Your Guide to Buying a Property in Portugal
We understand that buying a property in another country can be overwhelming. There’s so much to consider. The unfamiliar legal system, language barrier, and currency are huge factors when you’re considering a new home abroad.
If you’re looking to purchase a property in Portugal request a free copy of our Portugal Property Guide
Inside you’ll find an overview of all the essential information you need along with tips and tricks from our industry experts.
Moving Currency was created to assist customers from all around the world with foreign exchange and money transfer services. If you are interested in purchasing real estate, we specialise in transferring and exchanging funds. Our professional and experienced account managers will advise you on how to get the best deal and save you money in the process.
Moving Currency provide fast, reliable and secure money transfers in a way that suits needs. You can organise your money whenever you want, wherever you want.
Once you’ve read our guide, please feel free to get in touch if you need any further information.
Why Portugal?
Whether you want to move to Portugal permanently, enjoy your retirement, or the property is for work or investment reasons - your dream home in Portugal is closer than you think.
Portugal is a popular location thanks to its amazing climate and friendly culture. It’s a small country with a unique charm and lots to offer. The stunning coastline and enchanting villages are an attraction for over 25 million visitors each year and it’s no surprise some of them choose to stay.
There is a strong holiday let market and the tax incentives make Portugal one of the most attractive destinations for foreigners right now. The Portuguese love it too, and around three-quarters of people who live in Portugal own their own homes, which is higher than in the UK and USA.
Portugal is one of the oldest nations in Europe, so it has a rich history and fascinating culture. It is known for its amazing golf courses, and you’ll never be far away from a fresh food market or an amazing restaurant serving authentic Mediterranean dishes
Along with a low cost of living, Portugal is a laid back and welcoming part of the world. Whether you’re looking for the energy of a larger city or the tranquility of a quiet beach-side sanctuary, Portugal has something for everyone.
Decisions, Decisions
Before you start the exciting property search phase, you need to make sure you have all the essential information about the property acquisition process in Portugal. Your decisions may change along the way, but it’s good to have a basic plan before you get started. Here are some questions to ask yourself:
Let’s talk money
Be clear from the start on your maximum budget and try not to sway from this figure. We advise budgeting an extra 10% for additional costs and fees and put some extra away for plane tickets if you plan to visit the property more than once. Don’t forget that we can help you get the best exchange rates when you’re ready to buy.
Definitely, maybe, or absolutely not!
Think about what the property must-have, and the things you’d be willing to compromise on. Are you set on a pool, or would you like something near the beach? Does the property need parking or more than 3 bedrooms? It’s essential to be clear on what you don’t want just as much as what you do.
Who are you buying this for?
Knowing exactly why you are buying this property and how it will be used will give you clarity and direction. Will this property be for you and your family? Is It an investment for your children’s future? Or will it be rented out or used as a holiday let? Do you see yourself in Villa or an Apartment? Think about the type of property you will be buying and how it fits in with your needs both now and in the future.
Research is key
We all look forward to a holiday each year, but the reality of living in a different country can be overwhelming. It’s a big decision and you need to be as well-informed as you can before you get started. Here are some of the best ways to research your potential new home:
· Talk to professionals
· Engage with online forums and groups
· Read blogs, magazines and newspapers
· Visit the location and spend time in the local community
· Chat to locals and expats about their experience
· Research the local crime rates
· Check the distance to the beach, local shops and the nearest hospital
· What’s on the local ‘things to do’ list?
We know it seems like a lot of questions, but you need to be clear on what you want. The more information you know about your goals, the property, and the local area, the better.
Where to buy
The secret with real estate purchases is location, location, location. So will it be beach, city or countryside? With so many amazing areas in Portugal, how do you choose the right location for you? Here’s our guide to the most popular areas of Portugal:
The Algarve
If you want to live close to some of the best beaches in the world, the Algarve is for you. Amongst the buzz of this popular tourist area, you’ll find amazing restaurants, 5-star resorts and world-class golf courses. Living here does come with the additional price tag but if you want a quieter life, there are plenty of more affordable homes inland. Simply drive into town when you fancy a taste of the glitz and glamour.
Lisbon
Lisbon is a thriving city. Not only because it is a cultural hot spot that draws in millions of visitors, but because it has become such a fashionable place to be. Property prices have increased recently, but it is still a great time to buy. Listed buildings have been transformed into luxury homes giving you the best of character and modern living. If you love to be at the centre of it all then Lisbon is the perfect location.
Costa Verde
Costa Verde translates to ‘Green Coast’ which reflects the damper climate in Northern Portugal creates which wonderfully green landscape that is yet to be discovered by many homeowners. This traditional and historical area of Portugal is home to much of the countries wine and is where you’ll find hidden property gems tucked away amongst the forests and vineyards.
Lagos
Situated in the Barlavento region of the Algarve, Lagos is a future ‘hot spot’ that appeals to people of all ages. It is a great family-friendly area with a beautiful coastline and a Marina full of charming shops and restaurants. It is bustling with activity day and night with beautiful beaches to relax on too.
Silver Coast
It’s here where you will find some of the best value properties in Portugal. The lively expat communities make the towns a popular choice for buyers, although you may be more drawn to the tranquil villages found scattered amongst river beaches, breath-taking mountains, and peaceful lakes.
What to do when you find ‘the one’
So you’ve finally found it. The property you’ve been searching for. So, what are the next steps to securing your dream property?
Negotiate a price
Use the research you have done to stay in control of the negotiations. Have your deposit ready to go and move quickly, but don’t worry if it falls through. Once the offer has been accepted your agent will ask for a small reservation deposit to reserve the home and take it off the market. You will then need to instruct a lawyer who will carry out the necessary checks.
Get an idea of costs
The purchase of a property isn’t just the amount it says on the tag. There are extra costs associated with purchasing a property in Portugal. The main costs you will come across are:
Purchase property Tax (IMT) – This is based on the value of the property and can be up to 8%
Stamp Duty - This is charged at 0.8% and if you are buying with a mortgage there are additional costs on the loan amount.
Notary Fees - Typically fees are between 1% and 2% of the property purchase price.
Wealth Tax – This is applied to properties worth over €600,000 at 0.7% increasing to 1% on properties worth over
VAT - If you’re buying a new-build property in Portugal, IVA (VAT) at 23% applies.
As well as funds for flights, hotels and administrative fees, it’s always a good idea to put extra money away for any unplanned costs along the way too.
Get a good Real Estate Agent
Finding a reliable and ethical Real Estate Agent is essential when purchasing a home. Even more when you’re buying abroad. Choose one that has good reviews and has experience working with international buyers. Use technology as much as possible and ask for updates regularly so you can stay in control of what’s going on.
Lock in your exchange rate
When you know where you stand, give us a call. At Moving Currency, we can lock in your exchange rate today and secure it for your future purchase. The risk of exchanged rates fluctuating throughout your purchase can add extra worry as rates can change daily so give yourself peace of mind by securing your exchange rate with us.
The Legal Bit
There are no restrictions for foreigners that want to buy a property in Portugal, but the process will be very different. There are several steps we advise you to take when purchasing including investing in an English-speaking Portuguese solicitor (known as Avogado) who can oversee the entire process and ensure you fully understand any documentation. Here are the other important parts you need to know, broken down into 5 stages:
Step 1: Get a Fiscal Number (NIF)
You can obtain a Fiscal number even if you are not a resident and it is similar to a National Insurance number in the UK. You’ll need it for almost everything so make this a priority. It can be obtained online or at the Finanças office. However, you will need someone who's permanently resident in Portugal to be your tax representative.
Step 2: The Notary and Lawyer
The Notary (known as Notário) in Portugal represent the Portuguese legal system. They are similar to a solicitor in the UK. There is a fee associated with the Notary and their role is to ensure the paperwork and transfer of ownership is legal and correct. The lawyer is a separate party and will deal with:
The right to sell
That all local taxes on the property are paid
That the property has been legalised
That any recent renovation work complies with regulations
If there are debts against the property
Step 3: Promissory Contract
The next step will be a Promissory Contract that is prepared by your lawyer. You will also pay the agreed deposit on the property which is usually between 10-30%, less the reservation deposit already paid.
Step 4: The Escritura
The Escritura is the final deed and requires both you and the property vendor to be present in front of a Notary. If this is not possible you can sign power of attorney over to your lawyer. The funds are then transferred, and the documents are read and signed by both parties. You will also be required to pay the purchase tax (IMT) at this stage.
Step 5: Registration
Congratulations! The property is now yours and all that is left to do is register the property with the local tax office and the Land Registry which your Lawyer can assist you with.
Enjoy your new Portuguese home!
Moving Currency recommend a wide range of services in Portugal including real estate agents, Lawyers, rental agents and mortgage brokers.
If there is anything else we can help you will, please do not hesitate to get in touch.
As a final note, we’d like to leave you with these 5 take away tips:
Our Top 5 take away tips
1. Never sign anything you don’t understand
2. Hire a trustworthy Real Estate Agent and Lawyer
3. Consider all the pros and cons (and then consider them again!)
4. Visit the area
5. Hire an English-speaking Portuguese solicitor
And don’t forget to enjoy it! While buying a property can be a stressful time, it’s important to celebrate and enjoy the moment. Try to look ahead to the years of enjoyment and potential financial benefits you will have when your home reaches completion.
We wish you luck with your property search!
Have we sparked your interest in buying a property in Portugal? Get in touch today and our team will be happy to answer any questions you have. Contact us on our UK number 0207 435 7052, our USA number 516 548 6485 or email info@movingcurrency.com
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