What with the current state of the property market, people these days are on the lookout for cheaper options for purchasing apartments or houses in Italy. One way of cutting down your costs when you buy is with an off-plan property, estimated to be 15% cheaper than a used home.
What is an off-plan property?
Very simply, an off-plan property is a building that hasn’t been built yet or which is in construction. Aside from being cheaper than already existing buildings, it is a popular option for the fact that you normally pay between 15% and 40% upfront, and then only pay the rest when the construction work on the property is finished. Some property developers will even accept less than this deposit amount.
An especially popular option among property investors and speculators, it is a way of purchasing a house before the construction work has begun, but after the building plans are drawn up and the planning permission is granted. However, there is an additional risk related to this type of property that there isn’t with others, namely the fact that the property developer could go bankrupt before the work is completed. Luckily, there are laws in Italy to protect against this eventuality, meaning that your investment money doesn’t go down the drain.
What are the advantages of buying off-plan?
- As previously mentioned, buying a property off-plan is much cheaper than buying a re-sale property, since the developers understand that buyers have no physical building to base their decision to buy on, only the plans and the good reputation of the development team, so there is a substantial discount.
- What’s more, used properties are obviously not new and so may require refurbishing or carry other additional unseen costs, whereas off-plan properties have a fixed price tag attached.
- There are some property developers who even allow you to choose certain building materials, the layout of the apartment and other features of the home.
- Being new constructions, off-plan properties are more energy efficient and have lower running costs than other buildings.
- The average time to wait for construction to be completed is 12-24 months, giving you time to save up more money to be able to afford the house, but not so long that you get tired waiting.
- Buying off-plan is a great option when buying as an investment. Between the time you buy the property and the moment it’s finished and ready to sell on, house prices will probably have gone up and property investors can make an average profit of between 15% and 60% for properties in high-demand areas where they can be re-sold with a fast turnaround.
Before you buy an off-plan property…
- Compare the price of your flat carefully with other properties in the area to be sure you’re getting the best deal possible. If you’re investing in the house to sell it on after it’s completed, check to see if there is demand for this property type in the area where it’s located.
- Check that the area has good public transport links, supermarkets and other services, and that you’re not buying a development in the middle of nowhere.
- Get a bank guarantee for yourself, and make sure the property developer also has one, as well as insurance to cover incompletion or late delivery of the property. Although Italian serves to protect buyers against misconduct by the developer, it’s better to be safe than sorry when it comes to buying properties before they are even built.
- Make sure the developer has all the requisite legal paperwork, including planning permission and building permits, and once the building work is finished get all the requisite documents from them, including a Certificate of Habitability (Certificato di Agibilità), the title deeds and cadastral land registry certificates as well as the electrical, gas and water installation certificates and an Energy Performance Certificate.
How to buy an off-plan property in Italy
- Reserving the property: you pay a down payment as a sign of good faith in the transaction
- Signing the contract: you pay the deposit (between 15% and 40%). At this stage the developer must give you a real estate guarantee in case the work is not completed for whatever reason.
- You only pay the rest after construction is finished
Your buyer’s rights when purchasing off-plan
When you sign the contract, it should come with all the building permits and plans. It must then be registered with the Property Register (Registri Immobiliari) for everything to be above board and for you to be eligible to claim your consumer rights.
If this is adhered to, you will have 10 years in which you may claim for damages, either hidden or visible, against the developer. They must have insurance to cover such cases, so make sure before you sign the contract that the do have it.
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