Nuda proprietà: The Italian property-buying system that can lead to a bargain
There's a type of property ownership in Italy that allows buyers to pay much less than the market value. So what's the catch?
The Italian concept of nuda proprietà, which translates as 'bare ownership', is a new one to most people who move to Italy. For Italians themselves, it has long been controversial.
But rising house prices, uncertainty around pensions, and longer life expectancies have led more and more property websites such as Idealista and Immobiliare to feature nuda proprietà listings on their pages.
READ ALSO: Where in Italy are house prices rising fastest?
What’s more, estate agencies around the country are starting to specialise in the area. One agency in Milan, Preatoni Nuda Proprietà, has gone as far as to find their niche in the market by opening up a strictly bare ownership brokerage four years ago.
We spoke to the agency's CEO and co-founder, Roberto Preatoni, to find out more about this form of property ownership and its advantages and disadvantages.
First things first: what is nuda proprietà?
"To put it simply, this is the ownership of a property without the right to use it. In most cases, the seller tends to be an older person who for whatever reason decides to sell their house this way in order to make money for healthcare costs," says Preatoni.
"Once they sell to the buyer, they become a usufructuary and have usufruct rights. This simply means they have the legal right to temporarily use and benefit from someone else’s property. They remain in the property until death.
"The buyer of the property cannot profit from, or move into, the building until the seller is dead."
Are there any negative views on this?
"Bare ownership was initially unwelcome because it was not understood," Preatoni explains.
"Part of this is because we are a very Catholic country and buying bare ownership from the elderly was considered to be betting on their death, waiting like a vulture circling.
"This has been a mentality over time and it differs from countries like France. The French buy the most bare ownership properties in Europe and their market is huge.
Photo by PHILIPPE HUGUEN / AFP
"I founded the first specialised Italian agency and it’s been a challenge to change the stigma. However, you have to understand that most of the time, the people who are looking to sell this way are in financial need.
"In my opinion, it should be seen as a charitable investment rather than taking advantage."
How does the sale work?
"Well for the seller or usufructuary it is straightforward. They get their property advertised just as if they were selling normally," Preatoni says. "For the buyer, it’s a bit more thorough."
"The important thing to know is that all bare ownership properties for sale have a discount from the usual market price.
EXPLAINED: How much are house prices rising in Italy?
"However, the amount of discount depends on the age of the usufructuary. For example, if the usufructuary is between 76-78 years old, the buyer has a 30 percent discount on the overall price. Keep in mind the older the usufructuary, the less discount the buyer has as there is more chance of them moving in sooner.
"The lower age limit legally starts at zero, whereas the upper age limit ends at 99. Anyone past the age of 99 will not be able to sell via bare ownership."
What are the positives?
"The discount on the asking price is a huge benefit for the buyer," Preatoni says.
"They also have the advantage of selling the bare ownership if they want to, at any point, which will be profitable to them because the usufructuary will have aged more, meaning that the new buyer will have to pay out more for the bare ownership as the original owner is getting older.
"The buyers also don’t have to put the property down on their tax returns as they cannot profit from it whilst the usufructuary is alive. This differs from rent.
IN MAPS: How Italy’s property prices vary by region
"For the usufructuaries, the benefits are financial and sentimental. They can live out the rest of their days in the place they call home. Moving house for an old person is often traumatic, so they don’t have to go through any of that.
"Financially, they can use the money from the sale to assist them with living out the rest of their years in the best possible way alongside their pensions or by helping out family members. "
What are the downsides?
"It depends on the type of buyer you are. If you’re using bare ownership as an investment that’s one thing, but if you’re buying for your dream home to live in, you may have to wait a while before moving in," Preatoni says.
"Another thing to consider is that banks make it more difficult for buyers to take out mortgage loans on bare ownership deals than full ownership deals, meaning they will have to have a private loan or pay upfront. "
What does the future hold for bare ownership purchases?
"It can only grow. We saw a 12 percent growth in sales transactions in 2022 compared to the previous year," says Preatoni.
"The home is seen as a last-resort 'piggy bank' for Italians, especially in the global world we live in now. Things are more expensive. Before, people found a job, got married and died in the same place they were born. This is happening less and less frequently, with younger Italians dreaming of going abroad or to cities to get jobs.
"The landscape has completely changed, not to mention the financial crises we have faced in the past two decades.
"The market and mentality are shifting. The worse the financial situation gets, the more bare ownership deals there will be."
See more in The Local's Italian property section.
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The Italian concept of nuda proprietà, which translates as 'bare ownership', is a new one to most people who move to Italy. For Italians themselves, it has long been controversial.
But rising house prices, uncertainty around pensions, and longer life expectancies have led more and more property websites such as Idealista and Immobiliare to feature nuda proprietà listings on their pages.
READ ALSO: Where in Italy are house prices rising fastest?
What’s more, estate agencies around the country are starting to specialise in the area. One agency in Milan, Preatoni Nuda Proprietà, has gone as far as to find their niche in the market by opening up a strictly bare ownership brokerage four years ago.
We spoke to the agency's CEO and co-founder, Roberto Preatoni, to find out more about this form of property ownership and its advantages and disadvantages.
First things first: what is nuda proprietà?
"To put it simply, this is the ownership of a property without the right to use it. In most cases, the seller tends to be an older person who for whatever reason decides to sell their house this way in order to make money for healthcare costs," says Preatoni.
"Once they sell to the buyer, they become a usufructuary and have usufruct rights. This simply means they have the legal right to temporarily use and benefit from someone else’s property. They remain in the property until death.
"The buyer of the property cannot profit from, or move into, the building until the seller is dead."
Are there any negative views on this?
"Bare ownership was initially unwelcome because it was not understood," Preatoni explains.
"Part of this is because we are a very Catholic country and buying bare ownership from the elderly was considered to be betting on their death, waiting like a vulture circling.
"This has been a mentality over time and it differs from countries like France. The French buy the most bare ownership properties in Europe and their market is huge.
"I founded the first specialised Italian agency and it’s been a challenge to change the stigma. However, you have to understand that most of the time, the people who are looking to sell this way are in financial need.
"In my opinion, it should be seen as a charitable investment rather than taking advantage."
How does the sale work?
"Well for the seller or usufructuary it is straightforward. They get their property advertised just as if they were selling normally," Preatoni says. "For the buyer, it’s a bit more thorough."
"The important thing to know is that all bare ownership properties for sale have a discount from the usual market price.
EXPLAINED: How much are house prices rising in Italy?
"However, the amount of discount depends on the age of the usufructuary. For example, if the usufructuary is between 76-78 years old, the buyer has a 30 percent discount on the overall price. Keep in mind the older the usufructuary, the less discount the buyer has as there is more chance of them moving in sooner.
"The lower age limit legally starts at zero, whereas the upper age limit ends at 99. Anyone past the age of 99 will not be able to sell via bare ownership."
What are the positives?
"The discount on the asking price is a huge benefit for the buyer," Preatoni says.
"They also have the advantage of selling the bare ownership if they want to, at any point, which will be profitable to them because the usufructuary will have aged more, meaning that the new buyer will have to pay out more for the bare ownership as the original owner is getting older.
"The buyers also don’t have to put the property down on their tax returns as they cannot profit from it whilst the usufructuary is alive. This differs from rent.
IN MAPS: How Italy’s property prices vary by region
"For the usufructuaries, the benefits are financial and sentimental. They can live out the rest of their days in the place they call home. Moving house for an old person is often traumatic, so they don’t have to go through any of that.
"Financially, they can use the money from the sale to assist them with living out the rest of their years in the best possible way alongside their pensions or by helping out family members. "
What are the downsides?
"It depends on the type of buyer you are. If you’re using bare ownership as an investment that’s one thing, but if you’re buying for your dream home to live in, you may have to wait a while before moving in," Preatoni says.
"Another thing to consider is that banks make it more difficult for buyers to take out mortgage loans on bare ownership deals than full ownership deals, meaning they will have to have a private loan or pay upfront. "
What does the future hold for bare ownership purchases?
"It can only grow. We saw a 12 percent growth in sales transactions in 2022 compared to the previous year," says Preatoni.
"The home is seen as a last-resort 'piggy bank' for Italians, especially in the global world we live in now. Things are more expensive. Before, people found a job, got married and died in the same place they were born. This is happening less and less frequently, with younger Italians dreaming of going abroad or to cities to get jobs.
"The landscape has completely changed, not to mention the financial crises we have faced in the past two decades.
"The market and mentality are shifting. The worse the financial situation gets, the more bare ownership deals there will be."
See more in The Local's Italian property section.
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