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PROPERTY

Italian property roundup: Record low mortgage rates plus building bonus deadlines

From low property prices and mortgage rates to more one-euro homes, there’s plenty of good news for house-hunters in The Local's weekly Italian property roundup.

Italian property roundup: Record low mortgage rates plus building bonus deadlines
Photo by TIZIANA FABI / AFP

Property prices are no longer rising

Last year, the “pandemic effect” pushed up house prices in Italy overall (by +7% in the first quarter of 2020 compared to the end of 2019).

But after an initial rise, data shows that the price increase hasn’t been sustained – meaning the initial surge in interest in property purchases amid the pandemic didn’t reverse the overall long-term trend of falling prices in Italy.

This is according to a study by mortgage website MutuiOnline.it, which detected only a “brief initial recovery period” in early 2020, which it says was offset by a new decline in house prices in the second half of the year.

The only geographical area of Italy to record an increase in average prices per square meter in 2021 was the islands, with +5% compared to 2020.

Italy has the lowest mortgage rates in Europe

The average mortgage repayment in Italy has almost halved over the last 10 years, meaning people applying for a mortgage now will pay hundreds of euros less a month than they would have just a few years ago. This is due to a record drop in rates by the European Central Bank, according to newspaper La Stampa.

Data from Italian consumer rights association Codacons showed that a mortgage of 100,000 euros over a duration of 25 years for the purchase of a first home in Milan today comes with a fixed interest rate of around 0.98%, with monthly repayments costing 370 euros per month. 

In September 2011, in fact, the fixed rate on the same loan was 4.25%, meaning a monthly payment of 542 euros. Savings are even bigger on variable rates.

Photo: Maria Ziegler/Unsplash

Meanwhile, a study by price comparison websites Facile.it and Mutui.it found that Italy is the European nation with the lowest mortgage rates.

Looking solely at fixed rates, in Europe the second-lowest costs are found in Germany, at 1.18%.

Mortgages in Spain attract a rate of 1.64%, and in Portugal the rate starts from 1.91%. The figure was recorded as 2.30% in Norway and 2.40% in the United Kingdom.In Albania and Greece, borrowers find themselves paying considerably higher rates equal to 3.00% and 3.20% respectively, the report stated.

“Despite some significant differences, as in the case of Albania or Greece, rates in the eurozone remain fairly aligned with each other since all states use the same benchmarks,” stated Ivano Cresto, Managing Director of financing products at Facile.it

“The changes in the rate on mortgages therefore are attributable to competitive dynamics between the credit institutions present in each country.”

“If on the other hand, we look at countries outside the EU, such as the US, where inflation has already started to rise, the rates are higher. If this should also increase in Europe, then we can expect a rise in rates throughout the continent, including Italy,” he said.

Photo: Meejin Choi/Unsplash

Building and renovation bonus deadlines

As regular readers will know, there are numerous government tax ‘bonus’ schemes available to those renovating or rebuilding a property, from the well-known 110% renovation ‘superbonus’ to the furniture bonus. 

Unless an extension is announced, the restructuring bonus, ecobonus, facades bonus, furniture bonus and green bonus are all set to end on December 31st, 2021.

READ ALSO: From renovating property to buying a new car: 28 tax ‘bonuses’ you can claim from the Italian government

The superbonus scheme, which offers a tax rebate on up to 110 percent of the expenses incurred for certain property restorations, meanwhile looks set to be extended as we’ve previously reported. However, this still hasn’t been confirmed. 

As things stand, the current deadlines for those hoping to claim the superbonus vary depending on the type of building on which the work is being carried out

  1. Single-family buildings: deadline June 30th, 2022
  2. Multi-family buildings with 2 to 4 units: December 31st, 2022
  3. Condominiums: December 31st, 2022
  4. Social housing: December 31st, 2023

For more details on the superbonus scheme, see the Italian government website’s Superbonus 110% section. It provides in-depth guidance on who is eligible and the application process, and a host of FAQs.

One-euro homes – made easier?

Italian towns continue to add their names to the list, with many municipal authorities keen to spark regeneration by offering old, unloved properties for sale at the symbolic price of a euro.

While we all know by now that the actual cost ends up being quite a lot higher once fees and renovation costs are taken into account, there are a couple of other issues which can make the one-euro home offers hard to take advantage of.

The process can prove especially problematic if you’re not in Italy and don’t speak Italian well (or at all), since you’ll usually need to deal directly with a local council in a small, remote village with a shortage of any younger residents likely to speak English.

But one town in the sparsely-populated southern region of Basilicata is attempting to make it easier for prospective buyers or tenants to contact property owners directly via its website:  La tua casa a Latronico or “your house in Latronico”. Importantly, the site is also available in English..

We haven’t tested it out ourselves, but if you do use it and end up successfully purchasing a home in this beautiful, lesser-known part of the country, make sure to get in touch and let us know!

Do you have an Italian property-related tip, story or question you’d like to share with us for the next property roundup? Email us here.

See more in The Local’s Italian property section.

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‘It’s so frustrating’: My 25-year Italian property renovation nightmare

When US-based Davide Fionda embarked on renovating his mother's Italian property, he couldn't have imagined the obstacles and the timescale in store.

'It's so frustrating': My 25-year Italian property renovation nightmare

Building a home in Italy was almost inevitable for Davide, as he’s been visiting the same area in the Le Marche region, where his Italian-born mother grew up, since he was five years old.

Although he lives in Boston, US, and speaks with a charming East Coast twang, he’s also an Italian citizen and has long dreamed of having his own place to stay for the summer.

He began making this dream a reality back in 1997, when a barn that had been in his mother’s family for generations, in the village of Schito-Case Duca, was damaged by an earthquake.

“My mother, who had both her mother and sister in Italy, decided that it would be really nice for us to build our own new home instead of relying on family to host us each time we visit,” Davide said.

“The goal was simple. I would acquire the barn from my mom, renovate it and move in for the summers, as I’m a college teacher and can spend time in Italy,” he added.

“Simple” the goal may have been, but the project itself proved anything but, as Davide came up against unforeseen bureaucratic problems, legal hiccups and personal disappointments.

READ ALSO: The hidden costs of buying a home in Italy

As a former entrepreneur in his professional life, he said he’s “used to getting things done”, owning five companies and selling three.

But conquering Italian property renovation is his biggest challenge to date: “Never in my life have I had so many complications as I’ve had with this house,” he told us.

The earthquake-damaged barn. Photo: Davide Fionda

“In the beginning, I knew exactly what I needed and the costs to carry out the project. My mother was, and is still, living in the United States: the project started when she was approached by her godson, who is a geometra (civil engineer), to help her rebuild this barn.

“I started with what I could control. I sat down with an architect and we created a design. I did research on furniture and fixtures. But then the problems started,” Davide said.

His mother wanted a simple design: an open plan house with floor-to-ceiling windows facing the mountains, spanning two floors – a ground floor and a first floor for the bedrooms.

When they went to look at the progress in 2004, he said they were “horrified” at what they saw.

Instead of windows across the front as we asked for, with views of the spectacular Gran Sasso mountains, he took the entire view with two hallways for entering the property and for the bathroom. The bedrooms upstairs were unusable,” he added.

Davide describes himself as “not a typical Italian”, at two metres in height ,and says he always looks for suitable showers and beds when visiting Italy.

It was one of the reasons building his own home was so attractive, as he could custom-make it to fit his needs.

READ ALSO: What taxes do you need to pay if you own a second home in Italy?

But when they viewed the build, he discovered the first floor had ceilings of just one metre and 40 centimetres – not liveable for most people, never mind someone with Davide’s towering frame.

The results didn’t match the renovation plans that had been filed with the comune (town hall) – they wouldn’t have been approved otherwise, as Davide discovered Italian regulations deemed this height of ceiling in a bedroom uninhabitable.

He said he grew up with the geometra and knew him well, saying they were “best friends”. However, on raising the problems with him, Davide said the building professional “refused to fix the house”, adding, “he took my mother’s money and built a house with no bedrooms”.

He said his mother decided to stop construction after spending almost $100,000 on a house that they “could not live in”, adding that they “returned many times over the years to see the shell of the building that we thought we were going to call our home”.

READ ALSO: My Italian Home: How one ‘bargain basement’ renovation ended up costing over €300K

Faced with a stalled project and unsure what to do next, Davide tried to sell the property but got nowhere. He said the “market wasn’t right” for selling it, so he considered his options for fixing the botched renovations to date.

His Italian property project has been stalled for over two decades. Photo: Davide Fionda

Then, eventually, in January of this year he decided “he was sick of looking at it and it was time to act”.

He intended to use Italy’s Bonus ristrutturazioni (Renovation bonus), which allows homeowners to apply for a 50 percent tax reduction on carrying out renovation work.

On asking for professional opinions on whether the house qualified for this bonus, he said he asked five different people and got five different answers.

In the end, he discovered it was eligible and so he could, in theory, proceed with his latest plans.

READ ALSO:

The aim is to create his mother’s original vision – an open plan space with huge windows overlooking the mountains and bedrooms on the first floor – but habitable this time.

Since the beginning of this year, however, Davide has been stuck and hasn’t made progress.

Setbacks have included trying to get a permit to renovate the house, which has proved difficult since the first geometra reportedly didn’t update the changes to the building.

This thorny issue goes back to exactly who owned the house, as Davide told us it had been sectioned off and parts of the house were owned by various members of the family.

The building headaches roll on for Davide. Photo by Martin Dalsgaard on Unsplash

“Italian law makes you want to rip your hair out,” he said.

Getting the deed in his name has been a huge obstacle in itself, as his mother wasn’t the sole owner and some parts of the land that belonged to her were never recorded.

It’s meant months of waiting while archives have been searched and deeds have been drawn up and transferred, made all the trickier by coordinating it all from thousands of miles away.

Plus, the house category was never changed to a residential one, listed previously as farmland and therefore illegal to live in.

It’s just more unexpected bureaucracy for a project that seems to have no end.

“It has been months and months of all these twists and turns, it’s so frustrating,” he told us.

“This has been a 25-year nightmare,” he added.

A partly restored, but unliveable barn for Davide now. Photo: Davaide Fionda.

Although Davide had originally planned to sort out the more practical parts of the project by the end of May, with a ticket booked to Italy to choose the windows, he’s still stuck in the paperwork part and can’t move forward.

Nothing has happened since January. Three or four times I said, ‘screw this’. But it’s not in my DNA to give up,” he said.

Although he has a strong will, the house has taken its toll on him.

Every time we go, this house stares us in the face and it’s upsetting. Family always ask us, ‘when are you going to finish the house?’ It’s a real source of heartache,” he told us.

From this point, he hopes the paperwork will be completed by August and then he can meet with the contractors to get the process started.

That in itself was a tall order, due to the construction demand and shortage of building companies Italy is currently experiencing.

READ ALSO:

It’s a problem made even more challenging by the fact that he’s based in the States and had to find a company that would apply for the credit for the bonus on his behalf.

Despite it all, he’s hopeful that he will get the house they dreamed of by next August and says he’s learned a lot about renovating property in Italy.

For other would-be home renovators, he advised people to “adjust their timeframe expectations” and expect “anything to do with land or real estate to take forever”.

So what is his secret for not giving up, despite the rollercoaster of events and emotions?

It seems he’s holding on to his vision of blissful summers in il bel paese.

“The beauty of Italy is to be, sit in a town square and have conversations,” he told us.

“It’s a beautiful thing.”

See more in The Local’s Italian property section.

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