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Italy, a founder member of the EU, is a relatively
young country which was only unified as a
nation in 1861. It has land borders with Austria,
France, San Marino, Slovenia, and Switzerland
while the Vatican City is a separate state
within Rome.
The country’s long coastline, stretching
some 7,600km, has contributed to problems
with immigration control. Besides deep rooted
problems, such as the need to import most
raw materials, the country is also plagued
by corruption and crime.
The economy is divided by the industrial north
and less developed and poorer agricultural
south. The latest OECD report assessment of
the country reported that exports and investment
activity rose markedly in the first half of
2004, ending a protracted slump. GDP growth
of between 1.5 per cent and to 2 per cent
was forecast for 2005-06 although ‘inflation
could start to rise again’.
As in much of Europe, property prices have
been rising. According to the Royal Institution
of Chartered Surveyor’s European Housing
Review 2005, the housing market has been on
‘a sustained upward swing for five years’
(following a seven year period of recession
in which prices fell by over 20 per cent).
Last year ‘agents were reporting that
market activity was still brisk - although
it had fallen below its peak’.
Most Italian property is sold as freehold
although Italian property law recognises various
other property rights and tenures. Usufruct
is a right to use the property of another
for a fixed period but not to change its nature.
Leasehold rights, which may be for a fixed
period of 20 years or more or in perpetuity,
allow the lessor to use the property as if
he or she were the owner, subject to a requirement
to improve the land and pay a rent. Building
rights entitle the holder to construct a building
on land belonging to a third party, or maintain
a building standing on land belonging to a
third party. Building rights may be for a
limited or unlimited period of time, but if
for a fixed period, ownership of the building
reverts to the owner of the land on their
expiry.
Italian property transfer processes have some
similarities to France. Based on land registration,
the state regulated process involves both
purchaser and seller using the same state
appointed notary to complete the transaction.
The process begins with a formal and nominally
binding offer to purchase arranged through
an estate agent. If accepted during the set
period of the offer, this is followed by a
preliminary contract signed by both parties
(at which point a deposit will be paid). Finally
comes formal completion.
The notary, in front of whom the completion
documents must be signed, will verify that
the documentation is correct, that the property
is free from registered encumbrances and checks
the identities of the parties involved. Searches
beyond what is included in the registry are
unlikely to be exhaustive.
The notary also collects the taxes and duties
involved. These vary between Non-resident
property purchasers are treated differently
to resident purchasers in a number of ways.
In particular they will be obliged to pay
higher registration fees, although residence
can be claimed within a fixed time subsequent
to the purchase.
Total fees and charges are likely to amount
to between 5 per cent and 20 per cent, including
estate agents fee, if applicable, registration
fees or VAT if a new property, and the notary’s
fee. Fees in the order of 8 to 10 per cent
are also payable on sale of a property.
Some
charges are based on the registered value
of the property, which is likely to be less
that the actual purchase price. This also
applies to local property taxes, the amount
of which varies from region to region. The
Imposta Comunale surgli Immobili is paid by
both resident and non resident owners - although
the amount is halved for property that is
not habitable. In addition there are likely
to be charges for local services.
Italian taxation is undergoing reform. From
the start of 2005 personal tax rates have
been set on a graduating scale ranging from
23 per
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