As anticipated in one of our previous articles, several municipalities in Italy have been giving investors the opportunity to purchase local properties for the symbolic sum of €1.
But what are the hidden aspects behind this amazing opportunity?
Let us explain everything you need to know from a legal perspective.
Public Auction & Rules: First of all, those houses are being sold by public auction, which means that you need to know the rules in order to participate in bidding. The rules are usually published on the municipality’s website, however if you are not familiar with how auction sales work in Italy, you will need further clarification.
Since you need to send an initial sum to the municipality involved, you need to know what happens to your money should you win the bid, and also what happens if you don’t.
€1 is just the opening bid, however most of the time you will need to make a higher offer, especially if there are many other people bidding on the same property.
Most of the time the municipalities do not give you the opportunity to see those houses in person because of their conditions, but anyway you need to have a clear idea of what you are bidding on. This is why hiring an expert who can give you a rough estimate and advise you on the minimum and maximum amount to offer can be the right solution.
Choosing the right price is important for winning the auction, but it is also important to make a good deal!
Unmentioned Costs: The €1 home purchase does not include Notary fees, property transfer taxes (you need to make sure you pay the right amount), and insurance policy. Moreover, the properties listed will almost certainly need major renovations.
The issue of property taxes needs particular attention in order to avoid penalties and fines.
Furthermore, you are required to obtain work permits to be able to start the renovations. This involves costs for a technician, such as an architect or a surveyor.
Depending on the condition of the property, some may require more consistent renovation than others.
You will usually need to spend at least €15,000 for renovation, but this is a very low estimate and most likely you will need to spend even more than that.
A deposit is commonly required as a guarantee when you first make your application. It has happened that the deposit requested was as high as €5,000, but most municipalities will ask for a lower amount or might not even require any at all. For instance, the municipality of Salemi requires a € 3,000 deposit by cashier’s check, or alternatively the commitment to pay the deposit by bank transfer upon request of the municipality.
About changing your residency: This used to be obligatory in order to participate in an auction, however many municipalities no longer require it. In some cases, it is still requested for starting a business in the town.
Renovation works: This is an important aspect, and what you need to know is that once you submit your renovation plan, the work must usually be completed within three years.
If you do not complete the work within the allotted time, you will lose your deposit, and in some cases the municipality has the right to regain the ownership of the house.
Given the limited time frame, you need to consider whether it’s best to demolish the house and rebuild it from scratch, or just remodel the existing property. This decision should obviously be evaluated with the help of a professional expert.
Even if it ends up costing you significantly more than a mere € 1, it might end up being a real bargain anyway.
Foreign people usually hire a lawyer or other expert who can guide them through the entire transaction.
If you need a team of professionals who can accompany you throughout the entire process, feel free to contact firstname.lastname@example.org for a free first consultation.