It is notoriously well-known that Italian housing market is experiencing hard times with housing prices still falling also for this 2014 when a recovery was expected.
According to the data released last week by the Italian Agency of Revenue (Agenzia delle Entrate) 2013 registered a downturn in the residential real estate market equal to -9.2% compared to 2012, with 403,000 sales observed and prices dropped by 10.7%, namely 66.8 billion euros less then the previous year. At the same time also purchases through mortgage plunged 10.6% in 2013.
So, in order to overcome this stagnant situation, these days Prime Minister Matteo Renzi has announced new measures to be put into effect by July 2014, including a 1.7 billion euro Housing Plan consisting in 10 points to boost and encourage the property market. It deals with tax breaks for home owners who rent out to social-housing tenants and the increase in stocks of social housing. In addition 200 million euros will be devoted to new funding for controlled rents.
And what about buyers? Especially Renzi Plan has strengthened the ‘rent-to buy’ formula that will benefit both Italian and non-Italian potential purchasers. As a matter of fact this is becoming a very popular solution in recent years due to the economic turbulences among those who want to buy a property without taking out a conventional and mortgage from banks or that cannot get it. So they can immediately move in to while waiting the right time they believe they can afford and purchase it.
Then it appears to be the good compromise that allows you to live in your ideal Italian home while improving your credit to ransom it. But what is new about this ‘renting before buying’ alternative? The minister Lupi decree basically has greatly extended the lease period to 7 years against the usual 3 years. In this way the buyer will have the chance to save a larger amount that at the end will be deducted on the whole property price. At the same time all costs and taxes related to the mortgage are postponed if you plan to get it at the end of the tenancy period. Moreover all levies on the property will remain at the expenses of the owner during this first phase.
An example to sum up:
Agreed price (locked-in for 3 years â†’ 7 years): 200,000 â‚¬
Initial down payment (10% of the agreed price): 20,000 â‚¬
Monthly payment: 600 â‚¬ (300 â‚¬ rental price + 300 â‚¬ deducted on the whole property price)
Amount after 3 years : 30,800 â‚¬ (20,000 â‚¬ down payment + 10,800 â‚¬ saved in 3 years)
â†’ after 7 years: 45,200 â‚¬ (20,000 â‚¬ down payment + 25,200 â‚¬ saved in 7 years)
Balance: 169,200 â‚¬ â†’154,800 â‚¬
As you can see, in today’s market this could be a good option for many potential home buyers who are not in a position of pay a large amount of money immediately or who cannot get a mortgage. And now they have much more time to set aside a nest egg that in the future will allow to buy their own home in Italy while enjoying it at once!