When it comes to buying property in Portugal, there are many factors to consider, research to be undertaken, and criteria to be determined. Deciding on your ideal location, as well as which factors are of the utmost importance to your purchasing decision will put you in good stead in the buying process, better enabling you to secure the property of your dreams.
We’ve put together a helpful guide of factors we believe every prospective buyer should be aware of when deciding to buy a property in Portugal, from initial steps to the buying process itself.
Reasons to buy in Portugal
Making the decision to buy property in Portugal carries an enticing array of benefits. From lifestyle factors to a wealth of financial incentives, the country offers an attractive balance of charming culture and modern luxuries suiting a variety of lifestyles. Here are some advantageous reasons to buy property in Portugal:
Investment opportunity
If you are considering buying a property in Portugal, you may already be aware of investing for real estate purposes, or the idea may be new to you. Buying an investment property for both long-term and short-term rental purposes provides great returns. The wonderful quality of life in both rural and high-density areas draws a high volume of tourists and holidaymakers, as well as those wishing to stay for longer periods of time.
Due to the country’s seasonal demand in many areas, as well as remaining attractive in the winter months, Portugal carries a remarkable, year-round return on investment, with high rental yields and returns.
Lifestyle Incentives
If there’s one thing the Portuguese lifestyle is characterised by, it’s relaxation. Deciding to move to Portugal means you’ll be treated to the fabulous carefree lifestyle that has drawn visitors from across the world for years. Friendly locals, an exquisite coastline, bustling cities, and even better food, there’s nothing quite like Portugal.
- The weather, the lifestyle & more
If there’s one thing the Portuguese lifestyle is characterised by, it’s relaxation.
Deciding to move to Portugal means you’ll be treated to the fabulous carefree lifestyle that has drawn visitors from across the world for years. Friendly locals, an exquisite coastline, and even better food. In summer, the sunshine is plentiful, and even in winter, temperatures remain rather mild, making it the perfect year-round European location to escape to.
When you own a property in Portugal, you’ll find yourself getting to know the local area and its culture a whole lot more than a one-off holiday would allow. You’ll become familiar with the local community, see familiar faces and get to know the local restaurants and their friendly teams. This creates the perfect incentive to return time and time again.
In particular, Quinta Heights is an ideal community that allows exclusive access to a range of five-star facilities and a chance to get to know your neighbours and become familiar with the local area.
- Accessible routes to and from Europe
Offering direct routes to and from the UK and Europe, including Spain, Germany, France and much of the Scandinavian Peninsula, ease of access is another reason to buy property in Portugal. Not only does this mean ease of access for yourself, but if you decide to use your property for investment purposes, then you’ll be meeting this demand for long-term and holiday rentals from Europe.
There are a variety of well-connected airports that allow for ease of access to most of Portugal. Faro airport is situated no more than a 40 minute drive from the Algarve, and Lisbon and Porto each offer superb links to the entire country.
- No restrictions for foreigners wanting to buy property
Portugal is highly attractive as a place to buy property due to there being no restrictions for foreigners who wish to purchase or invest, provided they have all the official documentation and go through the legal processes required.
How to buy a property in Portugal
When buying a property in Portugal, the most important first step is to ensure you acquire a Portuguese NIF tax number. This is needed for both residents and non-residents wishing to buy property in Portugal, and will also be needed when you come to open a Portuguese bank account. Following this, the process is as follows:
- Once you’ve found a property for sale that you’d like to make an offer on, you should ensure you locate a lawyer or solicitor you can trust to look after your interests in the purchase process.
- Both buyer and seller will need to sign the Promissory Contract, a legally binding document setting out the conditions of sale.
- The buyer pays the deposit.
- The Public Deed (Escritura) will be signed with a Notary present. Upon completion, it will be sent to the Land Registry and ownership of the property will legally belong to the new owners.
Provided you are aware of the required documentation and processes, you’ll be in a good position to embark on the buying process in Portugal. For a checklist of the required documents and what to expect when buying property, check out our How To Buy Property In Portugal Guide.
Factors to consider when buying property in Portugal
When it comes to purchasing property in Portugal, the factors to consider range from deciding how to finance the property, costs involved, as well as choosing the ideal location to meet all of your requirements. Making the decision will likely come down to a range of personal and lifestyle factors as well as financial considerations including a budget, future saleability, as well as wider location details. We’ve devised some factors to consider:
How do I finance property in Portugal?
There are a number of options you may have to finance your property in Portugal. Whilst you may be seeking to make a cash purchase, there may be other options available to you.
- Remortgage property
If possible, you may be able to remortgage your existing property in order to generate enough equity to purchase a new property in Portugal.
- Withdraw funds from low-performing/yielding investments
If you’re wanting to source surplus cash for your property purchase, it may be a good idea to review your current investments. Some funds allow periodic withdrawals, whilst others may allow you to sell your stocks or other investments. It is good to be aware that if you do sell your investments, you may not be able to withdraw the proceeds straight away, as you will need to wait until after the settlement day.
- Drawdown on your pension in Portugal
By drawing down into your pension, you’ll be able to receive monthly withdrawals for whichever amount you wish whilst keeping the remainder of your income invested in your pension pot.
If you are considering buying property in Portugal, it can be a good idea to consider transferring your UK pension funds to a Qualifying Recognised Overseas Pension Scheme (QROPS) tax-free. This will allow you to receive your pension in euros and more freedom to pass on your benefits to your chosen beneficiaries. Transferred funds would also be protected from the UK lifetime allowance charges.
- Getting a mortgage in Portugal
Another benefit of buying property in Portugal means there are no restrictions for non-EU residents on obtaining a mortgage. Many Portuguese banks are happy to offer up to a 70-80% loan for the value of your property taken out for an average of 30 years for non-residents. They also usually take into account that no more than 35% of your income tax is spent on repaying any outstanding debts or existing mortgages. Most Portuguese banks offer a fixed-rate or a variable-rate repayment option.
What is the cost of buying property in Portugal?
- Transfer Tax (IMT) and Stamp Duty
The IMT is a transfer tax payable when buying Portuguese property. The amount you will pay is dependent on a number of factors including the property’s primary use and whether it is your first or second home purchase. An additional stamp duty of 0.8% is also payable, although new developments may incur a higher rate which is usually already included in the price of the property.
- Legal fees
A lawyer will take care of all legal issues involved throughout the buying process in Portugal. It is possible to grant your lawyer Power of Attorney to sign documents on your behalf to save you travelling back and forth. They will also manage any licences and contracts that need to be in place, including the Promissory contract which will enable the lawyer to carry out checks on the property.
- Notary fees
These fees will be required at the point at which you are given the official documents certifying that you own the property. This has to be signed with a Notary present and sent to the Land Registry.
Where to buy property in Portugal
Deciding where you want to buy a property in Portugal is certainly an important factor to consider. Whilst many dream of being close to the country’s famed golden beaches, you may prefer to locate yourself in a more inland location, be near to local towns, or place yourself within the peaceful atmosphere of the countryside. Whichever you decide, every region of Portugal offers unique perspectives ideal for a variety of different lifestyles.
Some popular regions include the Algarve, Porto, Lisbon, the Silver Coast, and Cascais. These localities are certainly what we would consider to be the best places to buy property in Portugal.
Our property experts are highly knowledgeable on buying in Portugal. If you’d like to find out more information, fill in the form below and one of our friendly experts will be in touch.
