Over the past few years, small towns across Italy have attracted global attention by selling off houses for as little as one euro (about $1.21). Despite their bucolic charms, historic villages like Mussomeli and Zungoli in Sicily were increasingly losing residents to cities for employment opportunities. To kickstart repopulation, an extraordinary real estate trend developed wherein the “dying” villages auctioned off abandoned houses at bargain prices, sometimes as low as one euro.
As the one-euro house scheme garnered international interest, two young Italian entrepreneurs — Alessandro Barba, a property manager, and Nicolò Bollo, a tax consultant — decided to develop a company to help foreigners participate in the auctions. Their dedicated house auction website, Auctions2Italy, has moved the whole purchasing process online. It makes the sale of dirt-cheap properties more accessible and pandemic-friendly by allowing prospective buyers to browse and bid on houses remotely. A partner legal team also helps new homeowners take advantage of government bonuses granted for some types of restoration, which is often a requirement upon purchasing one of the properties.
In order to explain how you can actually turn the dream of owning a house in Italy into a reality, Alessandro Barba tells Matador about how their online auction site is enticing international buyers who have been put off by travel restrictions and assist in reviving Italy’s struggling small communities.
Why is Italy selling off its houses?
Italy’s one-euro house auctions started back in 2014 and shot to international fame after just a couple of years. The scheme gained popularity because small towns in Italy had a common problem of shrinking populations. “Over the last 70 years with the decline in working opportunities provided by agriculture, many villagers left beautiful and historical small villages to move to cities in search of work in industry and services. Plus, the Italian economy has never been very dynamic so those small towns suffered, even more, the loss of human capital,” shares Alessandro Barba.
These towns with dwindling populations and local economies almost at a standstill saw the one-euro house sales as a radical solution. “Over the last couple of years some enlightened mayors decided to cater to foreign investors by offering depicted properties for a symbolic price, attracting interests from all over the world,” Barba added. As the houses are auctioned off, most don’t actually go for one, however the prices are still usually very low and particularly attractive for foreign buyers from countries where the market is costly and competitive.
Thus the one-euro home trend went from strength to strength, building momentum even during the pandemic. One town actually capitalized on its “covid-free” status to entice buyers. Last year, a house restoration also made it to American home design channel HGTV when Hollywood actress Lorraine Bracco bought a house in Sambuca in Sicily and filmed the renovations for the program.
A new scheme to help foreign investors
Despite the global interest, the property auctions are not often readily accessible for foreigners, especially amid a travel-restricting pandemic. One major problem for prospective buyers living far away is the tendency for the house auctions to be held physically in local town halls. By moving the viewing, bidding, and purchasing processes online, Barba and Bollo hoped a greater number of potentially interested people living abroad could participate in the auctions.
To use their house auction website Auctions2Italy, prospective buyers are asked to register and provide credit card details in order to avoid scammers. They are then free to browse and bid on available properties. Barba notes that the physical condition of properties can vary considerably. “Some in bad shape, some others are ready to live in,” he says.
COVID-tested flights from the US to Italy have allowed some potential property owners to see their new purchase, but most of the time the whole process is conducted remotely. Although it seems risky to buy a house without actually seeing it in person, Barba reports that it hasn’t deterred some people. “Given the fact that the properties are so cheap compared to their home countries … they feel okay with buying without seeing in person, just via photos and video calls,” he shares.
Italian government offers financial incentives
Once new homeowners have secured their dream property in Italy, they still have to face the daunting task of legal proceedings and bureaucracy. Besides the actual purchasing formalities, difficulties with paperwork could mean missing out on financial assistance schemes from the Italian government. Barba and co-founder Bollo realized their real estate and legal expertise could assist buyers, so they now offer help to clients struggling with the language barrier and the official paperwork.
Barba tells Matador about the various monetary incentives offered by the Italian government for restoring abandoned properties. The “Ecobonus” scheme, for example, offers a tax deduction of 110 percent on the expenses incurred during some types of restoration. To be applicable, the restoration work must improve a property’s energy efficiency rating or reduce its seismic risk. The bonus currently covers all relevant expenses up to December 2022.
Other incentives aim to encourage newly purchased properties to be used as permanent residences, thus boosting a town’s population and economy. In the south of Italy, for example, freelancers who move their official residence there only pay taxes on 10 percent of their annual income. To encourage more people to relocate to Italy, Auctions2Italy’s legal partner team helps secure VISAs for non-EU residents and dual citizenship for those who have Italian ancestry.
The other motivation, of course, is la dolce vita that these small towns offer. Barba rattles off a list of what new homeowners can expect: “Weather, peace, relaxation, Mediterranean diet, organic food, amazing wine, cheap costs of real estate and life, beautiful Mediterranean beaches within one-hour driving, community, sense of belonging and a slower pace of life.”
So what’s the real cost of a one-euro house?
With the abandoned houses being sold at auction, the final price can creep up to a few thousand dollars. Even so, the prices are still low compared to foreign buyers’ home countries. On the Auctions2Italy website, the auctions have different reserve prices that must be met, which are usually a few thousand euros depending on the condition of the house. In Barba and Bollo’s first round of auctions, which finished at the end of December, two properties located in the northern Emilia Romagna region sold for $19,400 and $24,200.
On top of this, however, there are restoration costs, and Barba warns that these can vary wildly. “Some houses are basically just four walls while some others just need some minimal adjustments.” For those hoping to move into a property right away, he suggests also looking for houses on the regular property market. These often need minimum restoration work, which can be very attractive for those on a budget. The one-euro homes, instead, are generally in poor condition. For Barba, they are “more interesting for those who have money and want to have a brand new property entirely re-made.”
Barba hopes that their website can ensure those tempted to invest in a property in Italy go through with it, not least because of the benefit to the moribund communities themselves. “These small towns are in need of new energies, investments, and a more global mindset,” he says. With investing in the one-euro house schemes now easier than ever, there’s no excuse not to fulfill a dream of moving to Italy. But if you’re still struggling to justify buying yourself a little property, you can think of it as an altruistic act.