Is it any surprise so many people are looking at buying property in Portugal? It has a gorgeous climate, friendly people, a low cost of living and communications are good.
Add the fact that property prices on the Algarve are low compared to the UK, and that there are glorious beaches, culinary delights and culture to experience, and you might think about going, too.
Moving to Portugal or buying a holiday home there involves different legal and financial processes, but it’s not complicated. The most difficult part will be choosing your dream home from so many beautiful properties!
Will you select a villa close to the sea? Perhaps a home next to one of the country’s glorious golf courses? Or how about an away-from-it-all rural property, complete with land and vineyard?
Read on for some information you might find useful.
Viewing property in Portugal
Once you’ve got an idea of type of property you’d like, where you’d like to be based, and have a budget in mind, it’s worth contacting an agent based in your area of choice area and make use of their expertise to help with your search. Speak to them about what you're looking for, the aspects you're willing to compromise on and things you can't live without. Then you can get to planning your trip, it's assumed you’ve been to Portugal at least once before, so combine your local knowledge with a holiday to view some properties.
When deciding who to work with when you go out to Portugal, make sure your agent speaks good English and Portuguese, this will be invaluable when it comes to negotiating the finer details with costs and legalities.
You should always keep an open mind. While you might enjoy beach holidays, would you want to live in a resort during the busier holiday periods? Similarly, if you like the idea of a secluded villa in the countryside make sure you won't miss the abundance of local amenities and local community feel in the winter months.
Once you've considered these aspects and still love the thought of buying property in Portugal, and you’ve found your ideal property, you need to hire a local lawyer to put in an offer (make sure they speak English).
Making an offer to getting the keys
Your lawyer and agent will help you through each step of the process. But essentially these are the stages to go through, from making an offer through to getting the keys to your dream property.
- You might be asked to sign a reservation agreement. While not legally binding, it does show your intention to buy, and the seller should remove the property from the market. You may have to pay a small deposit as a gesture of goodwill. Your lawyer, not the agent will retain the sum.
- All relevant checks are carried out on the property, much like a conveyancer would do in the UK. You’ll obtain a tax identity number (NIF), so you can open a bank account in Portugal. If you choose not to open a bank account at this stage it needn't hold up the process, your currency exchange provider can send the funds directly to your seller or their solicitor and reduce your admin a little.
- If things have gone according to plan so far, you are ready to sign a preliminary contract, or the contrato de promessa de compra e venda (CPCV). Think of this as the exchange of contracts in the UK. You’ll have to pay a non-refundable deposit, usually 10%. If the seller pulls out after this, he’ll have to repay you double the deposit.
- The main purchase funds can be transferred. A foreign exchange specialist like Foreign Currency Direct will send money to Portugal for you.
- About four weeks after signing the CPCV, you’ll need to sign the escritura de compra e venda. Your lawyer will also attend at the local notary’s office. You can appoint a power of attorney to sign on your behalf, but why not enjoy another trip to the country!
- You’ll get the keys once all the fees are paid! Once your name is on the deeds, you’ll have to register at the land and local tax office.
If you’re buying a new build, you may be asked to pay portions of the price during stages of the build.
Extra costs when buying property in Portugal
As a rule of thumb, it’s advisable to have 10% of the purchase price available for extra costs. Usually, these come in at a maximum of 7%, and often less, but it’s as well to be prepared. Your lawyer or agent can advise on each of these. For example, taxes vary for new builds, and if you intend to purchase a holiday or full-time home.
The extra costs to buy a house in Portugal are made up of:
- Legal fees
- Notary and registration fees
- Municipal tax
- Stamp duty
Removal costs come on top, and this can amount to thousands if you’re shipping everything you own to a new property in Portugal.
Extra things to take care of once you move in
Remember to sort the following once you’re settling in:
- Healthcare - There is an adequate public health service available to UK citizens, but you should consider private insurance as an added protection
- Home insurance - Routine for your new home, but properties purchased as holiday accommodation, which remain empty for long periods, will require special insurance
- Taxes and pensions - Confirm what your tax responsibilities and benefits including pensions are back home in the UK.
Now all you need do is relax and enjoy your new life in the sun!