This blog will take you through some of the steps involved in buying a property in Portugal, so you can begin your journey to the beautiful scenery and Mediterranean heat.
There are many reasons to join the 20,000 Brits who own property in Portugal. On the Western tip of Europe, the warm weather is inviting, the pace is much slower, and the cost of living is considerably less. The Portuguese culture revolves around family and as the 3rd most peaceful country in the world according to a recent article written by The Telegraph, there is a lot to look forward to.
Before you start
Good news, if you’re an EU citizen (let’s leave Brexit for another time) then you don’t need to worry about applying for a visa. If you’re planning on staying for more than 3 months though, then you will need a residency document. These can be picked up from the local town hall.
Looking for Portuguese properties
You may already have an area in mind, from visiting before or you may not. Either way, always do your research! Which areas are full of tourists? How far is the city centre? What are the local transport links? Generally, finding a property in Portugal is very similar to looking for a property in the UK and what you want should be in the forefront of your mind. Make a list of everything that’s important to you, set a reasonable budget from comparing property prices in the area and start looking.
The main property searching sites like Rightmove and Zoopla are used worldwide and a very good starting point.
Let’s not forget, looking in the local paper for property listings too.
Time for an Estate Agent?
Before you head off on your viewing trip take the time to find an estate agent that will meet your needs.
First things first, they need to be legal. The profession is heavily regulated in Portugal and all estate agents must train for their profession, be registered with the government and must legally display an official AMI (Associacao de Mediadores Imobiliarios) licence number on their premises. If you need to check out their credentials, you can contact the Instituto da Construcao e do Imobiliario: http://www.impic.pt/impic/. For extra security, you may want to consider an estate agent who is also a member of an international body.
The next step depends wholly on your personal choices and location. If you are looking in an area popular with British expats, then your Estate Agent will more than likely be used to dealing with Brits and speak fluent English. However, if you’re heading into more rural Portugal, an interpreter may be a wise consideration if you’re not fluent in the language.
Now you know they’re legal and there aren’t communications barriers. Get to know them over the phone before you plan your viewing trip, do they understand the types of properties you’re looking for? Do they know the area well? Do they sell many properties in the area? Do they regularly deal with British people buying property in Portugal? Much better to put the feelers out there early and make an informed decision.
Fees involved when buying property in Portugal
Estate agents in Portugal work on behalf of the seller on a commission basis, so it is the seller that pays. This is sometimes added onto the value of the property price to cover the costs, it is worth checking all the details ahead of making an offer.
What costs can you expect to pay?
As with buying a property in the UK, there are still fees for the buyer. Keep these in mind when planning your budget.
- Lawyer and Notary fees: 1-3% of the purchase price
- Land Registry Fees: Can fluctuate based on legal necessity but anything up to €600
- Transfer Tax (known as IMT, which stands for Imposto Municipal sober as Transmissões Onerosas de Imóveis): Anything up to 6% of the tax value of the property
- Stamp Duty: 0.4-0.6% of purchase price: This is a flat rate of 0.8% of the purchase price
The Portuguese viewing trip
Things are heating up! Before you book, it might be worth checking public holidays. There is nothing worse than making a plan to find that nothing is open. Book ahead of time with your Estate Agents, during high seasons they may be incredibly busy.
The Estate Agent has taken the time to get to know your requirements and should have properties lined up for your trip. Take lots of pictures, put together a list of questions prepared based on what is important to you. If you’re viewing lots of properties, this can help to distinguish your favourites and be a good reference point for your discussions back home.
The viewing process is so important, especially if you’re not familiar with the area. Give yourself enough time to experience the day to day and immerse yourself in the culture to get a feel for what it’s really like to live there. Doing everyday activities, like going shopping will give you an idea of how close the local amenities are, as well as the cost of living. Remember, there is no right way to do a viewing trip, so do what works for you. Some people rent before they buy, others take multiple viewing trips.
Appointing a solicitor
You may wish to appoint your own solicitor to work entirely in your interests. Your Portuguese Estate Agent may have some suggestions for local solicitors which can be helpful.
As the process of buying a house in Portugal can be pretty quick, so if you want to appoint your own solicitor it’s recommended to have one in place before you go house hunting.
Business dealings in Portugal can be surprisingly casual, pretty nice on the other end as billing can take time too. However, get your costs up front and in writing from the solicitor to avoid vagueness on what it is you’re spending your money on.
Do you need a Notary?
In a word, yes. A notary represents the state during a transaction, they are employees of the government, so they don’t act for the buyer or vendor. Instead they oversee the paperwork, transaction, taxes and register the property. All documents must be signed in the presence of a Notary from the Promissory Contract to Completion in order to be legally binding.
3 steps of purchasing a property in Portugal
One of the best things about buying a property in Portugal is there is a set procedure that is easy to navigate.
1. Make an offer
We’ll say that it has been accepted for the purpose of the blog, upon which an Offer and Reservation form will need signing along with a refundable holding deposit of around €6,000 to take the property off the market to other buyers. Hurrah, next step.
2. The Promissory Contract
The Promissory Contract (Contrato de Promessa de Compra e Venda) is a legally binding document designed to protect the seller and the buyer. The Promissory Contract is signed and the deposit is made. If the seller withdraws, then they are required to return double the deposited amount. If the buyer pulls out, they don’t receive the deposit back. So, make sure you are certain.
3. Completion and Public Deed (Escritura)
Following the signing of the Promissory Contract it is a matter of settling the timescale for completion and arranging the date and time for the completion contract.
On completion a Public Deed (Escritura) will be signed in front of the Notary, the transaction is now considered lawful and you will proceed to register the property into the Land Registry.
Now it’s time to sit back, relax and soak up the sun in your new home.
How to send money to Portugal
To open a bank account in Portugal you need to have the following documents:
- Photo ID such as a passport as well as your residency card
- Proof of address such as something like a utility bill
- Your tax number and card
Make sure you leave enough time for the funds to arrive in your solicitor’s account; this can take a couple of days so shouldn’t be left until the last minute.
If you are buying a property before you have moved out to Portugal or want to save yourself some time making the transfer from your own account, you can arrange for your foreign exchange company to send the funds directly to your solicitor. It’s worth speaking to your estate agent and solicitor beforehand to find out the best way of avoiding fees for receiving the funds. Check with your foreign currency provider that they will provide a proof of transfer once the payment has been sent for peace of mind.