UPDATE: How Italy will extend its building 'superbonus'

Italy's ‘superbonus 110‘ is set for yet another overhaul as the government on Monday approved an extension to the current deadline for single family homes.

It comes after various sectors called for the bonus to be rolled on for this category of property, as owners must have completed 30 percent of the works by June 30th - a rapidly approaching deadline for those caught up in delays and at risk of not meeting it.

READ ALSO: Italy’s ‘superbonus’ renovations delayed by builder shortages and bureaucracy

Owners of single family homes will now have until September 30th to complete 30 percent of works, while the final deadline of December 31st, 2022 to finish all renovations still stands.

It’s the latest extension to come for this building incentive – the Budget Law 2022, published on December 30th, 2021, rolled on the superbonus to the end of 2022, extending the previous final deadline of June 30th 2022 for detached houses.

This update to the bonus forms part of a new €14 billion decree – more than double the amount originally budgeted.

It forms one measure in the government’s new energy and investment decree (decreto energia e investimenti), including continuing cuts to excise duties on fuel, providing aid to companies hardest hit by the war in Ukraine and outlining national energy policies to reduce gas and electricity bills.

READ ALSO: Rising energy prices: How to save money on your bills in Italy

The superbonus has attracted plenty of international attention since it was first introduced in May 2020 to help restart Italy's lagging, Covid-hit economy.

The building bonus offers homeowners a tax deduction of up to 110 percent the cost of renovation work related to making energy-efficiency upgrades and reducing seismic risk.

But the popular scheme has been entangled in bureaucracy and delays, leaving many property owners trying to use it concerned about whether they'll able to finish their renovation projects in time.

A three-month reprieve will ease the pressure on those caught up in the middle of works and hoping to use the bonus before it expires for single family homes.

Italy's superbonus scheme was introduced to reinvigorate the country's sluggish real estate market, with the aim of reviving many old and abandoned properties. Photo by Marcus Ganahl on Unsplash

How the superbonus will be extended

The latest change to the bonus has been discussed over recent weeks, as the upcoming deadline began to create further delays.

Some companies had refused to accept new work in the knowledge that they will not be able to complete 30 percent of the work by the June deadline, while ongoing jobs experienced further slowdowns causing much anxiety for those up against the clock.

The deputy minister for economy and finance, Federico Freni, said in March, "The situation of expensive materials and in general legislation on this sector requires special attention," according to property portal Idealista.

In a press release, the government confirmed that single family homes would now have until September 30th to complete 30 percent of overall works. If a project hasn't reached that amount by then, that will become the final deadline and no more aid can be claimed for the rest of the year.

Further details on a restart to the credit transfer system are also expected in the final - and as yet unpublished - decree. Many banks and financial institutions had stopped buying credit, effectively blocking work and putting companies and citizens at risk of losing any investments already made.

Opening up the transfer of credit to more parties than banks and insurance companies is hoped to ease the supply chain and allow more parties to purchase the credit in order to finance building works.

Why are there delays to accessing the bonus?

Interest in the scheme has been high from the start, so much so that delays began to build up early last year.

The backlog has only worsened, with some homeowners scrapping their plans to use the bonus as a result, or even selling on an old property they'd bought on the back of the scheme's announcement.

Requests for the bonus has meant unprecedented demand for building companies, driving competition and putting more homeowners on ever-lengthening waiting lists.

READ ALSO: How Italy’s building bonuses are delaying the restyle of one-euro homes

Simply finding a building company and certain building professionals with any foreseeable availability is a challenge for some.

The rising expense of materials, as mentioned by Freni, has also played a part in slowing down access to the superbonus.

A worldwide boom in material prices, made even worse in Italy by enormous demand due to the popularity of the superbonus, has meant that some original quotes have sharply increased when building work actually gets underway.

This has effectively cancelled out the tax bonus, meaning some are simply no longer able to afford the renovations.

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

 

Bureaucracy, changing rules and material prices have squeezed many building projects in Italy as the first deadline for single family homes approaches. Photo: Annie Gray 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.

According to the president of the National Association of Building Contractors (Associazione Nazionale Costruttori Edili), Regina De Albertis, the price of iron for cement has gone up by 40 percent, as has bitumen.

"In addition to the increase, the delivery of materials has also become unpredictable," she told Italian newspaper Corriere della Sera.

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

"All of us builders have received a letter from our suppliers informing us that, in addition to double-digit increases, it is impossible to guarantee delivery times and that the price will be set when the materials arrive on site," she added.

All in all, these factors have led to delays due to the time lost in bureaucracy when building plans have had to be redrawn or abandoned altogether, which in turn are holding up other projects in the queue.

In response, Lombardy's regional councillors Raffaele Straniero and Matteo Piloni reportedly signed an urgent motion, after setting a regional price list to limit soaring material costs.

"The increase in the cost of raw materials and building materials makes it necessary to adjust prices in order to avert the paralysis of building sites and ensure that companies cover the costs actually incurred and protect citizens," they stated.

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 have been various regulatory changes already in 2022 when it comes to the superbonus.

READ ALSO:

• How you could claim Italy’s building bonus multiple times for the same property
• Property: Do you have to be Italian to claim Italy’s building bonuses?

Two ways to access the funds - transferring the credit (cessione del credito) or discount on the invoice (sconto in fattura) - have recently become stricter.

The changes followed vast amounts of fraudulent claims to the bonus, leading the government to introduce more clauses to the rules and complicate the bureaucracy even further.

These are the primary routes for most, as the final option of offsetting the tax from income is only financially viable for high earners.

There has therefore been the risk that creditors consequently stop offering the option, potentially leaving many projects half-completed or dropped altogether.

As noted, the government plans to introduce more avenues to access the bonus in the upcoming new decree law to clear the building backlog.

For a breakdown of all the current superbonus deadlines for all property types, see here.

See more in The Local’s Italian property section.