PARTNERSHIP Italy - UK

FROM THE CHAMBERS | 23 www.italchamind.eu place for property investments; despite a sluggish economy, Italy’s residential property market is gradually recovering and demand for properties is rising and residential construction has increased. As a matter of fact, currently many people are taking advantage of this very favourable situation. The demand for houses is increasing, both from those looking for a house to move into and those searching for an investment opportunity, whether Italian or international buyers. The country with the largest volume of property investment continues to be the United Kingdom. The turbulence caused in the EU by Brexit and the lack of certainty as to how Europe will work with the UK in the future will not last forever. Foreign investment is always required, and foreign investors can lift the real estate market in Italy and significantly help bolster the property sector. The impact of Brexit on the UK economy means the UK housing market is unlikely to see a continuation of weakening sales activity in 2019. Strong competition within the UK mortgage market continues, which has reduced borrowing costs. London has traditionally seen the fastest growth in house prices across the UK, but there are signs that this is changing, as the prime end of the market begins to cool. BREXIT EFFECTS With the UK’s deadline for leaving the EU now pushed back until 31st January 2020 and a general election on 12th December 2019, UK property owners and would-be property buyers in Italy are still feeling unsure. Even if Prime Minister Boris Johnson wins the December election and gets his withdrawal agreement bill through Parliament, the confusion over the UK’s exit from the EU will likely continue through 2020 or longer. If Brexit proceeds, we expect a differential effect across the Italian property market. For desirable locations and luxury properties where there is a strong market composed of national and international buyers, we do not expect to see much effect. In more affordable, usually rural areas, we expect to see some price falls driven by three factors: 1. The cumulative effect of the fall in the GBP against the Euro plus the experience of maximum exchange rate swings will lead some people, especially the retired or those on a UK income, to consider the Euro to be beyond their reach. At the limit, an owner who bought their Italian property back in 2000 and planned their finances at the then rate of GBP 1 to EUR 1.67 has seen the rate moves as low as GBP 1 to EUR 1.04 between then and now. If owners believe the risk to be on the downside, as some do, the logic is to bail out now and take the loss before it gets any bigger. 2. In many rural areas, the Italian population has become skewed to the elderly because those with good employment prospects continue to move to locations, either abroad or in major Italian cities, where jobs are available. There remains virtually no local market of potential buyers with purchasing power. 3. The market in rural areas has historically tended to be driven by incoming foreign nationals seeking affordable Italian properties to renovate. This has traditionally been a particularly popular market with UK nationals. With the uncertainty caused by Brexit, since 2016, UK nationals are no longer arriving in any number and so liquidity has dried up considerably in many areas. FUTURE SCENARIOS Assuming the UK completes the Brexit process, UK investors in Italy would likely be in a position similar to those from the USA. As such, this means no restrictions on property purchases or rentals in Italy. Depending on the deal the UK makes with the EU, obtaining a residence permit may be more complex. For the time being, we can only assume that in a post-Brexit scenario, the situation will be the same for UK nationals as it is for non-EU buyers now, i.e. exactly the same as for EU buyers with the exception of the requirement of a visa when staying in Italy for more than 3 months at a time, and a work permit if employed in Italy. As a conclusion, anyone can own or buy property in Italy, whether they are from an EU or non-EU country. The Italian property buying process is safe and well regulated. If you have been thinking of buying a house in Italy, you would be wise to do so with the help of an English-speaking Italian lawyer. An experienced Italian property lawyer will be able to guide you through tax and regulatory issues and steer you away from any risks. Make sure that you choose an independent lawyer rather than one recommended by the vendor or estate agent, who may have a vested interest in pushing through a property sale. If you have any concerns, De Tullio Law Firm is here to help. · Contact us at info@detulliolawfirm.com Below: Giandomenico De Tullio - Managing Partner Photography courtesy of De Tullio Law