Understanding the costs of purchasing property in Italy
When starting out on your purchase journey, you will want to know the total costs you are going to incur when buying in Italy.
Italian purchase costs can be divided into 3 areas:
(1) Professional fees
(2) Government fees; and
(3) Mortgage and bank related fees.
The extent to which you will pay different types of fees will of course depend on what you need (or think you need) in your particular situation.
At D&G we provide all our clients with a detailed schedule of total costs for their particular situation. If anything changes we update the schedule and keep your understanding and expectations up-to-date.
These fees include the fee for the selling agent, or estate agent (realtor), which in Italy is typically 3% for the buyer (unless a lower fee can be negotiated).
If you decide to engage a dedicated real estate support service to help you find a property in Italy, there will be a fee for this buying service. Agents in Italy can charge between 1 and 2% of property purchase price for this service, however the cost can vary, and it can result in a discount of the selling agent’s fee above.
Every transaction needs a Notaio (Notary) to prepare for and effect the transfer of the property title to you, and ensure every aspect of the transaction is legal and appropriate. The Notaio will charge a fee of between 1 and 2% of the property purchase price. Note that where a mortgage is onvolved a Notaio prepares a separate mortgage contract and this will have it’s own separate fee, just as instructing a power of attorney to sign property documents on your behalf will incur a separate fee.
The Notaio acts for the Italian government essentially, and should not be seen as a lawyer acting solely in your interests. Not every purchase requires a separate lawyer, however in many cases it may well be prudent to consider engaging a lawyer to represent you, certainly for larger value purchases and complex cases.
Translation costs should be taken into account here, including the cost of having a translator present when the final deed or contract is signed to transfer the property (for example between €300 and €800)
The fees that D&G Property Advice would charge for our agreed service of project managing your purchase should also be taken into account in this category.
For peace of mind and especially where renovations are required to a property, you can employ the services of an engineer or surveyor to make an independent survey of the property on your behalf to provide an opinion on the condition of the property, identify any potential issues with property paperwork, or confirm/estimate future costs of repairs or renovations. The cost of this service depends on the complexity of your property however you ought to budget on average between €800 and €2,000.
The Land Registry fee (or Imposta di Registro) is the largest government-related fee and the amount you need to pay depends on if you are buying a second home (or vacation property) or declaring that your property is your first home, for living in permanently in Italy. In the latter case (primary home for living in Italy) the Imposta di registro is 2% of the Commune-valued (council valuation) of the property.
Otherwise for non-‘first-home’ purchases, which typically applies for most foreign people buying in Italy, you can expect to pay 9% of the property’s council value. Note the council value is generally much lower than the market value of the property you are paying.
If you have a mortgage, there is a mortgage tax of 2% of the mortgage value, to pay to the government.
If you arrange an Italian mortgage successfully, there will usually be a bank establishment fee which could be approximately 1.25% of the mortgage value or a fixed fee, and this is very much dependent upon the Italian bank. The bank will require a professional survey completed on the property before they will provide full loan approval (they will choose the surveyor) and they will also require building insurance to be in place before closing (settlement time or Rogito).
The surveyor’s fee is approximately €250 and the insurance premium could be for example between €500 to €1,000.
To identify and arrange the right lender for your situation it’s possible to use a mortgage broker to manage the loan application process for you. They will have close relationships with many lenders and will have completed many applications on behalf of foreign owners. Their fee is likely to be between 2 and 3% of the mortgage value.
D&G Property Advice has close contact with mortgage partners who can help find an Italian mortgage for your property.
Your total costs are likely to total between 15 and 20% of the property purchase price, largely depending on which of the above professional services you require. In turn, the amount of services you need will depend on many factors such as your experience buying in Italy, whether you have time to search, your confidence with the Italian language, and any complexities you might find with your property.
D&G will summarise your total costs and advise you about all of the details regarding each cost and when each cost is due. We will also advice you where there is any change potentially in costs along the way.
Your investment in the purchase costs associated with buying property in Italy ought to be seen as precisely that, an investment to make sure you have clear property title and good advice, to avoid any pitfalls and enable you to focus on enjoying your property for many years to come, without regrets.
For more information or to request a more detailed quote that’s tailored to your specific circumstances, click below to be in contact with us.
D&G Property Advice.