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PROPERTY

‘What happened when I bought a house in Italy during lockdown – without viewing it’

Buying a house in Italy during a pandemic might sound crazy, and buying a house without visiting it sounds even crazier. One of our readers did both - and told The Local why he doesn't have any regrets.

'What happened when I bought a house in Italy during lockdown – without viewing it'
Buying a property unseen is the one thing everyone tells you not to do. Photo: Fred Tanneau/AFP

The first time that Jon Freeman saw his new house, he already had the keys.

Jon, from Cambridge in the UK, owned the property on paper by the time he viewed it in person. He broke the first rule of buying a house – sign without viewing – and he couldn’t be happier.

“I love it, that was lucky!” he told The Local in August, when he flew to north-west Italy to find out whether his gamble paid off.

By the time Italy went into coronavirus lockdown in March 2020, Jon had been looking for an Italian home for two years – and he’d already missed out on one property that went to another bidder before he could make it over from the UK.

So at an extraordinary time, he decided to take an extraordinary risk.

Was it as crazy as it sounds? We asked Jon to explain his house-hunting process, as well as what he’d advise others looking to buy in Italy in a year like no other.

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The province of Asti, Piedmont, is among the cheapest places to live in Italy. Photo: AFP

Jon knew he wanted a second home in Italy, but he wasn’t set on where.

Having only ever visited cities, he allowed his search to be guided by price. Looking at property listing website Gate-Away, which specialises in second homes in Italy for overseas buyers, two regions seemed to fit his “very limited budget”: Abruzzo and Piedmont.

“Let’s start diving into what’s in these regions a touch deeper – transport links, airports with flights from UK, beach and ski access, climate… me and the sun don’t get on that well,” explains Jon. “Seems Piemonte is in the lead – the final straw was a quick search on earthquake activity on the last 50 years, wow! Bye Abruzzo, Piemonte just won!

“Cool – now I’ve some focus… Where? It’s a fair size region and I want beach access with under an hour if possible. Ok, south of Turin it is, as I also plan to drive I want motorway access fairly close, oh, and don’t forget the skiing!”

READ ALSO: The very best Italian towns to move to – according to people who live in them

He settled on the area around Ceva, a town in the south of Piedmont. But despite finding a few properties that fit his criteria, “nothing was getting me excited enough to actually fly out and see it for myself”, Jon says.

Eventually, after checking online property listings weekly for more than a year, he spotted a place he really liked. He contacted the estate agent, confirmed it was still for sale and planned to fly to Italy in two weeks, the earliest that work commitments would allow him to travel.

But just as he was preparing to book flights, there was bad news from the agent: another bid had been accepted earlier that day.

“Damn – that’s the best one I’ve found in my whole time searching… Start again, this is how life is,” he recalls thinking.

OTHER READERS’ STORIES:

Early this year another house caught Jon’s interest, this one in Montezemolo, a small village in the same province as Ceva.

Listed at €50,000, it was detached, had two bedrooms, came with some land and lay within walking distance of a bar, bakery and restaurant – enough plus points that Jon thought it would be worth travelling from the UK to see it.

But this time there was a bigger problem: the coronavirus pandemic, which had prompted Italy to tightly limit travel to and within the country. Someone from the next region over wouldn’t have been allowed to view the house, let alone someone from another country.

The Italian estate agent told Jon he’d have to wait until the restrictions were eased. He asked the agent to inquire how low the seller might go on the price. The answer came back: €38,000.

“Wow, that’s in my budget, detached which many I’ve seen aren’t, actually in the best state of repair I’ve seen and the closest I’ve ever found to some kind of shop… ‘Ok! Bid the amount!’” Jon recalls himself telling the agent.

READ ALSO: House-hunting in Italy: the essential vocabulary you’ll need

While the agency couldn’t quite believe it, they went ahead and placed the bid – and it was accepted a few weeks before Italy lifted its restrictions on travel between regions and reopened to visitors from within the EU.

“The agent suggested there were hundreds of people asking to view as soon as lockdown was over but there was only one person mad enough to get his money out and go for it just from 15 pictures on the internet,” said Jon.

It would be another couple of months before he would see the house in person. He travelled to Piedmont in early August to sign the paperwork, collect the keys and find out “what my life savings have turned into”.

Fortunately for Jon, he wasn’t disappointed.

“What was bought as a holiday home is currently steaming into first place as my new home! It’s everything I ever dreamt it would be and more,” he says.


Jon’s new house in Montezemolo, Piedmont. Photo: Jon Freeman

While Jon got lucky, there were a few other things in his favour too: firstly, he’d done two years of research. He’d thought about an area to look in, spent time comparing properties and considered the amount of renovation he could take on.

He’d received a property survey that didn’t flag any major structural problems. And he’s willing to tackle the less urgent work the house and garden need, including clearing out old furniture, adding an oven, replacing the single-glazed windows, cutting down a few trees and making a driveway.

He was looking for a second home, so he didn’t need to be within commuting distance of a workplace or school, nor to move in right away.

He also wasn’t borrowing from an Italian lender, which can prove difficult to secure and add to upfront costs. And he’ll still have to pay sales tax, the agent’s commission, stamp duty and other local taxes on top of the house price.

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One factor he couldn’t have foreseen was that the sellers, a mother and her daughter, would be keen to make a quick sale. Her husband, who built the house in the 1960s, passed away from Covid-19 and his family “just wanted it sold”, Jon says.

But if you’re house-hunting in Italy at the moment, you can’t assume that every seller will feel the same.

It’s a mistake to think Italian families are willing to part with treasured properties for peanuts amid the current crisis, Dave Benton of Abruzzo-based real estate agents Vignaverde recently told The Local.

“Understand the reasons why people sell, be mindful of their sacrifices. There are people here who saw and survived the atrocities of World War Two. The coronavirus won’t make anyone give away their homes,” he advised.


The view from Jon’s property. Photo: Jon Freeman

Jon, who has since flown back to the UK but is hoping to return to Montezemolo soon, has his own advice for others looking to buy a home in Italy from overseas.

“I think the moral of the story is be patient, there are still bargains to be had in the market and when you find the one grab it with both hands and never look back,” he says.

Now that Italy’s lockdown is over, though, we’d suggest you at least visit your new home. Preferably before you buy it.

Member comments

  1. we too did exactly the same this year, when we bought an house in pontremoli in tuscany.. we decided to just go for it, we had seen the pictures, and got the agent to send us a video of the house.. that was it we were sold!
    we have visited the house in august for 2 weeks (5 days quarrantine) and we love it.. we cannot wait to return in november.

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PROPERTY

Nine things we’ve learned about claiming Italy’s building ‘superbonus’

Two years after it was introduced, Italy's popular renovation discount scheme continues to cause headaches for homeowners trying to access it. Here's what we've learned so far about claiming the so-called 'superbonus 110'.

Nine things we've learned about claiming Italy's building 'superbonus'

In May 2020, as the pandemic gripped Italy in its first wave, the government introduced a new building bonus programme to kickstart the country’s sluggish, Covid-hit economy.

This emergency response, known as the ‘superbonus 110′, came as part of the government’s Decreto Rilancio (Relaunch Decree), which offered a tax deduction of up to 110% on the expenses related to making energy upgrades and reducing seismic risk.

Other types of building bonuses existed before – and continue to be available.

However, none had offered quite so high a value to those looking to make home improvements on their property.

In fact, not only did the new measure incentivise people to upgrade their existing properties, it encouraged people to buy old, abandoned properties, making previously unfeasible renovation projects, in financial terms, a genuine possibility.

READ ALSO: How Italy’s building ‘superbonus’ has changed in 2022

We counted among those taking the plunge to buy a crumbling and uninhabitable building, with the intention to carry out extensive works thanks to funds from the superbonus.

Our property search completely changed due to the scheme and we planned on taking advantage of the generous sums of state aid.

After looking around and viewing properties for months, attracted by adverts that claimed a property was eligible for restoration with the superbonus, we found an old farmhouse – which had become a derelict wreck – in the lowlands countryside outside Bologna, near where we are already located.

(Photo by Philippe HUGUEN / AFP)

In our case, we had to demolish the old property and rebuild a home from scratch – it couldn’t be restored due to earthquake damage in the area, rendering it far too unstable and destroyed to ever be habitable again.

READ ALSO: Why we decided to build our new house in Italy out of wood

That wasn’t a disappointment as we had the opportunity to design our own home instead, choosing every angle, material, layout and floorplan we wanted. It would have been beyond our means to take on a project like this without the superbonus, but with it, we thought it was possible.

Incredibly, the small print of the incentive permits this too, as the government intended to reinvigorate the nation’s many old, damaged and inefficient buildings and recover lost land – including using existing plots to build new homes if the property was too damaged, as is the case for us.

So, we ploughed all our savings and the money from the sale from my husband’s apartment into a collapsing set of bricks, filled with junk and debris from years gone by.

Although daunting, the figures stacked up and meant that we could create our own country home with a manageable mortgage for around 15 years.

Since I’m now 37, that seemed to work well and it all looked reasonable.

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But it was just the beginning, before the superbonus spiralled into delays, bureaucratic quagmires and fraudulent claims, which all contributed to making accessing the funds a stalemate for many homeowners.

18 months into our project, we have got as far as a concrete shape in the ground, the old farmhouse demolished, but no sign of our future home still – and a budget that has blown out of proportion, changing our financial future considerably.

18 months ‘ progress looks like this on our Italian property renovation project. Photo: Karli Drinkwater

The clock is ticking with deadlines too, albeit briefly extended, to access the bonus in time.

Since its inception, here’s what we have learned about (trying to) claim Italy’s superbonus 110.

1. Demand slowed down starting renovation projects

Within its first year, interest in the scheme was so high that building companies were overwhelmed and projects piled up in a queue.

Many firms stopped taking on new clients, as they battled to push through projects that were already delayed by months and some homeowners abandoned their plans altogether as a result.

As the backlog built up, firms increased their construction quotes and material prices rose – driven by a worldwide boom in cost increases and also most certainly not helped by Italy’s superbonus-fuelled building boom.

Photo by Bill Mead on Unsplash

The situation has continued to worsen due to the war in Ukraine, which has impeded the import and subsequently driven the cost of raw materials.

It was this demand that also saw us sit and wait, watching on while absolutely nothing happened and we continued to be stuck, all the while watching the project cost continually rack up.

READ ALSO: How to stay out of trouble when renovating your Italian property

It had taken four months just for the sale of the wreck to go through, so we were on the back foot already as far as the bonus is concerned.

We were ready to get going in May 2021 after putting in our offer on the property in the January, but in the past year, very little has happened.

We’ve since had to move out of our apartment, as the new owners understandably wanted to move in and we’re now effectively camping out in a part of my husband’s parents’ new house.

As they, too, are trying to access the superbonus, our life has been packed into boxes while we our living area and office is all squeezed into a garage.

I write this surrounded by scaffolding and orange construction barrier tape, now heavily pregnant, and trying not to lose hope that we’ll have our own place to go to.

Our building project has got no further than knocking down the old wreck and laying down the concrete foundations. One year on, there’s not even the bones of a structure.

READ ALSO:

So is it still demand for the bonus and materials that’s causing the delay?

Yes, but also a huge part is down to how you can claim the bonus.

2. Credit transfer problems stopped the banks lending

Another recent cause for a further slowdown is the change in how people could access the bonus and the increasing difficulty of obtaining credit.

There are a few routes to obtaining Italy’s superbonus. The option of offsetting tax from income is likely only financially viable for high earners, as any unused tax discount gets lost.

Image: moerschy / Pixabay

Let’s say your renovation costs come to €100,000, which are tax deductible at 110 percent for five years.

So, if you have a tax break of €22,000 every year for five years, therefore, but your tax bill from your income tax, known as ‘IRPEF’, falls short of that, you lose the deduction and will end up footing the rest of the renovation bill.

READ ALSO: Do you have to be Italian to claim Italy’s building bonuses?

Note – the latest changes specify tax deductions for the superbonus will be spread over four years, not five as previously.

Little surprise, then, that the other two options to access the funds – transferring the credit (cessione del credito) or discount on the invoice (sconto in fattura) – have been more popular.

It effectively means you either trade the tax credit for cash to an Italian financial institution, such as a bank, for the credit transfer, or directly to your contractor or supplier for the discount on the invoice.

Using the credit transfer system means you’ll get cash back that you paid, directly in your bank account.

It’s a slightly riskier route than a discount on the invoice, as the latter means the the supplier recovers the bonus on your behalf, taking a slice of it as a fee.

So, you get less of the bonus but you don’t have to deal with the paperwork and the contractor takes the burden of getting the credit.

“The easiest option is the discount on the invoice,” tax expert Nicolò Bolla of Accounting Bolla told us.

“It takes care of the credit transfer. If you deal with the bank yourself, it takes some expertise and requires a little knowledge of technology and the system, such as downloading and uploading invoices.

“Contractors have multiple sales, so they are more trained to do that,” he added.

However, billions of euros of fraudulent claims led the government to introduce stricter laws, blocking being able to access credit for months, putting the bonus – and renovation projects – on hold.

Our builders were using credit from financial services provider Poste Italiane, who reduced the threshold of credit. This pushed all the building jobs back by months with no word on when works would start.

In that time, they had to search for another bank willing to fund the bonus, while home construction sites lay dormant.

3. Banks blocked and refused credit halfway through projects

Some homeowners faced extra setbacks when they encountered not only delays, but an outright cancellation of prior agreed credit.

Peter (not his real name) told us that he had got the green light to access one of the other building bonuses that can be used in conjunction with the superbonus – the Renovation Bonus (Bonus Ristrutturazioni).

READ ALSO: Budget 2022: Which of Italy’s building bonuses have been extended?

It allows homeowners to apply for a 50 percent tax reduction on carrying out renovation work in both individual properties and condominiums.

The maximum limit on expenses of €96,000 and the 50 percent offset to taxes is divided into annual instalments for 10 years. Or you can apply for the invoice discount or credit transfer.

Photo by Cristina Gottardi on Unsplash

He applied and was approved for credit transfer for works on his home in Modigliana, Emilia Romagna. After buying a property with his partner in December 2020, they began renovations in January 2021, based on credit approved by Italian bank UniCredit.

He told us they carried out €60,000 of works for a new floor and underfloor, electrics and plumbing throughout, a new boiler, replastering walls and installing a new bathroom.

That means that €30,000 credit was due from the bank, but Peter told us they are now refusing to pay out.

“The excuse from the bank is that we didn’t sign with them, however they didn’t ask us to sign anything when they opened the portal for us at the beginning,” he told us.

So, while the bank registered the renovation jobs for them on the government’s portal in order to be able to claim the bonus, they now refuse to return the credit as originally agreed.

“The thing that upsets me so much with UniCredit is we made about 10 payments to builders and suppliers costing €7.50 a time (in administration fees) to make it, and taking the time to go into the bank especially, to get it registered correctly. And to be let down by them now, really is pretty bad,” he added.

Taking this route is “harder” according to Bolla, as “banks prefer to deal with larger businesses than to give credit to individuals,” he said.

For Peter, he now has the option of deducting the tax from his annual income tax bill or finding another bank to take on and transfer the credit.

4. Finding other solutions to open up the credit transfer system

As accessing finance slowed down and projects ground to a halt, the government intervened with yet another regulatory change to the superbonus.

Along with extending the deadline of 30 percent completion of works for single family homes by three months – to the end of September 30th 2022 – the authorities also looked at how to make accessing the funds more straightforward.

The reason for so many changes stems from how the superbonus originally started.

“Two years ago, it was the Wild West. Anyone could get credit to use the bonus – a person, company or business. Due to that, the authorities lost track of sales and plenty of fraudulent claims slipped through the net,” according to Bolla.

“Everything stopped. Then they regulated too much, creating more bureaucracy and delays. So now, they’ve deregulated a little to reopen the transfer of credit,” he added.

Understanding why there were delays to accessing the bonus are complex and manifold. Along with the reasons above, banks also faced rising inflation, which in part caused them to stop lending.

“Somebody needs to offset the tax at some point. Many banks wanted to buy the credit and resell it to larger banks, but any credit that couldn’t be offset in their taxes got wasted.

“It made the banks less willing to buy credit, which in turn slowed down companies’ and individuals’ ability to access it,” he added.

Now, to keep better track of works being done, Italy’s Inland Revenue Agency (L’Agenzia delle Entrate) has introduced better tracking systems in its latest ruling. These will follow the trail of where the money is going, with the aim of cutting down on time lost to bureaucracy.

5. You might – legally – be left with a half-finished house

Depending on what you’ve agreed with your construction company, you may be taking a gamble with the superbonus no matter what, even if works have begun and the system has eased the bottleneck on claiming the funds.

Our builders would only go ahead with the project if we signed a document, in short saying that we understand the project won’t be finished if the funds aren’t available in time or if works roll on past the deadline.

Photo by Filiz Elaerts on Unsplash

The firm wasn’t going to be liable for paying for the construction of our home (and others’ projects too) if they continued to get caught in delays.

In this case, we had no choice. Sign it and hope for the best or lose the €200,000 that has already gone into the works and wreck purchase so far.

6. There are added fees to account for when claiming the superbonus

If you’ve ever sold or bought property in Italy, you’ll know there is an abundance of hidden costs associated with it.

From agency and notary fees, taxes to legal costs, buying a property in Italy can incur another ten percent of the purchase price. For a list of the hidden costs to watch out for, see our guide here.

When it comes to restoring properties using the superbonus, you’ll need to fork out for various certificates, including an energy certificate known as ‘Certificato Energetico APE’ to prove that the property would benefit from energy upgrades using government funds.

This will also need to be done afterwards to prove that the property meets the requirements of the superbonus and has jumped up at least two energy classes.

You may also incur charges from your local town hall or comune for making changes to the property. In our case, as it’s a considerable project, the administrative fee just for submitting our house plans to review cost €12,000.

In total, the cost of fees on our project – before any restoration works using the bonus have taken place – have come to €30,000.

7. The amount you claim and pay continues to rise

Since the superbonus began, the scope of house restoration projects has changed significantly.

The noted demand pushed up construction quotes and material prices continue to rise, vastly increasing the scale of a project’s budget.

It will come as a blow to home renovators who thought they were potentially getting considerable sums of money from the government and therefore making huge savings.

In fact, there will still be large pots of funds to come from the government, but the problem is the price you pay will track the increases and rise too.

Our particular home renovation project has almost doubled since we began.

We initially accounted for a final cost of €450,000 for all works, using the superbonus for almost half of that.

Instead, the quote we received in November was over €700,000 (on top of what we’ve paid for the wreck) and we were told this is unlikely to be the final cost, rising in line with continuing material price rises when works do finally get underway.

The impact of this is life-changing. In our case, it means we’ve had to apply for soaring monthly repayments for 25 years instead of 15. And that’s only if the bank agrees to grant us such a huge financial commitment – which it has, as yet, not done.

8. You might have to pay taxes if you sell your house after claiming the superbonus

At least for a while, you may have to stick with the property you’ve renovated using the superbonus.

Once you’ve claimed this building bonus, essentially you can’t sell it on for another five years if you want to avoid paying capital gains tax.

Tax expert Nicolò Bolla said that this depends on when you bought the property, however.

If you already owned the house for more than five years and took advantage of the superbonus, you can sell it on with no capital gains tax.

On the other hand, if you just bought the property to benefit from the bonus, and therefore have only owned it for under five years, you’ll be liable for the tax – that is, if you make a gain on its sale.

If you bought an old wreck and renovated it, for instance, it’s likely that you will.

For more advice on selling your property after using the superbonus, remember to check with professionals beforehand.

9. It continues to be popular and set back by delays

Despite the recently extended deadline, homeowners continue to wait in queues for their projects to begin or be completed.

Tax expert Bolla told us he gets “daily requests” for the superbonus, but issues a word of caution about the incentive.

“It is a long journey and you need to have some money to renovate your property with the bonus. It’s an expanded timeframe and there are still supply chain issues,” he said.

Despite this, though, Bolla believes it’s an “amazing” scheme. “We have a lot of energy dependence, so this is a good way to upgrade. Normally, the way we deal with our reliance on energy is to punish those who pollute more with higher energy bills, but those are always lower income people.

“Higher energy costs just punish the poor – this, instead, is a good way to solve the problem.”

See more in our articles about property in Italy on The Local.

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