Italy presents a tantalizing challenge for property managers. In general, the country has not yet seen the large conglomeration of property management companies that many other countries have. Yet, at the same time, the rate of homeownership is high and opportunities more limited. Those that do exist have been tested by time.
The reasons to invest in and manage properties in Italy are connected to one of the most fundamental concepts in real estate—location, location, location—and given the history of property management in Italy, timing may be right for IREM members to demonstrate the benefits of professional property management.
Historically, the profession of property manager has not existed in Italy. The maintenance of major buildings was considered an administrative function for which the owner would have hired a maintenance person or a contractor for extraordinary matters. This effectively makes each owner their own independent management company, but in Italy it is not standard practice to incorporate oneself to do business as a professional.
In general, the real estate market in Italy is very highly parceled, and the rate of homeownership is 72.4 percent, relatively high when compared to the U.S. (64.2 percent) or Canada (66.4 percent). This is why condominium buildings are much more standard than apartment buildings. The role that most resembles that of property manager or site manager is the condominium manager. Usually one of the condominium owners would volunteer for this position or it would be delegated to an external manager.
The goal of an Italian condominium manager has been to find a consensus among the homeowners’ assembly on how to divide the common expenses rather than to provide services. It is worth noting that condominium managers have spending power only within what has been approved by the homeowners’ assembly. The lack of autonomous power can make it difficult to collect assessments. Condominium managers can request payment of assessments informally, and a reform that allows them to stand in court without the approval of the homeowners’ assembly has only been approved within the last few years.
Perhaps because of the lack of professional property management, there has been a tendency for many properties to be underserviced from a maintenance and renovation point of view. Thus, the prices of older homes can be extremely depressed, since buyers are willing to pay far more for a new construction.
The good news is that thousands of years of history have provided a long chain of data to analyze each area, making the Italian real estate market very predictable if managers are careful about how they choose which properties to add to their portfolios. This is often ignored because statistics easily fail to acknowledge the overperformance of specific areas. Once again, location is of the essence.
These locations are good investments because they are linked to tourism. While the Italian economy (and therefore the Italian real estate market) seems to be falling apart and many enterprises are relocating outside of Italy, the Colosseum, Vatican City and Venice are going to stay where they have been for two millennia, and tourists will keep visiting Italy to see these wonders.
Owners also have the opportunity to switch an investment property to personal use and back. Properties can be rented in certain months and used personally in others. As an example, June and August are typically very good months to lease out beach houses in Italy, while cities perform better during the rest of the year.
There are very few limitations on foreigners investing in property in Italy, but there are a number of unique Italian details that must be addressed to ensure that transactions go smoothly.
The purchase of a property in Italy requires obtaining an Italian tax code, known locally as a “codice fiscale,” which serves as an identification number for tax and administrative purposes. Obtaining one is as simple as bringing your passport to the local tax office and filing a form, but the bureaucratic system is entirely in Italian, so most investors make use of a local consultant for language support.
Once a sale has been made, a notary must help transfer the property by deed. This involves confirming the presence of the parties, certifying the title and then recording the deed. Italian notaries perform duties that go beyond the scope of title insurance and most foreign notaries. The notary will inquire into not only the chain of title and the absence of liens, but also the compliance with zoning laws and the energy efficiency of the property. A minor nonconformity in the property can potentially stop the transaction midway, creating a liability to the seller. Having a trustworthy lawyer and surveyor is critical for the success of the transaction.
The Future of Property Management in Italy
Some internationalization has come to the field of Italian property management. Recently, there has been a push to professionalize the management of condominiums. At the same time, the ownership of real estate in Italy is beginning to consolidate; in consequence, property managers are becoming a more prominent, necessary role.
However, the country still needs time to adapt to these changes. Because of the lack of experience with large property management companies and property managers, it will take years for the perception of these two roles to change within society. This creates an opening for property managers to help define their roles through high quality property management in Italy.