Now's a good time to grab a piece of 'la dolce vita'
There are property bargains to be found in Italy, and a great lifestyle as well, reports Louise Dransfield
Sunday 09 December 2012
Ridley Scott used the Tuscan countryside to portray paradise in the film The Gladiator and paradise it is still considered by many Brits.
The climate, fine art, historic architecture, food and wine, combined with rolling hills meandering down to myriad beaches, draws people back to the region again and again, But it is the lifestyle that makes the area and Italy as a whole so attractive. As Rupert Fawcett, an associate partner at Knight Frank International, notes: "People do not purchase in Italy to make money; it's very much a lifestyle-driven destination."
And now may be a good time to purchase your own bit of la dolce vita. Although Italian banks didn't get sucked into housing market boom to the same extent as their UK or US counterparts, the country's sovereign-debt problems and sluggish economy means: "The Italian people are starting to feel the pinch to a much greater degree and this is reflected in softer property prices," according to Mr Fawcett
However, most Italians under financial pressure do not want anybody to know as Paul Belcher, the managing director of Ultissimo, a property search company, says: "A new trend is developing whereby properties are changing hands very much by word of mouth instead of being advertised."
Elisa Biglia, of estate agency Chesterton Humberts, agrees. She said: "It is a good time to buy in Italy as people are realising the market has been quite still so vendors are prepared to drop their prices a bit more than perhaps a couple of years ago. Prices are down by up to 20 per cent in certain areas."
This possibly even creeps up to 30 per cent discounts on the second-home market in Tuscany, adds Mr Fawcett. But in the longer term, Italy and more specifically Tuscany, is considered a safer area for property investment.
Mr Fawcett says: "We found as the recession began to bite that it brought people back from the emerging markets and the slightly more risky destinations to the more trusted ones, such as Italy. Overall people feel secure it will weather the storm."
Ms Biglia agree: "Compared to Greece or Spain, Italy is a safe place, and unlike them and others it has not been overdeveloped and swamped with new builds. It is more the resale of renovated buildings because there are a lot of restrictions on what you can build or extend."
This is essentially what is taking place at Castelfalfi in Montaione, Tuscany. A medieval hamlet, with only five permanent residents left on approximately 2,700 acres and an hour from Florence, it is being revived by TUI Travel , the parent company of Thomson, through the company Tenuta di Castelfalfi.
The renovation will include apartments priced from €230,000 (£186,773), golf villas starting at €1.2m, casali fienile barns priced from €1.8m and casali farmhouses starting at €2.5m, along with three hotels, including the 31-room La Tabaccaia, due to fully open next year, an 18-hole golf course (already open), shops and restaurants.
Owners at the Toscana Resort Castelfalfi will be able to rent their property out when they are not occupying it through the company with rents for one-bedroom apartments estimated to start at a minimum of €500 per week and casalis from €1,750 per week.
However, Ms Bigila points out that "people are still waiting to see what happens in Europe and with the euro," before they commit. But as Mr Belcher adds: "A lot of people say they're worried about something but the question is what are they actually worried about?
"Most people have fears of some sort and they are generally irrational and I think the concerns about the euro very often generally fall into the area of irrational fears and when they actually start to think through it they start to feel differently.
"A bank account can vanish tomorrow, but your property will still be standing; so in many ways in this scenario you are better having invested your money in property than you are having a bank account."
Mr Fawcett believes that as the euro exchange rate has improved recently and as prices have come down a little in the past couple of years there are good opportunities to buy property. But he stresses: "You're never going to get an absolute bargain because the market hasn't fallen as it has in other EU countries, but you are going to pick up something for better value than previously.
There are no particular restrictions for foreign buyers in Italy other than taxation on the purchase which can be up to about 10 per cent of the property's value, although stamp-duty levels can be higher on land purchases.
As well as the Castlefalfi development, Knight Frank has A Valli, in Lucca, a converted, 16th-century villa with apartments priced from €250,000, while Ultissimo has a variety of properties they have developed and renovated, including San Vittorino in Umbria, with prices starting from £425,000. Chesterton Humberts also has properties on their books including The Castle Of Campiglia, Campiglia Marittima in Tuscany with apartments from €300,000.
When it comes to financing a property in Italy, one of the most hassle-free ways is to borrow against your UK property. This has the advantage of fixing the mortgage in sterling.
Italian banks are willing to lend to UK buyers, but loan to values are generally capped at 70 per cent and assessments are made on the grounds of affordability – so existing borrowings are taken into account – rather than a multiple of income. Bank fees vary, but are typically about 1 per cent of the mortgage amount.
Once you have agreed a price for a property, you will sign a "promise to buy" known as a compromesso. This is a binding, legal document obliging both parties to complete the purchase at a future specified date. At this stage, you will also hand over a deposit that can be up to 30 per cent – and which you will forfeit if you pull out of the purchase. If the transaction reaches completion, the deposit is taken as down payment.
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