American-style properties

Una casa all'americana in Italia, che garantisce un nostro NPL

Property execution and expropriation reforms are taking on a social and historic connotation in Italy.

Italy is the home of privately-owned primary residences, where the house is a synonym for stability  and increase in value, at least according tothe ancient popular wisdom; on Saturdays and Sundays, in fact, people (including bricklayers and carpenters) devote themselves to theimprovement of their houses byspending hundreds of hours and thousands of euros on this activity. Well, in the last weeks some changes – more or less evident – have been observed, which are likely to revolutionise the typical attitude and customs of the Country.

Considering the actual or alleged necessity to allocate a large amount of NPLs and the real estate auctions, the property in Italy is regarded as a standardized (instrumental) good to be sold to the bank unless it is returnedin case of any problem, or disposed of by public sale at extremely low prices. According to the American style. With all due respect to our grandparents, who will turn in their graves.

Let us provide some examples:

– According to Legislative Decree 59/2016, three auction attempts must be made with a decrease by 25% plus a fourth final attemptwith a price drop by 50%: in some cases,the real estate properties will be depreciated by 75% or more within less than one year (read a detailed study); 

– Based on the new home loans including the “non-payment” clause,after 18 failures to pay the instalments, the bank can automatically put the house up for sale without the explicit consent of the owner and without having to go throughproperty attachment (read a detailed study);

– Private individuals will be able to purchase the main residencethanks to the leasing formula, which is already applied to cars (read a detailed study);

What are the consequences of these elements? In a previous post we focused on how our economy and culture are taking on Anglo-Saxon features:we talk, work and now will probably begin to regard our houses as the Americansdo. To be honest, I must admit a little bit of nostalgia. Some will have their heart broken and others will not understand.

However, our colleagues surely know that this change is inevitable and results from previous causes. Therefore, we had better focus on the benefits possibly arising from thismind-setin the present time and in the future.

Actually, there is no denying that, excluding any romantic or sentimental value,the purchase of the main residence with a loan is one of the worst mistakes from a financial point of view.

End of Part One.

(Picture: an American-style house in Italy which represents aNPL)

Emanuele Grassi