullio Law Firm we often don’t meet these buyers until after they have purchased a property. They have usually spent way more than they expected and need to fix problems.

The best advice we can give you is to engage an Italian lawyer before buying a property to renovate in Italy. It will save you time, money and anguish.

A Renovation property in Italy: the right project for you?

No matter how experienced you are, a renovation project anywhere can be a stressful and time-consuming process. Even more so if you live overseas, can only visit Italy periodically and you are not a fluent Italian speaker. Unless a project is guaranteed to give you your dream home, or make you money, think carefully. You may be taking on the wrong property.

Make sure you know exactly what you are buying

Don’t wait to discover major legal issues such as lack of planning permission until after your purchase is complete. Having a lawyer means you have someone to work on your behalf to conduct thorough due diligence. Any legal non­-compliances will be detected before you complete the purchase.

In addition, your lawyer will assist you in obtaining a structural survey. A survey of the property will reveal important information about construction and building materials. It will highlight problems and remedial actions. Moreover, it will give you a good indication of the likely cost of renovations. It is also worth commissioning a measured survey of the building. This will give you a detailed set of floorplans and elevations on which to base your proposed renovations.

Builders

Even minor renovations can turn into a nightmare if your builders or subcontractors fail to do a good job.

Always ask for references, and speak to previous clients. Your lawyer can help you hire reputable builders and can act as project manager on your behalf throughout the project.

Buying a renovation property in Italy: costs

Work always costs more than you expect. This is because you can’t foresee some problems until renovations start. You may have to change your mind or alter designs or specifications.

Always include a budget contingency of 10 – 20% to cover unforeseen costs and fully expect to spend it.

Make sure your plans are as detailed as possible; list all the tasks and materials and, who is going to do the work. Don’t forget to allow for skips, scaffolding, tools and plant hire. Estimate costs by comparing similar projects in the area. Make sure you, and/or your lawyer, get builders’ quotes.

We would recommend that you instruct your lawyer to draft a building contract with your chosen builder. A building contract makes the builder’s quote legally binding.

Heed Italian rules and regulations when buying a property to renovate

Under no circumstances, should you ignore requirements of the Italian law, as it will eventually catch up with you. Do not undertake any work without first checking whether you need to satisfy requirements such as planning and building permits.

You may also need to notify neighbours or others regarding your renovation plans. Your lawyer can advise you if property deeds contain restrictive covenants, leases or other overriding interests in the property and land.

What are the penalties if you don’t follow the Italian law?

You may think that you can obtain the required planning permission retrospectively. However this is not always possible. Even if you can make  a retrospective planning application, it may be rejected. Your illegal work could then  constitute a criminal offence. In this case, the Italian State may seize your property. Getting your property back will likely be a very lengthy and costly process.

If you fail to obtain the relevant approvals, you will have to prove compliance. This may mean undoing completed work.

Breaching a restrictive covenant or the terms of a lease can lead to a court injunction, you may have to pay fines or even have to undo your renovations.

Before you can start renovations, you will probably need to do some demolition.  As building materials need careful disposal, demolition work is a procedure that will also require authorisation.

Finally …

With over 55 years of experience as specialist property lawyers throughout Italy, we strongly recommend that you seek independent legal advice before purchasing any property in Italy. If you have already purchased a property but have run into trouble and would like to discuss your situation, please get in touch. We can help!

 

You may also be interested in Building a House in Italy: a short step by step guide and our Guide to Buying Property in Italy. We also have a number of info videos on the subject of how to buy Italian property safely.

Off-Plan Insurance Policy in Italy

Insurance policy for off-plan property

Buying off-plan means you purchase your home before the developer has finished building it. You may even buy it before construction has begun. This type of purchase in Italy is not without risks. Article 4 of Italian legislative decree 122/2005 states that a construction company must provide an off-plan insurance policy to property buyers.

Because this insurance policy acts as a guarantee, it is therefore an important element of your off-plan purchase.

The insurance policy provides 10 years of cover and acts as a guarantee for any “serious construction defects”.

As you should receive your insurance policy no later than the transfer of ownership, we recommend you request that the notary explicitly references this insurance in your deed of sale.

What types of defects are covered under an off-plan guarantee?

Thanks, in large part, to jurisprudence, the notion of a serious construction defect has developed substantially in recent years.

Whereas a serious construction defect only previously included problems prejudicing safety and stability of a property, it now has a far broader meaning. In effect, nowadays, a defect might be anything that provokes a significant decrement to the normal use of the property. Consequently, the insurance policy should cover any damage that might impact regular use of the property.

In addition, serious construction defects extend to secondary elements of construction. This encompasses, for instance, use of poor or inadequate materials. It also includes construction that may jeopardise habitability of the property and problems that require maintenance work.

Examples demonstrating the breadth of serious construction defects could be the detachment of tiles in a kitchen or bathroom or a poorly sealed roof. Both of these issues may lead to water infiltration and would require repairs.

Buyers should also be familiar with the responsibility of the contractor concerning defects in construction work.

Who has the right to off-plan insurance?

The law limits the right to this insurance policy to private buyers.

In a more restrictive interpretation of the law, a buyer should be a “consumer”. This means that the insurance policy and guarantee is only available to buyers who purchase an off-plan property for personal use.

In other words, any commercial or professional use of the property would exclude the buyer from the right to this insurance policy.

Finally …

At De Tullio Law Firm, we specialise in Italian and cross border legal matters. If you are buying any type of property anywhere in Italy and you need advice or you would like to discuss your purchase, please get in touch with us. We are here to help.

You may want to read other articles about buying off-plan in Italy:

Advice for Buying Off-Plan in Italy

Investing in Italian Off-Plan Properties

Italian Law: Off-Plan Preliminary Contracts 

Preliminary Contracts Checklist for Italian Off-Plan Purchases

Off-Plan Italy. Where Do You Stand from A Legal Point of View?

Delivery Delays in Italian Off-Plan Properties

The Italian Property Market And COVID. What Is The Outlook?

Three main impacts of COVID on the Italian property market but the outlook is optimistic

The Italian Property Market And COVID. What Is The Outlook?

The Italian property market has taken a hit from the COVID health and economic crisis.

Wide-ranging central bank and government policies and stimulus packages are supporting the economy. As emergency restrictions ease, the outlook is optimistic.

The impact of COVID-19 on the Italian residential property market is threefold. Firstly, it creates a natural tendency to worry, making all but the most committed buyers more cautious in the short term. Secondly, on a practical front, travel restrictions have impinged on buyers’ and sellers’ ability to transact, as restrictions limit people’s ability to go about business as usual. Thirdly, the situation generates economic effects which impact the traditional drivers of affordability.

Prior to the COVID pandemic, Italy was experiencing a healthy upturn in its economy

The residential real estate sector particularly in the north of the country was showing a rise in demand for properties and residential construction was increasing.

The uncertainty surrounding the health situation and its duration have seen many would-be investors put their plans on hold. Data for online property listings show a fall in the number of Italian properties on the market. In addition, searches by potential buyers has decreased sharply.

Essentially, the impact of the pandemic on the economy and on property markets extends worldwide. It is not restricted to Italy. Provided that the situation continues to improve, we will likely see a negative effect in the short and medium-term on the real estate market in Italy. However, we expect to see that bounce back as vaccination continues apace and economic recovery gathers momentum.

The Italian luxury real estate sector reports decreased activity but it is far from paralysed

Initial information shows that luxury real estate is weathering the storm. Although they have slowed, transactions are continuing. It is too early to tell how the situation will evolve economically. However, it seems likely that investors will seek to protect their assets by focusing on safe securities such as luxury real estate. The perceived safe-haven of bricks-and-mortar investments in times of uncertainty helps to underpin values of high-end properties.

Experience from crises such as the recession in 2012, shows that once the most critical period passed, the Italian real estate sector gradually recovered.

Volatility in financial markets and low-interest rates continues. This means the real estate sector could again become a strong investment opportunity as we emerge from the COVID pandemic.

Italian property prices may fall before they rise

There is a general expectation that there will be a fall in property prices for a while. This would make Italy a buyers’ market. Thereafter, in the medium term, prices should increase to previous levels. This means sellers will need to be pragmatic on pricing in the short term, as demand becomes more dependent on needs-based and opportunistic buyers.

Having come through a global financial crisis in 2008, governments and central banks have a better understanding how to act in the face of uncertainty. Since then, they have moved quickly to implement measures to combat economic downturns. The approach of the European Central Bank’s (ECB) and the Bank of Italy’s monetary policy suggests that the low-interest-rate environment is likely to continue.

The Italian government has introduced stimulus packages to support property investments

During the pandemic, the Italian government quickly activated its wide-ranging fiscal easing measures in its, “Cura Italia” decree.

The government later announced a further stimulus package in its “Rilancia Italia” decree. Measures include property-related subsidies and tax benefits to support relaunch and investment in the Italian housing and construction sectors.

The combination of the central bank and government policies should support the economy through the current recession and what could otherwise have been a much stronger blow to economic growth. Furthermore, since the 2008 crisis, obtaining mortgage financing in Italy has become easier and this looks set to continue.

The pandemic has driven new ways of working

Many real estate agents and legal professionals took advantage of the pandemic lockdowns to plan how they will manage business in the future.

As restrictions lift, professionals have turned to technological innovation to serve clients. For example the use of using video calls. This could become the new normal.

At De Tullio Law Firm we have seen an increase in clients using our Power of Attorney services. This allows us to organise clients’ property sales and purchases remotely as well as manage many other property-related matters on our clients’ behalf.

Finally …

If you are thinking of investing in Italian property and would like to talk to us about any aspects mentioned in this article, please get in touch.

We are aware that the pandemic has left the signing of many Italian residential property transactions in the air. Many are worried that they may be in breach of contract. This is particularly relevant if there is no specific reference to a pandemic as a force majeure in their contracts. If you need a legal strategy session to discuss your situation, we are here for you.

You may like to watch our useful info videos about buying property in Italy.