So you've fallen head over heels for Portugal, and you're thinking about buying property here? That's awesome! Portugal offers numerous options for comfortable vacation homes, investment properties, or permanent residences. Buying a house in Portugal is similar to other countries but with some differences. The promissory contract works slightly differently, with legal and structural issues to watch out for. Buying property is easy for most first-time buyers, and there are plenty of resources to help. Working with a lawyer and buyer's agent is always a good idea to ensure a smooth process. In this blog, we’ll guide you in buying property in Portugal.
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Why Consider Buying Property in Portugal
If you're considering buying property abroad, Portugal is a great choice. The stunning coastline, welcoming community, and perfect climate make it a popular destination for expats. Lisbon is an attractive destination, one of the most cost-effective European capitals. It offers all the conveniences of a large city. Other cities like Porto and charming coastal towns in the Algarve are also popular. No matter your preference, Portugal has something to offer every ex-pat, from bustling cities to tranquil rural retreats.
Homeownership in Portugal
Portugal has a strong homeownership culture, with about 75% of its population owning a home. That's higher than the US and UK! Unsurprisingly, many foreigners, whether ex-pats, retirees, or digital nomads, are drawn to the country. The Portuguese real estate market offers much for those looking for a second home or investment property.
Is It Possible to Buy a House in Portugal as a Foreigner?
Absolutely! The great news is that Portugal welcomes foreigners interested in buying homes with no restrictions. The Portuguese government has created the Golden Visa program to encourage foreign investment in real estate. This program allows non-EU citizens to obtain a residence permit in Portugal by investing in property above a certain value. This permission allows the person to live, work, study, and travel in the Schengen area. And after five years, you may even qualify for permanent residence or citizenship in Portugal.
Process of Buying Property in Portugal
The following is a complete process of buying a house in Portugal:
Search Properties Online
Are you ready to embark on finding your dream property in Portugal? The first step towards finding your ideal property is to search for properties online and narrow down the areas and property types. If you want to buy a vacation home, investment property, or move permanently, compare costs to similar properties and locations. Also, see if the area is popular with tourists and people who have moved from other countries. Research others who have bought properties in the same area.
Once you have identified potential properties and areas that fit your needs, it's time to prepare for an in-person viewing in Portugal. Get swept off your feet by the beautiful landscapes, charming architecture, and unique culture Portugal offers.
After shortlisting potential properties that meet your requirements, it's time to visit Portugal and explore the areas yourself. This is an essential step that allows you to ensure that the property and area meet their expectations. When exploring a new area, engaging with the locals is always wise to better understand the culture and atmosphere.
Observing the location at different times of day and throughout various seasons can yield valuable insights. When searching for a property, selecting an experienced real estate agent who can expertly guide you through the entire process is essential. They can advise you on the best neighborhoods and property options based on your requirements and preferences.
Organize Legal and Financial Affairs
Before making an offer on your dream Portuguese property, it's crucial to have your legal and financial matters in order. Consider whether you need a mortgage and how you'll make your payments. If you're paying from a different country, get advice from a currency specialist to get the best exchange rates.
Factor in extra expenses such as legal fees and agency commission. These typically total around 8% of your purchase price. Get the support of a reliable real estate agent and an experienced solicitor.
Make an Offer
Once you've sorted out your finances and hired a solicitor, it's time to make an offer on your chosen Portuguese property. Typically, an agent will represent you and negotiate with the seller on your behalf when making an offer. It's worth starting with a lower offer, as many sellers are willing to accept offers below market value.
You should also negotiate what's included in the purchase to avoid problems later. Once you've agreed upon a provisional offer, it's common to lodge a reservation deposit (usually around 6,000 Euros) with your solicitor to indicate your intention to complete the purchase. Usually, the seller takes the property off the market because of this.
Sale & Purchase Promise Contract
Assuming everything goes smoothly during the due diligence process, it's time to move on to the next stage of the property buying process in Portugal - signing the Promissory Contract of Sale and Purchase (Contrato Promessa de Compra e Venda). This legally binding document outlines all the details of the transaction and conditions of sale, such as stage payments, the maximum term allowed for completion, what is included in the sale, and who the buyers and vendors are. It is typically signed within 14 days of lodging the reservation deposit.
Once the contract is signed, the buyer must make another deposit, usually 30% of the total purchase price agreed, minus the reservation deposit. If the buyer decides to pull out after this negotiation stage, they will forfeit this deposit. Both parties or their respective lawyers can sign the contract based on a power of attorney. Legal representation is crucial when buying to ensure everything is done correctly and informed decisions can be made.
On the day of completion, the Public Deed will be signed in front of a Portuguese Notary, who will check the documents and ensure that the purchaser has paid the Purchase Tax. Once everything is in place, the balance of the purchase price is paid in full, associated costs and fees are paid, and the buyer's lawyer registers the property's new owner into the Land Registry. The purchase is complete.
Buying property in Portugal is relatively straightforward, with no restrictions on ownership. Portugal offers numerous options for comfortable vacation homes, investment properties, or permanent residences, and the country's real estate market has much to offer. Working with an experienced real estate agent and a reliable solicitor is essential to ensure a smooth process of buying a house in Portugal.