Looking for a place in Europe with lots of sunshine, right by the water? Then buying property in Portugal can indeed be the right choice for you. But, before you start your property search, you should make sure you have all the essential information about the property acquisition process in Portugal.
Property costs in Portugal offer a range of opportunities.To help you, we put this comprehensive guide together that covers all the necessary information you will need from getting a Portuguese NIF number to property management.
Key Aspects of Buying Property In Portugal
- Buying property in Portugal offers a good investment opportunity for foreigners. The real estate market in Portugal provides various options for investors.
- Investors may take the advantage of cost-effective living, an excellent quality of life, and easily obtainable residency options.
- The average property prices in Portugal range from 3141 to 8389 € per m2. And the best locations for buying a house in Portugal include Lisbon, Porto, The Algarve, Tomar, Peniche, Obidos, or Nazare with their enchanting beauty.
- The Portuguese government supports foreign property ownership including for UK and US citizens. However, individuals need to open a bank account in Portugal and get a Portuguese NIF number from the bank.
- Buying a property in Portugal doesn’t give non-EU/EEA citizens the residency right to live. You have to get a residence permit in order to live there full-time.
- The property tax in Portugal is around 0.3-0.5%, and all foreign investors are required to pay it, regardless of their residency.
Your Guide to Buying Property in Portugal
At Get Golden Visa, we helped many people buy their dream homes in Portugal. We’re happy to help you along your journey now.
Contact us to speak to our real estate advisors who can assist you with your property search in Portugal.
What to Discover in This Guide?
- Top 7 Reasons Why You Should Buy a Property in Portugal
- Can You Buy Property in Portugal as a Foreigner?
- History and Overview of the Property Market
- Types of Property in Portugal
- Where To Buy a Property in Portugal
- How to Find a Property in Portugal
- Step by Step Guide to Buying a House in Portugal
- Requirements for Buying a Real Estate in Portugal as a Foreigner
- Buying Property in Portugal: Pitfalls
- Taxes and Fees
- Property Management
Top 7 Reasons Why You Should Buy a Property in Portugal?
Portugal is a second home to many expats. Here is why:
- The enchanting coast, friendly community, and unparalleled climate make Portugal an ideal destination to relocate to.
- The capital, Lisbon, shines out as one of the most affordable European capitals. It has about half a million residents. Its small size and population give it a unique charm. But, don’t for a second think that it doesn’t offer all the comforts and amenities of a bustling European metropolitan.
- The cities of Porto, Amadora, and the charming coastal towns and villages in the Algarve are also popular among foreigners.
- Portugal’s real estate market has shown consistent growth, with rising property values. Thus, it becomes an attractive long-term investment opportunity.
- The country offers favorable tax regimes. For example the Non-Habitual Resident (NHR) tax status provides significant tax advantages for foreign investors and retirees.
- The country has a stable economy, offering a reliable environment for investors.
- Through different visa programs, it opens doors to the EU and visa-free travel within Schengen Area countries for non-EU/EEA citizens.
Portugal has something to offer for any expat whether you’re looking for the electrifying energy of a larger city or the magic of a quiet rural oasis.
Homeownership in Portugal
Portugal has an unusually high number of homeowners, standing at about 75 percent of the population. This is about 10 percent higher than the US and the UK. A large number of foreigners already live in Portugal. Some are expat professionals, some are retirees, while others are digital nomads. Many of them chose to invest in a second home in the Portugal real estate market. Let’s dive into the complete Portuguese property buying guide for foreigners.
Can You Buy Property in Portugal as a Foreigner?
The simple answer is YES! One of Portugal’s most appealing features is that there are no restrictions on foreigners wishing to purchase property in the country.
Additionally, the Portuguese government has historically encouraged foreign investment in real estate through the Golden Visa program. However, real estate is no longer an eligible investment type for the Portugal Golden Visa as of October 2023. The Portugal Golden Visa, on the other hand, offers various investment options, and you can be eligible for citizenship within five years.
In this guide, we will explore the market history, key locations, and the legal process involved in purchasing property in Portugal.
History and Overview of the Property Market
Like the rest of the world, Portugal suffered through many economic troubles in the past. The real estate market got its share of the 2008 global economic downturn. The average value of homes lost around 11% between 2011 and 2012.
Luckily, after a low point in 2012, the market started to recover in 2013. A successful recovery occurred between 2013 and 2014, and the market began to grow steadily from 2015 onwards. The real estate market closely mirrors the overall Portuguese economy. Since 2016, Lisbon’s real estate has been growing in value at an annual rate of around 2.5 percent. But, that’s not the most impressive market growth in Portugal, some areas such as Santa Maria da Feira have shown unprecedented annual growth of about 12 percent.
As you know, the secret with real estate purchases is location. Some areas in the Portuguese real estate market did not perform as well growth-wise. The towns of Coimbra and Guimaraes exhibited a growth of only about 0.9 percent annually. In our next section, we’re going to discuss property costs in various areas in Portugal.
Property Prices
What you will pay for a property in Portugal will differ dramatically depending on where you choose to buy. Choosing where to buy, of course, depends on your purpose of acquisition. Retirees, for example, often pick the coastal towns in the Algarve or Cascais, while young professionals prefer more urban places such as Lisbon or Porto. In the table below, you’ll find the average price of various neighborhoods per m².
|
District |
City |
Average Price per m² |
|
Baixa and Chiado |
Lisbon |
8,389€ |
|
Lapa and Santos |
Lisbon |
7,279€ |
|
Campo de Ourique |
Lisbon |
6,549€ |
|
Ribeira, Miragaia and Baixa |
Porto |
4,016€ |
|
Alfama |
Lisbon |
7,508€ |
|
Portimão |
Algarve |
3,141€ |
|
Cascais and Estoril |
Cascais |
8,141€ |
|
Carcavelos and Parede |
Cascais |
3,427€ |
Expensive Areas to Buy Property in Portugal
Some of the most expensive places to buy property in Portugal include Lisbon, Cascais, Albufeira and Vilamoura in the Algarve, Madeira, Porto, Sintra, and Comporta. These areas are known for their luxury properties and prime locations. To find exclusive properties, real estate investors can have a look at these regions.
Affordable Areas to Buy Property in Portugal
The price of buying a property in Portugal varies widely, but it’s cheaper on average than in other countries in Western Europe. However, you need to focus on interior regions rather than focusing on popular destinations like Lisbon. For example, places like Portalegre, Castelo Branco, and Guarda offer more affordable real estate options.
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We helped hundreds of clients find the right property in Portugal through our local office. Contact us and talk to one of our experienced team members to help you with any and all your questions.
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Types of Property in Portugal
Portugal is a highly developed country, and its real estate market reflects that. Properties range from studio apartments to large homes with five or more bedrooms. When buying property in Portugal, it’s important to understand certain terms:
- A Casa or Moradia refers to a detached house, often with additional features like a backyard or patio, and typically surrounded by a wall with a front gate.
- Casa Geminada refers to a semi-detached house.
- Condomínios or condos are individual apartment units that share common areas. While they can be expensive, they offer enhanced care and safety.
- Quintas are traditional rustic homes or farms, usually located inland, though some can be found in suburban areas.
- Terreno means land. Some foreigners opt to buy land and build their own homes. If you choose this option, you’ll need to check with the local city hall (Câmara Municipal) to confirm that the land is registered for residential use rather than agricultural purposes.
Apartment Terminology
When looking for an apartment in Portugal, you might find confusing numbers next to the ads such as T0, T1, T2, and so on. These numbers actually signify the number of rooms. So, a T1 would be a one-bedroom apartment, while a T2 would be an apartment with two bedrooms. T0 means a studio apartment. Sometimes you might notice a +1 next to the type, like T2+1; this means that this is a two-bedroom apartment with an extra windowless room.
Where To Buy a Property in Portugal
When buying a property in Portugal, it’s always a good idea to consult an experienced real estate agent. Make sure that it is a property registered agency with a license number acquired by the Portuguese Association of Real Estate agents (Associacao de Mediadores Imobiliarios).
1. Lisbon
Lisbon is the heart and soul of Portugal. Considered one of the cheapest European capitals, it increasingly draws investors and expats alike. Many tech companies and startups started moving to Lisbon, turning the city into a lively economic hub. The real estate market in Lisbon is hot.
The prices in some sections of the city, such as Avenida da Liberdade, Lapa, and Baixa Chiado increased in value dramatically with the incoming demand. Yet, many buyers and investors are still turning their eyes toward these trendy neighborhoods.
If you’re looking for cheaper options, moving further away from the city center helps. Some good examples are the neighborhoods of Amadora and Benfica. Many young professionals choose to live in Cascais and Estoril. It makes a lot of sense to be based in these coastal towns, as they are only 30-40 minutes away from Lisbon by car and cheaper in terms of property prices.
2. Porto
This mystifying fishing town holds a unique mix of history and urbanism. Many Americans moving to Portugal prefer Porto, primarily because the city looks over the Atlantic and offers some top-notch beachfront property.
While buying property in Portugal as an American, you can find many reasons why Porto is a good destination. The property market is showing promising growth, and it’s both a touristic and a commercial hub, which is why it’s considered an advantageous place for investment.
What’s unique about Porto’s real estate market is that it offers various types of properties to choose from. You can, for example, choose the Foz Douro neighborhood, which boasts some of the best Atlantic beachfront properties that you can ever find. On the other hand, if you’re looking for commercial properties, you might want to check the Ribeira neighborhood.
3. The Algarve
Many foreigners who choose to invest or buy property in Portugal are drawn to the Algarve. The world-famous Golden Coast offers an extensive choice of properties, ranging from villas and luxury houses to apartments with ocean views. The Vilamoura is renowned for luxury homes and villas, making it the most expensive area in the Algarve.
Places like Lagos and Albufeira also happen to be on the higher end of the price spectrum. In rural areas like Alcoutim or Monchique, you can find some cheaper opportunities. Remember that it’s never a bad idea to invest in the Algarve, as it has never failed to grow as a touristic and economic pillar in Portugal.
4. The Silver Coast
Many people don’t know that the Algarve is not the only region in Portugal with fantastic beaches and a magical coastline. The Silver Coast, which is situated between Lisbon and Porto, also has some pristine beaches and properties.
If you want a beachfront property, but are unwilling to pay the Algarve’s high ticket prices, then areas on the Silver Coast real estate market places such as Tomar, Peniche, Obidos, or Nazare are right for you.
How to Find a Property in Portugal
Budget is one of the most essential factors to consider when buying a property, and most buyers have a certain budget in mind. Your road to discovering the ideal house is linked to several necessary areas, beginning with the question of how to buy property in Portugal
- You might begin by determining your requirements. A list of your personal requirements and preferences can help you define the necessary elements, such as preferred location, size, budget, amenities, accessibility to specialized facilities like hospitals or schools, and transportation.
- The next step is to set a budget limit. Create a reasonable budget for the property purchase and determine whether you will require a mortgage during the process.
- Then, you’ll know what you are searching for and may narrow your search to only properties in your price range. As a result, you will understand what you are looking for and how much you can afford.
- Where do you want to live? It will have a significant impact on your search to understand the neighborhoods and have a specific goal. So, look for areas that interest you and are compatible with your lifestyle. If you have children, for example, you can seek nearby schools and see if they meet your children’s educational criteria.
Due Diligence
Then, there is due diligence, which is an essential aspect of any real estate deal. Due diligence will help you uncover any potential concerns or obstacles. This way, you will know them before you go through with the deal.
The legal professional you work with can assist you and perform due diligence checks for you. For example, they will address difficulties with the property and the seller. They will also verify and inform you if there is any outstanding debt on the property.
Consult a Professional
If you are looking to buy a property in Portugal, expert advice may save you time and money, bringing peace of mind along the process. At Get Golden Visa, we have an AMI license to practice real estate brokerage.
We have a local office in Portugal with legal professionals and chartered real estate professionals on our team. We can help you understand the real estate market and hold your hand all along the property acquisition process in Portugal. For a free consultation session with our professionals, get in touch with us.
Documents You Need to Acquire
To buy a house in Portugal, you need to have your Portuguese tax number which you or your lawyer can get at the local tax office. In addition, you should have the following documents:
- A photo ID from both parties.
- The Contrato-Promessa De Compra e Venda (CPCV), if available.
- The property’s energy certificate.
- The Imposto de Selo or (payment of the stamp)
- The Caderneta Predial (land register)
Step by Step Guide to Buying a House in Portugal
Now that we have covered the real estate market and where to look for a property, we will walk you step by step through the process. First and foremost, you’ll need to acquire a Portuguese Tax Number (NIF). You can obtain this at any government finance office, and you can find more information on acquiring the NIF here. After you have found a place that suits you, and have had a successful house visit, here’s what you will need to do:
Requirements for Buying a Real Estate in Portugal as a Foreigner
As a foreigner, you’ll need a notary to witness the sales contract when buying a house in Portugal. Additionally, you will require a Portuguese tax number (NIF), which can be obtained at any local tax office. Here are some key points to keep in mind:
Mortgages and Down Payments
It’s advisable to arrange your mortgage early to determine what you can afford and plan your monthly payments. Several factors come into play when securing a mortgage.
What Are the Lending Terms?
To stimulate the economy, many major Portuguese banks offer mortgages to foreign buyers. For residents, most banks provide loans for up to 50 years, while non-residents typically get a loan term of up to 30 years. The maximum age for loan maturity generally falls between 70 and 80 years, depending on the bank.
What About the Deposit or Down Payment?
The loan-to-value ratio varies by lender, with borrowing typically ranging from 60% to 80% of the property’s value. It means a minimum deposit of 20% is required because the borrowing varies from 60% to 80% of the price or valuation price. This depends on the lender, with loans available at a variable rate or fixed rate basis.
You can choose between variable or fixed-rate mortgages.
Variable Rate Mortgage
When buying property in Portugal, opening a bank account is often a necessary step, especially if you’re applying for a mortgage. Portuguese variable rate mortgages are tied to the European Central Bank’s (Euribor) rate, which fluctuates based on the interest rates set by European banks. The Euribor rate influences what Portuguese banks charge for loans. An early repayment penalty of 0.50% is typically imposed, as per Bank of Portugal regulations.
Fixed-Rate Mortgage
A fixed-rate mortgage allows you to have predictable monthly payments, as the interest rate remains the same for the duration of the fixed period, which can range from 0 to 30 years. After this period, the mortgage will automatically switch to a variable rate unless specified otherwise in the agreement. There is an early redemption penalty of 2% for fixed-rate mortgages, as per Bank of Portugal regulations.
How Do I Qualify for a Mortgage?
When applying for a mortgage, banks will evaluate your financial situation and the property’s value.
Financial Position
To assess your financial status, the bank will require proof of income, including:
- Salary
- Investment income
- Pension income
- Dividend payments
- Rental income
They will evaluate your net income and may ask for details about any existing debts and your employment history to ensure you can manage the mortgage payments.
Property Evaluation
The bank will hire an engineer to appraise the property you wish to purchase. Typically, banks will lend between 60% and 80% of the property’s value.
Required Documents for Mortgage
To apply for a mortgage, you’ll need to provide:
- A copy of your passport
- Portuguese Tax Number (NIF)
- Proof of address (e.g., recent utility bill)
- Credit report
- Recent payslips
- Recent bank statements
- Most recent tax return
- Copy of tenancy agreement
Acquiring Home and Life Insurance
Home and life insurance are mandatory in Portugal when applying for a mortgage loan.
Buying Property in Portugal: Pitfalls
Buying real estate in Portugal, like any other process, has some pitfalls which are better to be aware of.
1. Lack of Due Diligence
Non-resident landlords in Portugal require property maintenance. One of the disadvantages of purchasing property in Portugal as a foreigner is the lack of due diligence. To avoid this, ensure that the property is well-maintained, repairs are completed on time, and no legal concerns arise.
It is the job of property managers to examine the property and do due diligence on your behalf.
2. Incorrect Location Choice
Another one is making a wrong choice with the location. To prevent this from happening, you can evaluate the distance, check the environment to see if it matches your desired living expectations, and spend some time in the neighborhood to assess the vibe.
3. Hidden Costs
Unseen expenses, such as notary and registration fees, need to be monitored and reported to avoid problems. So, if you are hesitant, make sure your real estate agent notifies you of any financial needs and has clear communication to minimize surprises.
4. Tax Implications
When it comes to taxes, bear in mind property taxes, maintenance fees, and any other associated expenses that may arise.
Try to comprehend the tax depending on your property’s value. There is a lot to know about this topic, from property transfer tax (IMT) to stamp duty and local property tax (IMI), all of which are included in annual property taxes. Renting out is another situation in which you may encounter the rental income tax, so it is best to seek expert guidance.
5. Lack of Legal Assistance
A qualified lawyer can help you proceed without any legal complications. For example, if you discover that the owner has a legal right to sell the property or if there are outstanding obligations against the property. It is also critical to ensure that the deeds are correct.
The lawyer will go through the legal documents to prevent pitfalls and complicated paperwork. Local regulations may be challenging to navigate. Therefore, it is critical that you follow regional property regulations.
When you keep these potential pitfalls in mind when looking for a house to buy or property management, you may avoid unwanted circumstances and make confident decisions with the help of an expert.
Taxes and Fees
When purchasing property in Portugal, the primary cost you’ll face is the IMT (Property Transfer Tax), which varies based on your circumstances. It can be as high as 10% for non-residents from tax havens or as low as zero for those buying an inexpensive second home. It’s advisable to consult a professional to understand how these taxes apply to your situation.
While agency fees are typically covered by the seller, you may still need to pay the following:
- Imposto Municipal Sobre Transmissões (IMT): This is the property transfer tax, which depends on the property price and can be higher if it’s a second or third home.
- Land Registry and Notary Fees: These fees are usually paid together and range from 0.2% to 1.2% of the property value.
- Stamp Duty: This tax is set at 0.8% of the property’s value.
Learn about the recent housing measures announced in June 2024 here.
Property Management
A real estate agent or a local buyer’s agent in Portugal may help you with your property research and management. With important insights from professionals and access to special listings, you will be guided through the whole property-buying process.
- You can visit the properties you have shortlisted in person. There are some factors to consider, such as the property’s general condition, layout, and any renovation needs. Your buyer’s agent will organize these actual viewings, so you only need to be there when they are planned.
- Another detail is to ask questions about the property, the area, and any other elements of the property during viewings. You might as well write down some questions before heading there to ensure that some of them are addressed when you visit the property.
- Depending on the area, you may also try speaking with neighbors to have a better understanding of the community. It is typical for the place to appear different during the day and night. So you can try to visit both times.
- After all, it is about property pricing and investment prospects. You can evaluate the property based on the possible rental revenue, appreciation, and other economic possibilities in the neighborhood.
The Portuguese legal system is difficult to navigate. If you are a foreigner unfamiliar with Portugal’s legal system, your local real estate lawyer may be very helpful.
Frequently Asked Questions on Buying Property in Portugal
Can US and UK citizens buy property in Portugal?
There aren’t any restrictions on foreign property ownership in Portugal. The government encourages foreign ownership of property there.
How long can I stay in Portugal if I own a property?
Owning a property in Portugal does not automatically grant you the right to stay in the country long-term. As a non-EU/EEA citizen, you can stay for up to 90 days within a 180-day period as a tourist. However, if you wish to stay longer, you would need to apply for a visa or residence permit.
Can I get permanent residency in Portugal if I buy a house?
Simply buying a property in Portugal does not grant permanent residency. However, certain property investments, such as the Golden Visa program, can lead to permanent residency.
Can I move to Portugal if I buy property?
To move permanently, you will need to apply for the appropriate visa or residence permit.
Does Portugal allow dual residency?
Yes, Portugal allows dual residency. If your home country permits dual citizenship, you can hold both Portuguese residency and your original country’s citizenship.
Does owning property in Portugal make you a tax resident?
To be a tax resident in Portugal, you have to spend more than 183 days in a year, and have a permanent home available.
How long can a foreigner live in Portugal?
It can change depending on the type of visa or residence permit they hold.
Do I need a lawyer when buying a property?
Yes, it is advisable. An independent lawyer will act on your behalf and in your interest only.
What are the additional fees when buying a property in Portugal?
This varies depending on the property you purchase. However, for private property, the total purchase cost should be between 7 percent and 10 percent.
Is Portugal a good place to invest in property?
The real estate market in Portugal is inexpensive compared to other Western European capitals. In recent years, it has seen a period of steady growth, which makes it an excellent place to invest.
Is buying property in Portugal a good investment?
Buying a property to rent in Portugal could be an excellent financial investment. It’s worth it now because there’s more demand for accommodation than is currently available, especially in Lisbon and Porto. Also, rental yields during peak tourism season make property rental there a viable investment.
Is it a good time to buy property in Portugal?
When Portuguese banks are once again more willing to offer mortgage loans for the purchase of property, this may be an excellent time to buy. … First, though, it’s worth remembering that the latest figures show that buying real estate in Portugal is certainly more expensive now than before.
Do expats pay taxes in Portugal?
If you’re a non-resident in Portugal, you will only be taxed on Portuguese income, while residents have to pay an international tax. You are considered a resident if you reside for 183 days or more within a consecutive 12 months.
Is property cheaper in Spain or Portugal?
According to the web portal Numbeo, consumer goods in Portugal are 12 percent cheaper than in Spain on average, and restaurant prices are 32 percent lower. Meanwhile, Spain is less expensive than in many European countries.
What is the tax on buying property in Portugal?
As an owner of a property in Portugal, you’ll need to pay the property tax, also known as the Immovable property tax (IMI). Each individual municipal has its rate and is set by the municipal assembly. The Tax rates range from 0.3 percent to 0.45 percent.
Is there a wealth tax in Portugal?
Rates are 0.4% for properties held by companies, 0.7 percent for individuals, and 1 percent for those whose share in Portuguese property goes over €1 million. There is a €600,000 allowance deducted from the value of all Portuguese properties owned by individuals, but not companies.
Can I buy a property with crypto in Portugal?
Yes, Portugal is working on regulations that make it easier to buy a property with crypto in Portugal. For more information, you can contact with our team
