Italian rent to buy, sometimes called vendor finance, may be the best solution if you do not have Euro income or if you do not qualify for an Italian mortgage for other reasons.
We all know that in the present financial circumstances, getting a mortgage from an Italian bank can be very difficult with a high risk that your Italian mortgage application will be rejected.
Italian rent to buy or vendor finance, is now the fastest and most convenient financing solution for your property purchase in Italy.
No bank, no bureaucracy just a stress-free process leading to the realisation of your Italian dream.
How Italian Rent to Buy Works
A rent to buy agreement is an Italian contract which includes both the sale-purchase and lease agreement in a single deed.
The rent to buy contract must conform with the Italian Decree 122/2014, Art 23.
A purchaser buys the property in monthly installments which are split into capital payments and rent. The specific proportions of these two elements can be negotiated by the parties.
At the end of the contract the ownership of the property (Rogito) is transferred from the vendor to the buyer.
The buyer has the right to conclude the contract early by paying off the outstanding capital balance. If the right of early redemption is exercised no further rental payments would be due to the vendor.
The Legal Structure
1) The deed will be filed for 10 years.
2) A buyer gains immediate use of the property.
3) The buyer may sub-let the property for short-medium-long term, thus financing (partially or totally) the monthly installments.
4) The possibility of transferring the contract, thus there is the opportunity to profit from the resale within 10 years and not to have to pay the transfer tax.
The Advantages
- Reduced initial costs of lower deposit and reduced transaction costs.
- Saving the 2.5% mortgage tax on the amount borrowed.
- Avoiding the administrative cost of the bank’s processing charges and the cost of the compulsory purchase of any bank insurance linked to the loan.
- Convenience and time saving as there is no need to provide an endless list of documents to be translated and notarized in the Italian Consulate.
- Simplicity as the only documents required from the purchaser are:
- Passport or Personal ID
- Italian Tax Number (Codice Fiscale)
Our Italian Rent to Buy Contract
Our rent to buy contract is an internationally applicable 10-year contract which will make your Italian property purchase faster, cheaper and easier than using a conventional Italian mortgage product.
The key features are:
- Minimum 10% down payment as a deposit.
- Regular 10-year monthly payment schedule which create a 3.33% rental income return for the vendor whilst reducing the financing cost for the purchaser:
- 75% as an installment towards the sale price.
- 25% as rent for the use of the property.
- The buyer will save money because the non-resident mortgage cost would have been higher than the 3.33% paid as rent.
- The vendor gets 3.33% capital return of the capital amount until the termination of the contract or until early payment is made.
The buyer has the right to activate the buying option at any time by paying the full sale price and completing the property ownership transfer.
The History of Italian Rent to Buy
In Italy, the origins of rent to buy date back to 2009 with the introduction of short-term payment plans permitting a purchaser to defer the application for an Italian mortgage yet take possession of the property from the date of the compremesso.
In 2014 rent to buy was formally introduced into the Italian legal system with the Decree 133/2014 – Art. 23 (Decreto Sblocca Italia).
The fiscal implications were explained by the Italian Revenue Agency (Agenzia delle Entrate) in Circolare 4/E 19.02.2015 which confirmed rent to buy as a secure method to buy Italian property.
This new decree allows a rent to buy contract to replace an Italian mortgage with a maximum term of up to 10 years.
Its distinctive feature is the compulsory 10 year’s filing of the deed. This gives the buyer and the vendor complete security in the case of bankruptcy, death or third party creditor claims on the property.