Posted by Adam Solomon on August 28th, 2018.
Portugal is a top destination for expats due to its Mediterranean vibrancy and rich culture. From city to countryside, work to retirement, the country offers a world of excitement – and a world of choice when it comes to buying a home.
Portugal’s housing market has reovered from the 2011 and 2012 crisis, and property prices in the nation are beginning to climb – but that doesn’t mean there aren’t still bargains to be had.
Find out everything you need to know about buying a property in Portugal with our quick guide.
Of course, the first step in choosing the right property is knowing exactly what you want from it. Here are some questions to ask yourself:
You might have ready answers to the first two questions, but the third can be tougher if you’re open to moving anywhere.
When it comes to choosing your location you could narrow it down straight away by asking yourself whether you’re a city slicker or a proud rustic. Are you seeking hustle, bussle and a busy nightlife or a quite retreat with idylic views? Then think about practicalities – what are the transport links like? Is there a large expat community in the area? Is the cost of living comparitively high or low? If you’ve got a family you’ll also need to look at schooling options, and if you’re planning to work in Portugal the employment opportunities will also factor in.
Once you’ve established the general areas you’d be happy to relocate to, do some research on housing market stats for your prospective destinations (Global Property Guide is a great resource). If possible you should also try and visit the locations you’re considering at least once to get a feel for them before embarking on your property hunt.
As a general rule, houses in Portugal tend to be larger on average than in the UK and more affordable per square foot.
Houses in rural areas are often referred to as ‘quintas’ and vary widely in price depending on the size and luxury of the property.
The sought-after villas tend to be a little more expensive, ranging from €500k to €10m, and the most extravagant can easily reach €13m.
Townhouses are a cheaper alternative to villas, offering a similar living space at a lessened price. A smaller garden and surrounding property are the trade-off for the cheaper rates.
Apartments are also a popular option, with urbanised and rural areas alike seeing many new apartment blocks developed recently thanks to the housing boom. These typically range in price from €100,000 to €400,000, but particularly luxurious ones can surpass €5m.
Once you’ve settled on a location and have compiled your wish-list, it’s time to get house hunting. If you’re house hunting remotely, your search will probably start on dependable property websites like Century 21, Rightmove, UrHome Portugal or ERA. Many expats also choose to engage the services of a reputable estate agent.
If using an agent, it’s important to ensure that they’re registered through the Associacao de Mediadores Imobiliarios. It’s also recommended that you employ a surveyor to canvas the property before you buy as they can highlight issues you might otherwise miss.
Fortunately, and perhaps contributing to the rising number of foreign buyers, non-Portuguese purchasers don’t have to adhere to any additional regulations. In fact, there’s an incentive for non-EU buyers in the form of a ‘Golden Visa’, which provides foreign buyers with non-restricted residency for up to five years providing that the value of their purchased property exceeds €500,000.
Now that you have an agent, you know where you want to settle and you’ve found a promising property, it’s time to dive into the intricacies of the purchase. First of all you’ll need a ‘numero de contribuinte’, or fiscal number. You can acquire this at a local tax office for a small fee. Find out more by reading this article.
Then (if you aren’t able to buy the property outright) you’ll need to apply for a mortgage. Unfortunately, the process for applying for a Portuguese mortgage can be as stressful, and require as much paperwork, as applying for a mortgage in the UK.
Next it’s time to part with some money.
One of the largest costs you’ll need to pay is the IMT. The size of this tax depends on how large the property is and factors like whether or not it’s a second home.
Next there’s Stamp Duty, which again varies depending on the value of the property.
Thereafter you’ll need to pay notary and land registration fees, which are usually a combined fee and are in the region of 1% to 2% of the property price.
If your property is worth more than €600,000 you will also have a wealth tax to consider.
Finally, if you are using a lawyer you’ll also have their fees to pay. The estate agent’s fees should be covered by the property seller.
It’s recommended that you reserve around 10% of the property price to cover all the fees involved in the process; while you may end up paying less it’s always good to have some emergency funds to hand!
Once you’ve got all your money in order, the property purchase process is similar to the UK. And, just like in the UK, buying a new home can be subject to delays and stresses.
Making sure you have the support of the right people, like bi-lingual lawyers and estate agents, can make the process that bit easier and is well worth the additional outlay. You’ll also find that using a a reliable currency transfer provider to manage your foreign exchange needs can reduce the worry of moving money abroad and make your funds go further.
This is only a very brief overview of the things you should be considering when buying a property in Portugal – but hopefully it’s provided a bit of inspiration to kick start your research.
Happy house hunting!
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