It might seem like an absolute dream to be able to purchase a property for just €1, especially in Italy of all places! However, despite how far-fetched it sounds, there are numerous small towns, villages and hamlets where you can actually buy a property for as little as €1. In fact, some places, such as parts of Sardinia, will even pay you to move there!
Even so, is buying a €1 property in Italy a good idea and is it really all it’s made out to be? To help you better understand the situation, let’s take a closer look at why these properties are going for so cheap and what the process of purchasing one of these properties means for the buyer.
Reasons Why Towns In Italy Are Selling Homes For One Euro.
Italy’s rural communities, like many rural communities in Europe, have experienced difficult times in recent decades. One of the main reasons for this is that many of the locals simply can’t afford to maintain their lifestyles in rural towns and villages, especially the younger generations.
This has led to a large proportion of people, especially in Generation X and Millennials, to leave their rural communities in search of work and career opportunities in bigger towns and cities. This has caused a depopulation epidemic which is damaging the fabric of community life in rural Italy.
The dwindling numbers of people in rural parts of the country make it hard for local businesses to maintain their profits and many have had to shut their doors.
This only adds to the pressures on the remaining people in these once idyllic areas to leave in search of work and financial security elsewhere. As this vicious cycle deepens, many rural towns and villages are beginning to feel like ghost towns with a very uncertain future.
As people continue to leave, local mayors and councils have been implementing radical policies to attract investment and new people to their towns and villages. One of the best publicized policies in recent years has been the offer of a one Euro property!
These one Euro properties are mainly run down, dilapidated, abandoned and falling into disrepair. This not only reduces the value of nearby properties but it puts off tourists and has become a major blight to the local communities. Therefore, rather than paying for these properties to be demolished or simply leaving them to decay, it makes more sense to offer them to new owners at a massive discount. However, as you might expect, there are conditions attached to these bargain basement prices!
What One Euro Property Really Means For The Buyer.
If something is a little too good to be true, then it probably is! In reality, the one Euro price tag is more symbolic than a genuine reflection of the property’s true value and the commitments you’ll be taking on. Essentially, when you buy a home for one Euro, or a comparably low price, you are also committing to refurbish and renovate the property at your own expense.
In fact, in most cases, you have to commit to completing the necessary renovation works within a set period of time, such as 3 years for example. This puts a major financial condition on the purchase and depending on the state of the property it could cost you a lot of money.
Before you can take ownership of the property you also need to pay a deposit. This deposit can vary although it’s usually about 3,000 to 5,000 Euros. Obviously, this is another cost you need to take into account. This deposit will be withheld from you if you fail to meet the specific requirements of the purchase, for instance, if you haven’t renovated the property by the agreed deadline.
Another vital thing to keep in mind is that even though there are certain properties available for as little as one Euro, many have a higher price tag and still come with conditions attached. Properties, even dilapidated ones, are often put on the market for up to 30,000 or 40,000 Euros. These properties may still require extensive renovations and often come with similar conditions as the one Euro properties, such as refurbishing them within a given time period after the purchase.
As you can see, buying a property for one Euro is not quite what it says on the tin. That’s not to say that it might not represent a genuine opportunity for some people, but generally speaking, it’s not such a good deal as it might seem at first glance.
Important Reasons For Not Buying A One Euro House In Italy.
The following are some of the key reasons for not buying a one Euro house in Italy:
Essentially, you’re not actually buying a property for one Euro. The one Euro concept helped get a lot of worldwide publicity for these towns but it overlooks the many hidden costs that are associated with the purchase. Most of the one Euro houses are not inhabitable and require lots of renovations. In many cases as part of the contract, you will have to spend a certain minimum amount on the property renovation.
Typically a property renovation in Italy can easily cost upwards of 15,000 Euros and in some cases a lot more than that! So think carefully and do detailed calculations to ensure that you don’t end up committing yourself to a project that is not going to work out for you financially.
Think of the time and effort it takes to renovate a property in Italy. My property renovation was delayed by almost 12 months. That’s money lost in rental income. During this time, I had to visit Italy multiple times and many times I had to take unpaid vacations from work.
Restrictive Renovation Deadlines And Conditions.
If you buy a one Euro property you will almost always have to agree to renovate the property within a certain period of time. This is not only restrictive but can tie you to the property, even if the markets change and you could have got a better deal elsewhere.
In many cases the authorities will place restrictions on what and how you can renovate. For example, in some cases external renovations will not allowed only internal. So you will be stuck with the way the house looks from the outside. Authorities will also likely ask you to hire a certain number of architects and lawyers.
One Euro Houses Are Mostly Purchased By Foreigners.
You will never see Italians lining up to buy the one Euro properties. The main demographic who has shown interest in buying these cheap, dilapidated properties are expats and foreign buyers. This means if you decide to go ahead with the project you might find that by the time you move into the village most of your neighbors will be foreigners just like you. This may be a positive thing for some people but most Expats will regret that the idyllic rural town or village no longer feels authentically Italian.
The fundamental reason why Italians are leaving these towns is because of the lack of well paying jobs. Decades of very poor economic and social policies has lead to this current situation. The problem cannot be fixed by selling outdated houses for one Euro. There are some lessons here for American cities. Most American cities including Philadelphia (my hometown) cannot fix potholes, run a proper school system, maintain street lights, control crime or the drug trade. But to keep the population distracted, they invest in bike only lanes, electric city buses, painting murals etc. At this rate there will not be anyone left in Philly a few decades from now!
Italy also has a population growth problem. Italians population is aging and there are some estimates that indicate that Italy will lose 20% of it’s population in the next 50 years. Population growth that is below replacement rate is one of the biggest issues facing humanity now.
Regulations Vs Returns On Property Investment In Italy.
Although Italy certainly does offer some incredible property investment opportunities for foreign buyers, there are other countries within the EU that offer equally good, if not better opportunities. For instance, countries such as Croatia, Slovenia, Armenia and even Poland, represent mush better investment opportunities. As well as great prices, these countries, and others, often have much fewer government regulations and red tape to worry about!
Therefore, if you’re thinking about buying a one Euro property in Italy as an investment, you might be better served by expanding your search to consider countries in Eastern Europe or even certain fast growing economies in Asia.
Are You Paying For The Property Or The ‘Italian Brand’?
Every country has a global brand, an image that comes into people’s minds when they hear about it. Italy, for good reasons, has built an incredible brand that conjures up the Dolce Vita, delicious food, stunning scenery and romance. Now, all of these things are undoubtedly true but that doesn’t necessarily mean that a one Euro property in Italy is a worthwhile investment.
The Italian Economy – Is It Growing?
Most European countries are in deep trouble because they handed over their security and foreign policy to the Americans. Before purchasing a property in Italy the macroeconomic situation should always be taken into account. The Italian economy has been floundering for several decades now and even though there are some positive signs, there are other countries in the European Union and elsewhere that are experiencing faster levels of growth and look set to continue making gains for the foreseeable future.
Cheap Italian Property Is Rarely As Good As It Sounds!
When considering a low cost property in Italy you need to be very careful to avoid falling into the trap of ‘wishful thinking’ and imagining that just because the property is in Italy that it’s a bargain. The truth is when it comes to one Euro properties in Italy, it’s often going to be much more trouble than it’s worth – in fact, it might not even break even after the renovations and refurbishments are paid for.