How to buy a property in Venice

Italy is well-known for its red tape and this of course can include property transactions. However it does not mean that the system is worse than others and to some extent it could be considered safer. For example, 'gazumping' is not possible.

Generally, there are three steps to buying a property:

Step 1: Proposal of purchase or proposta

This document is a written offer on a property in which the purchaser acknowledges that, having seen the property, he wants to make a firm offer stating his terms regarding finance, survey, etc... He will also be expected to put down a non-negotiable bank cheque as an escrow (deposito fiduciario) corresponding to 10% of the purchase price, which becomes binding if the offer is accepted. This deposit is held in a special bank account under the responsibility of the estate agent.

Step 2: Preliminary purchase contract or preliminare

This contract, which is binding on both parties, clearly states that X promises to sell to Y, who promises to buy. Y has to deposit a sum usually corresponding to 10/20% of the purchase price (caparra confirmatoria) which includes the previous 10% already deposited. The notary will then require about a month to make all the necessary enquiries, e.g. find out if there are legal problems or if there is a mortgage on a property, and prepare all the paperwork needed for the final document.

In some cases, steps 1 and 2 can be carried out at the same time.

Step 3: Final purchase contract or rogito notarile

This final contract is signed in the notary's office. Balance of total payment is given to proprietor, and on final signature purchaser becomes legal owner and receives the deeds to the property and the keys.

The extras

Foreign clients often ask '...but how much are the extras?'. It is often difficult to be exact about this figure. However, the following should make it clearer and easier for the client to at least understand why.

All properties in Italy are registered at the local land-registry office (catasto) and as far as the Italian state is concerned are given a certain value depending on district, number of rooms, etc. This value can differ greatly from the property's commercial value, perhaps because the property has recently been restored, or it's in a wonderful position with a great view, etc.

When a house is sold it has to be registered. The registry tax (imposta di registro) is 3% on a first house and 7% on a second property. This applies for Italians too, not just foreigners. The registry tax is calculated on the value stated at the land-registry office which can be considerably less than the commercial value. Here is a simple chart:

* You will be liable for either VAT or registration tax. VAT is applicable on purchases from a company, whereas the registration tax applies to private purchases

The agency fee is usually 3% plus VAT (I.V.A.), and is payable at the signing of the preliminare contract.

All property transactions must go through a notary who is appointed by the buyer. There can be a slight variation in price between notaries, but not much. Notary fees on a property of €250,000 would be from €1,800 to €2,000. The higher the price of a property, the higher the notary fees are likely to be.

WHY Venice

Venice is composed of a lot of small islands linked together by bridges and surrounded by a lagoon. There is only one link with the mainland, in the form of a long bridge where cars and trains have access. The main elements that makes Venice unique are:

A) there is no vehicle traffic;

B) there is no metro network;    

C) public and private transports are only by sea.

There are advantages to this uniqueness. The advantages are: 1) there is a low atmospheric pollution; 2) there is a low acustic pollution level; 3) virtually non existent crime due to difficulty of escape.

THE PROPERTIES

Venetian properties are divided into:

1.    palaces, or 'houses of architectural value' (subjected to restrictions by the ministry of artistic heritage)

2.    offices and flats

3.    shops.

The property market is based on the value per square metre, and follows the general guidelines:

a.    view of the Grand Canal: from $ 12.000  to $ 25.000 per square metre

b.    restaured, residential area, with view: $ 10.000 per square metre

c.    semi-central area restaured: $ 8.000 per square metre

d.    central shops of small dimensions: $ 35.000 per square metre

e.    central shops of larger dimensions: $ 25.000 per square metre

PURCHASE TAX AND COST OF PURCHASE

The purchase can place through a property agent, whose commission is 3%. The presence of a notary is required by law at the signing of a contract.

Tax and legal fees amount to an average of 10-11% of the price shown on the contract. The 'ICI' tax is paid annualy at a rate of 4 /7 (x 000) on the value of the cadastral revenue if the owner is the occupier of the property. A tax is also paid annualy for the disposal of waste. This is calculed in relation to the square metres of the property.