Anyone who has bought a home will know there are many stages in the process, and you should get expert help to deal with issues and ensure success. When buying a property overseas it can sometimes be daunting, and the issues are exacerbated. However, the property buying process in Portugal is relatively straightforward, despite what may feel like a high degree of bureaucracy. We have created this guide to help you realise your dream of owning a property in Portugal.
The attraction of Portugal can be put down to so many reasons – a warm climate throughout the year, stunning sandy beaches, white-washed villages, amazing golf courses and welcoming people.
Despite a more robust property sector, it is possible to find property bargains in the Algarve and the Silver Coast starting from 80,000 euros. For those of us with deeper pockets, you will be spoilt for choice thanks to a wide choice of luxury homes.
More recently, Portugal’s efforts to attract international buyers has resulted in attractive visa schemes and tax friendly tax policies.
Before you start your search, you can save yourself a lot of time, hassle and disappointment by spending some time establishing your requirements by answering these questions.
Why are you buying? Defining how you plan to use the property will help you evaluate the properties – weekender, holidays then retirement, investment or something in between.
What are you looking for in your ideal property? It is surprising how many people forget to fully define their requirements – bedrooms, bathrooms, property type, locations, must haves and turn-offs, orientation and view.
What is your budget? It is important you get a realistic idea of your budget. Get an in principal approval if you plan to get finance and to remember to allow for buying costs in your budget. Buying costs are at least 10% of the property costs. If you are interested in residency visas then allow for more!
Where are you looking to buy? Finally, establishing where you are looking to purchase you property will save you a huge amout of time and money. Below is a brief summary of the regions.
Algarve – The most southerly region of Portugal, with beautiful golden beaches, historic villages, world-class golf courses, and a warm climate through-out the year. The region is well served by Faro international airport. The most popular destionation for holiday makers and expats. The Algarve has something for everyone, glitz and glamour, slow and relaxed country life or something in between. Similarly, you’ll find properties to match your budget.
Porto – Classified as a UNESCO World Heritage Site, Portugal’s the second largest city is famous for its Port wine. A more industrious city, currently Porto does not appear on expat checklists. Apartments on outskirts start at around €100,000, with prices rising the closer you get to the center of the city.
Northern Portugal – This lush green and mountainous region of Portugal, borders Spain to the north. You will find property bargains with prices lower than in the Central Portugal.
Central Portugal & Silver Coast – Much less developed than the Algarve. This region is approximately 1.5 hours drive from Lisbon. The region is blessed with great beaches, good weather, spectacular landscapes and historical importance. Central Portugal has been popular with overseas buyers interested in remote hamlets and villages. You’ll find renovation projects from €30,000 and villas close to the coast from €180,000.
Lisbon – The largest city and capital of Portugal. As well as stunning beaches the area has a lot more to offer with a great range of shopping, leisure, sporting and cultural activities.
Alentejo – This sparsely populated region of Portugal, covers nearly a third of the country. Here you will find the typical and rustic Alentejo’s hills (known as Montes Alentejanos), farms,estates, and some of the country’s most beautiful houses by the sea.
Madeira & Porto Santo – Close to Spain’s Canary Islands, located off the coast of Africa. Madeira is famous for its tropical flora and fauna and stunning scenary. Generally considered an upmarket destination for tourists and expats. Porto Santo is very different to Madeira is known for its warm waters, dive sites and the 9km long, sandy Porto Santo Beach and turquoise waters.
Azores – Located half way to the US east coast. Flights are via Lisbon. The Azores is comprised of three groups of islands they are famous for their traditional foods, handicrafts, world-class water sports and nature reserves. Property prices start at €120,000 for a house.
Overseas Property Forum is a perfect place for you start your property search with new properties being added every day. And if you don’t find a property that meets your requirements, tell us about your perfect property criteria and we’ll send you details of properties to consider.
Once you have a clearer idea of which area of Portugal interests you the next step will be to find a good estate agent covering the area. The real estate industry in Portugal is regulated. Under Portuguese law agents are required to be licensed, insured and bonded. They should be registered with the AMI (Associacão de Mediadores Imobiliários). You can check an Agency is licensed on the IMPIC website. So, what should you expect from an agent and how to get the most from them?
A good agent should reduce the time and hassle finding your perfect property. Once they’ve clearly understood your requirements, help you understand what will realistically be possible for the budget and show you properties that meet those criteria.
They’ll have an in-depth knowledge and experience of the local property market, including potential rental income on properties. Good agents will contact other agents on your behalf to find a property that meets your requirements even if they cannot be found in their own listings.
They’ll hold documentation with detailed information on each property including local rates, utilities, restrictions on alterations and community charges. The agent will help you negotiate the purchase price, but remember their commission is based on the selling price!
A good independent lawyer who is fluent in your language as well as Portuguese that specialises in helping international clients with property purchases will work to protect your interests alone. We highly recommend you appoint a lawyer for your security, who will guide you through the purchase process, making all the checks required to ensure there are no nasty surprises before you sign any agreements or part with any money.
Always be wary of a lawyer recommended by the agent or developer as there may be a financial relationship. We can recommend a good Portuguese lawyer to help with your property purchase.
They are not lawyers; They are public officials that are required to ensure that the property transaction are conducted properly and the relevant taxes are paid. They are independent of the both the buyer and the seller. Your lawyer or agent will recommend a notary, but you can choose your own.
Not a legal requirement, but we strongly recommend your property is surveyed by an expert to ensure there are no nasty surprises.
They will help you avoid losing money to currency market volatility. FCA regulated, your currency transfer specialist is a fast, safe, and secure way to ensure you get maximum value from your currency transfers. You should register for an account at the beginning of your search as they will help you establish a true budget and when you find your dream property help you quickly secure it.
Generally, you should allow for up to 15% of the purchase price for all the costs and fees. These charges will vary depending on whether it is a re-sale property or new build property and if you plan to be Portuguese citizen. The main charges are:
– VAT (IVA) or Transfer Tax (IMT)
– Bank charges
– Notary Fees
– Surveyor Fees (optional)
– Legal Fees
– Deed registration Fee
– Utility Fees (new-build)
Depending on the property, documents and checks required the legal process in Portugal can take between one and five months. Here are the key steps in the process.
1. Reservation Agreement – Once an offer has been accepted you may be required to sign a reservation agreement, which demonstrates a commitment to buy. You may be asked to pay a deposit, but this should be retained by your lawyer (not the agent or seller) and the seller should take the property off the market.
2. Checks – Your lawyer undertakes checks on the property. The type of checks can vary depending on the property, but will include checks that it is free from debt and the seller is the actual owner of the property and can rightfully sell it.
a. Other documentation including tax certificates, council licenses and planning approval will also be collected and checked your lawyer
b. You lawyer will often help you obtain a Tax Identity Number (NIF), which will be required when opening a Portuguese bank account
c. A survey of the property will be arranged and builders consulted if you plan to undertake any building or renovations
3. Preliminary Contract (Contrato de Promessa de Compra e venda (CPCV) – is the next step after the legal checks and surveys have been done. It is legally binding and generally a non-refundable deposit of 10% of the purchase price is required. If the sellers pulls out they have to pay twice the deposit in compensation. The price in euros is set for the property when the contract is signed. However, the price in Pounds is not – you should speak to your currency specialist about your deposit and balance payments to ensure you don’t lose thousands on your property purchase.
4. Balance payment – If you are a cash buyer, your currency specialist will help you with the currency transfer. If you are using a mortgage, the finance provider will send the funds directly to the notary or seller.
5. Completion (escritura de compra e venda) – you are invited to the notary’s office with your lawyer, where the deeds of sale are signed. You can appoint a power of attorney to sign the agreement on your behalf if you are unable to travel to Portugal. The balance payment is sent to the seller and all other costs are paid to the notary. You then get the keys for your property.
6. Registering Change of Ownership – The notary will register you as the new owner and your lawyer will ensure name is also registered as the owner of the property at the land office and the local tax office.
New Build Properties – You will be required to make stage payments as the property build hits milestones. A currency specialist is the best way to lock in the exchange rate for each stage payments, so there are no nasty surprises.