The free houses that aren’t free

This sounds like a real bargain:

It’s yours for the price of a cup of coffee – a historic house in a terracotta-tiled hill town in Italy.

In fact for the price of a full English breakfast, you could snap up half a dozen of them.

A village in Sicily which has endured decades of population decline and neglect has come up with a novel, and seemingly too-good-to-refuse offer: it is selling off empty homes for just one euro each. That’s 80p at today’s exchange rate.

But it’s not, not really. Because you’ve got to do them up, costing perhaps €35,000. And once done up, well, will they be worth €35,000? Given that no one locally is doing them up then perhaps not. And it’s not unusual to find this in areas undergoing depopulation. A house being worth less than not just the build cost, but even the renovation cost. I’m seeing it here in Northern Bohemia too. In the centre of town then yes, housing has a positive value. But there’s hundreds (quite literally, hundreds) of places on the edge of town that you can have from the council for €1 each but it’s not worth having them. The renovation costs would be more than the value of the finished building.

That’s just what happens when the local population is shrinking.

21 comments on “The free houses that aren’t free

  1. This may be true if you want an investment property, if you want to sell it after you’ve renovated, but as a place to live – y’know, what houses are really for – it’s still a bargain, surely.

  2. Well, no, not really. Because if the renovation costs are “not worth it” then that is stating that you can purchase a renovated property for less than the cost of renovation……

  3. Rather like our local council sold off its housing at £29 each.
    The housing associations buying them had to spend millions between them bringing the council properties up to scratch.

  4. Why can’t we house the long-term unemployed in €1 houses in northern Bohemia? Would be a key benefit of European integration and stop them turning theirs and their neighbours’ British €300,000 houses into €1 houses.

  5. But Tim, on what basis are you saying that renovation costs are “not worth it”? What if I actually want to live there?

  6. OK, start from the beginning. You wish to live in Sicilian town. You have two choices. But one euro wreck and pay 35,000 to do it up. Total cost to you of 35,001. If you can buy an already renovated house for 30,000 then doing those renovations is not worth it, is it? You can achieve the same result for less money.

    And that’s very definitely true here in Aussig. It’s “not worth” renovating many local properties simply because you can buy an already renovated one for less than the cost of renovation.

  7. I was told that in Lithuania there are apartments even worse than worthless, because you’re tied into a communal heating contract that costs more to heat than the heat and rent ion an equivalent flat.

    Don’t know if it was true, but the people who told me were very definite about it.

  8. It’s worth it if you can’t access £35,000 worth of credit. Perhaps you have a poor credit history or a criminal record; perhaps you are working in the black economy, or are doing a bit of Cosa Nostra work to make ends meet. Maybe you’re an African migrant with no work permit. Maybe you’re a single mother on benefits with a bit of DIY skill and/or a series of casual boyfriends who you can rope into doing some DIY for you. No bank is going to lend you any amount of money.

    The banks have their own costs and incentives too. Writing a secured loan on a £350,000 property with 5% down means the bank has a £17,500 buffer if you default: that could cover legal costs, bailiffs, etc. On a £35,000 property the same deposit ratio is just £1,750; and the Italian legal system is notoriously expensive and drawn-out. Britain is highly unusual in offering credit for the masses: many Italians will buy homes in cash, rather than on credit. (Note that Italy didn’t suffer a credit bubble like Spain.)

    In short, it’s a great deal for some people, but (probably) not the kind of people you want to attract to your town.

  9. By definition, if these houses are worth doing up someone already there would be doing them up. The Italians know a bargain when they see one.

    Unless there’s some sort of mafia issue – eg people have been warned off, or renovation prices are artificially high – it being Sicily. Then there’s the local and national government to deal with.

    I looked at buying a big old farmhouse in the Marche. Around 3,000 sq ft, fabulous views, near to a small ski resort, not far from the coast, lovely village. From memory, 120,000 euro to buy and probably another 150,000 to renovate. You’d have had a pad worth (‘worth’) a million quid on the face of it.

    Trouble was everyone in the village was about 80 – not a single young dolly bird in sight – and I could only see one way that demography was going.

    When every village for miles around in the same, it adds up to a dying country. Italy as we knew it no longer exists except in our imaginations and in photographs etc.

    So we didn’t buy.

  10. I’m quite happy living in a run down property. I don’t care what it looks like, as long as it’s structurally sound-ish. £1 anywhere is a bargain on that basis. Hell, I could knock it down and build a new basic dwelling on the plot for much less than 35 grand.

  11. I’ve been pointing this offer out to one of my colleagues of Italian descent (he’s Neopolitan but won’t split hairs about it). The bit that makes us laugh is the price – WHEN YOU ADD IN LOCAL TRANSACTION TAXES. So we’ve taken to calling it the Ryanair Property Offer.

  12. But surely the “worth it” equation applies only to me; is the value TO ME of the finished property worth more than the €35,000 it costs to rennovate. Yes, there might be a better offer down the rod, but I like this particular village because Grandpa Corleone was born here etc. And yes, this might put me in a minority of 1 and everyone else might think I’m irrational, but…

  13. @Ian
    He’s saying that if the sale value of the property is less than the original purchase price (unrenovated) + cost of renovation, then you might just as well buy a renovated property, if you’re looking for somewhere to live. It’s cheaper.
    There’s plenty of Brits made the same mistake in Spain.

    Having had some experience of doing this sort of thing in France & Spain, I’d be extremely suspicious of that €35k renovation projection. I’d be wanting to have a really good look at what the regulations are down there. Can one do “as was” renovation or is one expected to bring the property up to current requirements.
    This is why I own a rather nice little house in France. Brit couple bought it as a renovation project without realising, bringing it back into use would require compliance with current sewerage requirements. For this particular property, getting the work done by contractors would have consumed more than their renovation budget. The end cost would have exceeded just buying a going proposition house, somewhere else in the commune.
    Don’t suppose the Sicilians are any dafter than the French or Spanish. This’ll be intended to generate work for local people & that’s where most of the added value of the restorations will end up. You really need to know what you’re doing to get ahead of the game.

  14. There are remains of little stone cottages dotted all over the moorlands of Britain – I’m mystified that birdwatchers and the like don’t buy and “renovate”. But not very mystified.

  15. I was told that in Lithuania there are apartments even worse than worthless, because you’re tied into a communal heating contract that costs more to heat than the heat and rent ion an equivalent flat.

    Heh. I think I lived in one of them for a week. Ex-Soviet monstrosities, but in better nick than their Russian equivalents.

  16. IanB–your problem then would be that you are living in a ghost (or soon to be ghost) village all on your own. And vulnerable to any local crims/psychopaths who hear about the “rich” Inglease living in his new mansion.
    If you could bring a small community with you it might be worth doing.

  17. There is one particular bird watcher for whom I would like to buy a little stone cottage as a present…and brick him up in it.

  18. Buy ’em all then spend 35k on marketing Sciliy as the “new France” to the chattering clases. You could even get someone to ghost write a book called a year in Sicily.

    Some of he stories I’ve heard of gullible people buying properties in France to do up means there’s plenty of fools looking to part ways with their money.

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