The fallout of the UK’s decision to Brexit triggered a massive drop in the value of the Pound, driving GBP EUR to a six-year low. With the exchange rate so weak and Portuguese property prices recovering from the global financial crash, now might be the time for you to achieve a good return for the sale of your foreign property.
In this particular guide we will be advising you on the steps to take when selling your property in Portugal.
First off, ensure that all taxes relating to the property are paid and up to date. If you default on these obligations it can cause your property to be sold through a public auction in order to satisfy the debt. This means that the property will be sold to the highest bidder and could go for substantially less than what the property is worth!
You will also need to make sure that all utility bills, such as gas, water and electricity, are paid in full before the sale.
The first decision to make when selling your Portuguese property is whether or not you wish to sell privately or enlist the services of an Agente Imobiliaríos (estate agent).
By selling privately you will be able to get the highest return for your property, but this can be a very long and time consuming process and the successful sale of your property is entirely reliant on you.
An estate agent will do a lot of the work involved in selling your property, like advertising it and organising Marcações e Visitas (property viewings) they will also likely have access to a large database of house-hunters. This doesn’t come cheap however, as an estate agent will generally take between 4% and 10% commission on the sale of your property.
Alternatively you can both market your property yourself and via an estate agent if you ensure that you do not sign an exclusivity agreement.
To ensure that your sale will be successful it is a good idea to really research the correct market price for your property. While you’ll want to set the asking price as high as possible, you won’t want to overprice your property and risk it being on the market indefinitely.
Prices in Portugal can be determined by various factors such as Útil (its size), the Distrito (district), Concelho (urban neighbourhood) or Freguesia (parish) that is located in and what facilities it has access to.
If you have enlisted the services of an estate agent then they are likely to carry out the Avaliação Imóveis (property evaluation) for you, but if you have chosen to sell privately then you should seek the services of an Avaliador (evaluation agent) and a Vistoriador (surveyor).
When it comes to selling your property it is important to make sure that is stands out against the hundreds of other homes on the market.
You will want to provide prospective buyers with plenty of high quality photos of your property, which help to emphasise the best parts of the property while giving buyers a solid idea of the layout. If you really want to maximise the potential of your property it’s recommended that hire a professional photographer.
In the case of viewings you will want to make sure the property is not full of clutter and that the majority of your personal photos have been put away. The idea of visiting a property is to help potential buyers see the house as a prospective home for themselves – which can be difficult to do when someone else’s family is adorning the walls.
Portugal, like nearly every other country in the world requires, you to collate a litany of paperwork before you can sell your property. Below you will find a list of documentation that you will require:
Hiring an Advogado Propriedade (property solicitor) is a good way of making sure that all your legal requirements are met and that no paperwork is missing. The solicitor can also draw up a Procuração Publica (power of attorney) document that can be signed and registered in the notary office to allow your solicitor to act in your stead should you be unable to be present for the entirety of the sale.
Should you get an agreeable offer on your property then both parties will be required to sign a Contrato de Promessa de Compra e Venda (promissory contract of purchase and sale) that sets out the conditions for the sale, such as a time limit for the signing of the final contract and the consequences of defaulting for either party.
The contract will generally require the buyer to pay a 10% deposit on the value of the property, which they will forfeit should they pull out. The seller is liable for twice the deposit should they pull out or fail to comply with the terms of the contract, so ensure you are ready to sell before signing the contract!
The signing of the public deed to complete your sale will take place on the day outlined in the promissory contract you signed prior and will need to take place at a notário público (public notary) with all parties and legal representatives present.
If you are unable to be present for the signing for whatever reason then be sure to grant the power of attorney to your legal representation who will be able to complete the sale in your absence.
Once checks have been made that property transfer tax has been paid and the content of the Contrato de Compra e Venda is verified, they will then be read out to the parties involved before the deed is signed.
The original documentation is then kept by the notary’s office to be bound into official records, and copies given to the relevant parties. Meanwhile, the public notary arranges for the title deed to be registered at the local Conservatória do Registo Predial (land registry office) in the purchasers name to complete the transfer of ownership.
Unsurprisingly the sale of your property will be subject to taxation and you will need to pay capital gains tax on any profit you may have made from when you originally brought it, with Portuguese tax residents given a 50% exemption.
Should the proceeds from the sale be used to buy another property for residential purposes in Portugal – or any other country in the European Union – it will not be subject to taxation, which can be applied to any property bought in the 24 months prior to the sale or acquired within 36 months after the sale.
Once the sale of your Portuguese Property is finally complete, you may need to transfer the proceeds from the sale back to the UK, and there are vast savings to be made here depending on how you choose to transfer your money.
There are two main options when it comes to transferring your money, via your bank or with a currency broker. While using your bank might appear to be the easier option at first glance, you may find that using a currency broker is actually a more convenient and cost-effective choice.
Most banks will charge transfer frees when moving your money, whereas some currency brokers don’t. Brokers also tend to offer more competitive exchange rates and a range of specialist services, such as the ability to fix an exchange rate for up to two years before a transfer. Fixing a rate in this way is particularly useful when purchasing or selling a foreign property as you’ll get the return you expect and won’t lose out as the result of unexpected shifts in the exchange rate.
In ensuring that you get the most competitive exchange rate and bypassing any costly transfer fees, your Portuguese property sale could potentially be worth thousands more when transferring funds back to the UK.
If you’re considering putting your Portuguese property on the market in the near future, find out more about your currency transfer options.
So there you have it, a step-by-step guide to selling your Portuguese property. If you’re putting your property up for sale in the near future, bear these points in mind and get the best return possible.
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