Naked ownership and usufruct: advantages and disadvantages
Naked ownership and usufruct: implications for the seller and the buyer “Genoa: liferenter (usufructuary) aged 95 sells naked ownership of apartment of 6 large rooms with two balconies. The apartment is divided into an entrance hall, a large hall, kitchen, two bedrooms, bathroom and pantry. High floor with elevator, sunny panoramic exposure. Only 85,000 €. You can fins good bargains like this on italian real-estate ads, but what is naked ownership in Italy? The bare ownership is generally an investment option for those who aim at the revaluation of the brick in the long term, without immediate needs or housing (obviously the house remains at the disposal of the usufructuary as long as he is alive), or profitability (purchase to rent). The years of crisis have pushed the offer of this type of solutions: the 2016 data recorded an increase in the bare-property trade of + 11.7% (24,107 transactions). What does it mean to buy a property in this mode? There is no doubt that for those who sell the formula to satisfy the interest of obtaining liquidity, to divest, but without leaving the house and without (as in the case of a regular loan) having to start every month to return the money. If, however, I also have another house in which I live, I can, as an usufructuary or liferenter, make income and also round off my pension. For those who buy, it definitely involves buying at a reduced price (the younger person the longer the life expectancy), waiting for the moment of death to become a homeowner, then go live or rent it. In the case where the bare property has been sold by owners in communion of property, it is necessary to wait for the death of both to come into possession. This is done as an investment, for example, to give the house to a child who is still small at this time. What are the tax burdens for naked ownership? Who buys a bare property pays indirect taxes at ordinary rates: so if it is a principal residence it pays 2% on the price or the cadastral value (if you invoke the value-price). If second home, you pay 9%. Naturally, the tax base is reduced because the value of the usufruct is calculated on the basis of the tables attached to the TU (Single Text Law) and is deducted in terms of registration tax. As for the subsequent expenses: the direct tax costs (IMU, = property tax etc.) and the expenses of co-ownership, in addition to the expenses of ordinary maintenance, are chargeable to the usufructuary. Extraordinary maintenance (e.g. roof repairs) remains the responsibility of the bare owner. Who should enjoy this option? Buyer side: I buy at a much lower price and I bet on the survival more or less long of the usufructuary to calibrate the times when I can enter the house or rent to earn money. Vendor side: I immediately receive a small amount of money and do not leave the house. I do not have to (as in the mortgage) return anything. Alternatively I can ask, as payment, a monthly rent or a moral and material help according to the needs. But in the latter two cases the risk of default of the buyer are higher and it will be up to the notary to provide the safeguard clauses of the position of the seller. What are the other aspects to consider? From the seller’s side: You can continue living at home without risk Will have to bear the tax burden You will have to arrange regular maintenance at your expense On the buyer’s side You will not be able to enjoy the house before the expulsion of usufruct However, it will not be necessary to bear the tax burden You will have to pay for extraordinary maintenance Can we sell the bare property of the house before the death of the usufructuary? Yes. What is the position of the heirs of those who sell a bare property? The heirs of the seller will find nothing to inherit because the usufruct is extinguished on the death of its owner. The instrument is an indirect way of disinheriting, but it is necessary that the sale be made at a reasonable price otherwise the heirs could challenge it in court. Can you buy with a mortgage? Yes of course. Given the reduced value of bare ownership, even the amount I can claim will be proportional to it. If then I get the consent of the usufructuary to register a mortgage on his usufruct, then the bank will have the guarantee on full ownership and not on the bare property alone, so it could give me a bigger mortgage.
Moving to Italy
Moving to Italy and purchasing a home can be a lot to deal with, a lot of everything quite frankly!! We were lucky to find English speaking real estate agent, lawyer, notary and builder. Which was a necessity as our Italian language skills were non-excistant. The purchase process went as smooth as expected, but several other problems arouse along the way and as the years have gone by we can only come to one conclusion: -Having Marco as our lawyer was a life saver! He was always there for us, responding quickly to any, and every, worry we had. Ha gave great advice and got us out of very stressful situations. Having lived here for 5 years now, we have gotten more experience of local lawyers (Marco is located 50km from us) and would not recommend any of them! In the small towns the lawyers are too nestled into the society. Having a lawyer from a larger city as Lecce was a very good decision. Previous to moving to Italy neither of us had ever needed the assistance of a lawyer, beeing here and having to go to court was extremely stressful but with Marco by my side I felt confident that truth would prevail, and it did. Linda & Rita Larsson, Villa Ottilia, Oria. info@villaottilia.com
Buying a Trullo in Italy
As a non-Italian looking to purchase a property in Puglia, Marco’s assistance was invaluable. Marco explained the purchasing process, advised on possible areas of concern and provided ad-hoc translations when needed. Without Marco’s assistance, buying our Trullo could have been an incredibly difficult and expensive process. I’m really glad that we had Marco’s support and I would whole heartedly recommend him to anyone about to embark on the same process. Aaron Cue aaronjcue@gmail.com
Residential real estate in Italy – the market grows; prices decrease
Prices stabilized in Q4 2017 In the fourth quarter of 2017, the residential real estate market grew by 6.3%. Prices have decreased by 4% in 2017, albeit the Q4 saw a stabilisation. The residential real estate types most sought by Italians The demographic changes that have gone through the company in recent years and the decline in property prices has led to a change in the type of properties required by buyers. Now the most requested are the three-room apartments, followed by the four-room apartments. But let’s see what is the situation in the main Italian cities according to the analysis of Tecnocasa. According to the Tecnocasa study office, in January 2018 there was a prevalence of three-room apartments (40.5% of the preferences) followed by four rooms (24.1%) and two-room apartments (23.4%). The percentage of the latter type is also increasing due to a return of investors. Sales times are slightly down. The analysis of the offer shows that in the major Italian cities the most common type is the three-room apartment, with a percentage of 32.7%, to follow the four rooms with 23.9% and finally the two-room apartment with 22.6% . Rental prices up 1.9% in 2017 According to the rental report of the real estate marketplace, the rental price has returned to the rate of 1.9% in 2017, at an average of 8.6 euros per square meter per month, after the surge in the last quarter (0.8%). This is an increase above the rate of inflation of 1.2% in Italy in the past year, which shows strong growth in demand driven by the centers of greatest attraction from the employment point of view. Rental prices by region 16 out of 20 regions recorded positive changes over the last twelve months. The biggest increase is in Trentino Alto Adige (9.7%), followed by Valle d’Aosta (8.0%) and Veneto (7.0%). Among the macro-areas with variations above the average for the period, the performance of Sardinia (6.1%), Piedmont (4.4%) and Puglia (4.1%) was highlighted. On the other hand, Basilicata (-7.3%) is the region that suffers the most, with a real drop in yields. Calabria (-4.5%), Campania (-2.7%) and Lazio (-1.1%) lay behind it. On the price front, Lazio brings the rents to 11.4 euros / m², followed by Lombardy (10.9 euros / m²) and Tuscany (9.5 euros / m²). The lowest values of the peninsula are in Basilicata (5.3 euros / m²), Molise (4.8 euros / m²) and Calabria (4.6 euros / m²).
How to estimate the market value of a property
How to calculate the market value of real estate The construction costs, the neighborhood, the state of maintenance, the size, the finishes, the presence of the elevator rather than a terrace or a large garden and the energy class: these are the factors usually considered more important and therefore valued to define the price of a house, in Italy and also in France; but are they sufficient? And how much do they really affect the cost? It is not easy to establish the market value of a property. You must first consider the location and the context, then the condition of the apartment, but there are many factors and even more variables that can affect the final price: there is no specific list indicating the values to take into account. The variables are different and the factors also change depending on the type of property. On equal terms, therefore, an apartment in a condominium, a detached or independent house will have a different value. First, come the construction costs, especially on new or recent real estate The price of a house or apartment is a complicated intertwining of the market and the costs incurred by the manufacturer. For example on the new will have a major impact the cost of construction, municipal costs and technical costs, the cost of the construction area or demolition. Second, the position Once defined the construction costs defined, the following factors to consider are definitely the position and the area. If the demand is higher in a particular neighborhood or position, the cost will also be higher. This factor can affect the price of a variable percentage between 40 and 80% for example. Two apartments of 150 square meters with the same characteristics, the first at the gates of Milan and the second in one of the most luxurious streets of the city, can cost 300 thousand euros one and 2 million the other. Third, the condition of the building Then we find the state of the property: It can affect between 20 and 50% of the value: this gap depends on the condition, because if you do not need extra work, you will be ready to spend more than for a house where you incur other expenses to make it habitable. Old and new construction, what is different? If the apartment is old, the seismic parameters, the thermal and acoustic insulation and the exterior of the building will be evaluated. When we talk about restructuring, we can find ourselves in front of a house that is comparable internally. construction, but outside, it is still part of a building built in more or less remote times, with technologies often obsolete. In fourth place, the surface of the building The size of the house is in fourth place. In fifth place, several factors For example, the elevator: It is important, however, to specify that the elevator affects only slightly, about 15% of the value, if we consider an apartment on the first floor or on the ground floor; if we are talking about a house in a building of more than three floors, it will have a greater impact. The heating system can affect a good 10%, depending on whether it is efficient and economical, or old and consumes a lot of energy. Other factors include the assessment of the year of construction, including anti-seismicity, energy class and condominium work to be done. These can weigh from 10 to 30%.
Hundreds of houses for sale at 1 euro in Italy
“1 Euro” properties: update on past and upcoming initiatives Given the high interest that “1 euro” properties have been recently attracted, we have prepared this short draft to update our readers about the past and current “1 Euro” properties’ initiatives across the entire Italian territory. These initiatives started few years ago already, with Ollolai being one of the first municipalities offering these investment opportunities. As of June 2018, the list of Italian municipalities offering “1 euro” properties included the following municipalities, here listed by region: TUSCANY (Toscana): Fabbriche di Vergemoli (Province of Lucca); Montieri, (Province of Grosseto). SICILY (Sicilia): Salemi (Province of Trapani); Sambuca (Province of Agrigento); Gangi (Province of Palermo); Regalbuto (Province of Enna); SARDINIA (Sardegna): Nulvi (Province of Sassari); Ollolai (Province of Nuoro). PIEDMONT (Piemonte): Carrega Ligure (Province of Alessandria). ABRUZZO (Abruzzo): Lecce nei Marsi (Province of Aquila). LAZIO (Lazio): Patrica (Province of Frosinone). In September 2018 we have contacted most of the municipalities listed above, to create a complete database that listed the number of properties available in each site, their structural conditions, estimated refurbishment costs, and legal requirements to get full ownership of these properties. Most municipalities we contacted told us that the first batch of properties were already gone, with Ollolai in particular having received 5,000 requests for the first 100 properties, being currently “overbooked”. Overall, it looks like that these initiatives are currently on hold, with the municipalities trying to identify a new batch of properties to offer. The case of Sambuca (Sicily) In 2018 the Municipality of Sambuca (Sicily) did publish a call for tender to sell various properties in its historical district. The deadline to submit requests to participate to the call expired in May 2018. However, since most of the properties remained unsold, the Municipality recently decided to extend the deadline for submissions, read here. However, in order to submit new requests, it is necessary to wait for the Municipality to publish a new call for submissions (i.e., “Bando di Gara”, in italian). We recently contacted the office in charge of issuing the new call and they told us they expect to do so in 30/40 days, the latest. At that point, we would be able to know the rules governing the call in more detail. According to the one expired in May, properties were assigned based on an auction with a starting price of €1, with participating bidders submitting their offers and the highest bidder winning the property. At the moment, there is uncertainty on whether the new call will be regulated based on the same rules, this is why we have to wait for it to be issued. Here the link to the properties that are still available for bids. Our law firm will update this page as soon as we receive any new info. Feel free to contact us by email at info@studiolegalemagaraggia.it if you have any further question or you would like to receive a quotation of costs and fees for our advice and assistance in the bidding process. Further information, see article by CNN. Kind regards, Marco Magaraggia Senior Partner
Purchasing my property in Italy
I used Studio Legale Magaraggia eight years ago when purchasing my property in San Foca – Marco was instrumental in a smooth transaction. He has helped me with a legal dispute after the purchase which was satisfactorily resolved – and more recently a problem with house insurance – again with a satisfactory result. I would trust him to do a good job and he has a good command of English. Myra Edwards, United Kingdom, myraedwards@btinternet.com
Veneto is the most visited region in Italy, thanks to the sea
Veneto in the European top 10 with nearly 18 million Italian and foreign visitors in 2016 Sea, Dolomites and Venice: it is the triptych that makes Veneto the most visited Italian region, the only one of the top ten in Europe. On the one hand, there is the coast of the province of Venice, from Bibione to Rosolina, through the large number of pearls like Jesolo Lido and Caorle: miles of beaches that have nothing to envy to those of Emilia Romagna, which are traditional destinations of Austrians and Germans, who start to frequent them from May. On the other hand there are the Dolomites, a UNESCO World Heritage Site, the “pearl” Cortina d’Ampezzo and mountains like the Crystal, the Marmolada or the Three Peaks of Lavaredo, chosen by a growing number of foreigners for hiking and walk in the woods. From the ‘jewel’ Venice to the Prosecco hills In the middle there are villages and cities, starting from Venice, which alone is worth more than 20 million presences, which occupy all the year the hotels between the streets and San Marco then go all the way to Murano, Burano and the other islands of the lagoon. But then, they move to see Giotto’s works in Padua, Palladio’s work in Vicenza or to touch Juliet’s boob in Verona, a classic lucky ritual that is repeated every year by thousands of people who visit the city by reliving the emotions of Shakespeare’s work, and perhaps by watching that represented at the Arena. At the gates of Verona, in recent years, tourism is growing on Lake Garda, where more and more visitors arrive each year. Then there is the thermal tourism, with places like Abano and Montegrotto, near Padua, and the gastronomic and oenological tourism, wooed by the Prosecco boom, whose hills have recently been nominated World Heritage by Unesco. In 2016, record number of tourists On the other hand, in 2016, there was the record number of tourists: arrivals were 17,856,567 (+ 3.5%), with foreigners 11,525,916 (+ 2.8%) and Italians (6,330,651 + 4, 7%); total attendance 65,392,328 (+ 3.4%), with 43,961,624 foreigners (+ 4.1%) and 21,430,704 Italians (+ 1.8%). If we look at the turnover, tourism is the most important industry in Veneto, with revenues exceeding $ 17 billion. Figures that could be retouched, again, up: on the beaches, indeed, summer started right and June also saw double-digit increases in different places. And if during the winter the snow did not help the skiers, no less people went to Cortina or the other Dolomites, thanks to the massive investments of the last years for the artificial snowing of the slopes, which fall between breath-taking views. A unique scenario, to the point that the Tre Cime area was chosen for certain filming of the new movie Star Wars, the eighth of the saga: tourism in Veneto, it should be said, is spatial. Italian Veneto in the top 10 most visited regions of the EU Spain, France and Italy are the favorite destinations for European tourists, but only one Italian region – Veneto – falls in the “top ten” of the European Union, according to data published by Eurostats for the number of nights spent for tourism in 2015. In the ranking of the ten most popular destinations, the Canary Islands in Spain are clearly ahead with 94 million nights in 2015. Spain is the country with more regions in the ‘top ten’ with 75.5 million nights for Catalonia, 65.2 million for the Balearic Islands and 61.4 million for Andalusia. France has three regions among the ten most popular with Paris and Ile de France (76.8 million nights, second in the EU), Provence-Côte d’Azur (54.6 million) and Rhône-Alpes ( 48.7 million). Croatia ranks fourth in the EU (68.1 million nights), while Veneto is the only Italian region in the top ten, finishing in sixth place with 63.3 million nights. Six Italian regions in the Top 30 However, if you consider the 30 favorite destinations in the EU, Italy is tied with Spain and France with six regions in the ranking: Veneto, Tuscany, Lombardy, Emilia-Romagna, Lazio and the autonomous province of Bolzano. The southern regions are absent: according to Eurostat, in 2015, 58% of Europeans spent their holidays in their own country, 26% in another EU Member State. Only 16% of overnight stays were spent in non-EU destinations, with the United States being much more popular (13.8% of overnight stays by EU residents in the rest of the world), followed by Turkey (10%). 4%) and Morocco (4.6%).
20 mistakes to avoid when buying a home in Italy
The purchase of a house is one of the most important decisions and probably the main investment in the lives of most Italians and, nevertheless, the same mistakes are frequently made. Buying a home is a big economic effort and sometimes we are engaged in a good part of life. After years of crisis, the real estate market is catching up in Italy. 1. Generally, the accounts are not good. In Italy, according to various international studies, we do not have a financial culture. Buying a house is the biggest investment for many Italians, but we do not have enough financial preparation to deal with it. 2. Many people forget that at the price of the property you have to add about 10% for the expenses. In addition to the VAT (if the house is new) or the registration tax (if the house is second-hand), there are cadastral taxes. 3. There is no account on the loan, which also involves expenses and taxes. The mortgage tax usually applies 2% of the amount borrowed, not to mention that many banks want mortgage insurance, which serves to protect against risks such as the loss of employment or death of the policyholder. It’s useful, but it costs, and much. 4. Taxes and additional expenses. The buyer forgets that being a homeowner means paying condo fees each month and other extras that can dramatically increase the price. Houses need maintenance, not to mention common expenses (facade, antenna, elevator, etc.). In the case of an independent house, the costs are even higher. 5. Money for furniture and contingencies. When you make a budget, you add the expenses for furniture and additional funds for contingencies that do not have to do directly with the house, like breaking the car two months after buying a house. 6. Do not ask for a report on the taxation of the property. 99% of people who buy a house do not inform themselves in advance of the fees to be paid. 7. Do not rely on Euribor in the case of a variable rate mortgage. If Euribor is at its lowest, we must also consider when it will be the highest. 8. Apply for a mortgage with long maturities. More than 25 years, it is not practical to buy: by calculating all interests, the house becomes too expensive. 9. Make debts greater than 30% of your income. The Bank of Italy suggests that the share of the loan, added to the rest of the debts (the payment of the car, credit card, personal loans) should not exceed 35-40% of the income of the mortgage borrower. 10. Ask for guarantees from parents, friends or relatives. Those who decide to buy a house should take their responsibilities. 11. Often those who buy lose the meaning of what it means expensive or cheap. You need to research statistical information and compare market prices. You can find information in many ways, from the local branch to the Bank of Italy, but also through real estate portals. 12. Many buy a home thinking that prices are still rising. The latest experiences have taught us that the value of homes does not always improve, but it seems that not everyone wants to understand it. 13. Do not listen to the agencies. At the moment, you can save money through an agency. Negotiate, and the agents know it well. For this reason, they may have more room to lower the price and convince the seller to substantial discounts. 14. Do not negotiate the price until the end. Many potential buyers give up some properties because they think they can not cope with the price. Prepare to negotiate and always have a counter-offer available, but always after counting. Another mistake is to accept a contract for fear of losing the house. If your budget is 180,000 euros, for example, do not move from there. If that’s not enough, it’s not the house for you. 15. Let yourself be emotionally transported. Sometimes buying a house is a more emotional than rational decision and the purchase is then wrong. If you feel tired or unmotivated after months of searching, it will be easier to decide badly. Take the time to think. 16. Thinking that prices will not go down and so rush. There is still no clear data to speak of a widespread price recovery, but only a few partial data confirming that certain areas have held. If the center of Milan or Rome has increased, it is not granted that the same thing happens in the suburbs. 17. Speculate on the house. The house must be a good use. If we buy it to live, there is a relative problem, since, at least, it solves the housing problem. But if we buy it to speculate and things go wrong, we will have destroyed our finances for many years. 18. Do not consider whether it is worth living on rent. 19. Buying a home is not like buying a car. It is a decision that can have repercussions over the next thirty years, a period when anything can happen: births, deaths, divorces, job opportunities in other states or in other cities. 20. Not consult the notary before signing important documents such as purchase proposals and a preliminary contract. For example, not everyone knows that donated goods are liable to an action for revocation by the heirs who have been wronged in their rights. For this reason, many banks do not lend for the purchase of property from a donation. In this case as in other cases, the opinion of an expert can prevent any bad surprise.
Hello Marco!
Hello Marco Now the court case is over both Sheila and I would like to thank you very much for all your help in resolving the matter, very much to our satisfaction. I think without your help the outcome could have been very much different. Finally may we take this opportunity to offer any help you may require if you have other potential English clients. We have no problem in you passing our contact details to them. We would be happy to tell them about the tremendous job you did for us. Best regards Bob bob@kilburn.me