Finance boost for Italy investors
New laws in Italy are making it easier than ever for investors to prosper…
The introduction of liberalisation laws in Italy has made use of existing Italian financing for property less expensive and significantly more flexible. More and more UK buyers are now taking full advantage of the flexibility and financial benefits that the new laws have brought.
Sarah Ferrara, Managing Director of Garda Homes says, “Traditionally UK investors into Italian property, financed their purchase by raising finance on existing capital in the UK, then simply transferred funds to their Italian bank account in order to complete the buying process.
“However a combination of zero early repayment penalties and lower interest rates has made Italian mortgages extremely popular and the trend amongst UK investors is now strongly in favour of financing property purchases in Italy.
Quicker and easier
Sarah continued: “The new laws mean no early repayment penalties for mortgages taken out by private individuals to purchase or restore property from 2nd February 2007, meaning buyers can repay the capital owed as and when they choose, either in one lump sum or occasional payments. As long as the agreed regular payments are met, then there is so much more flexibility. It is clear why this form of financing is becoming so popular.”
The liberalisation laws have also made it quicker and easier to extinguish a mortgage after it has been repaid. Before the enforcement of the “Decreto Bersani” as it is known in Italy, only a notary could clear a line from a previously mortgaged property.
Now, use of a notary is no longer obligatory and consequently the associated fees are no longer payable and the entire procedure is quicker and less complicated. While Italian mortgages do have higher setup costs, owing to government taxes payable at the time of purchase, the flexibility and convenience of being able to pay off the mortgage at any time with no penalty more than balances this out.
Advice still essential
Sarah concluded, “Those looking to invest into the Italian property market still need to take advice; as with all countries there is a broad similarity to financial matters but it is often the smallest matters that constitute the biggest changes. For example, buy-to-let mortgages are generally not available in Italy, whereas in the UK we almost take this for granted. Italian banks currently only take into account your proven income at the time of applying, not the theoretical income from the property.
However, budding portfolio investors should not be discouraged, as once an investment property has been let successfully, the banks are then keen to include those figures in financing for those looking to purchase additional investment properties.
Mortgages in Italy range from 5 years to 30 years although 20 years is more common. You can choose between fixed, variable rates or a mix, commonly fixed for two years and then variable.
The Move Channel, Thursday, November 22, 2007