Buying property in Portugal

by Jose Marc Castro on October 4, 2009

costoflivingPORTUGAL200There are few countries in Europe that have benefited as much as Portugal from the worldwide property boom.  The country has always been very popular with tourists, and very often seems to be a consideration for retired couples looking to relocate overseas.  This has resulted in not only substantial interest in the local property sector, but a massive redevelopment and building program which seems set to continue for some time yet.

As with so many of the sunnier climbs of Europe, Portugal seems to be very popular with the UK Expat population, whether looking to retire overseas, holiday or the younger generation looking to sample life overseas.  Golf courses, apartment blocks and villas seem to be springing up on a regular basis, firmly cementing the tourist trade as a major part of both the Portuguese economy and culture.

Like so many of the recent “hot spots” of Europe, Portugal did become a major target for the time-share scams and other illegal property operations.  To prevent this, an advisory was provided in the Portugal Expat Forum last October 21, 2009:

I would suggest not going on amn arranged viewing trip, it will tie you into one agency and they will dictate what you see, when you see it etc etc, if they are paying for your trip they will apply huge pressure constantly to you to buy, not the best way to vist Portugal and find a new home……avoid this type of pressure, just book a flight with a low cost airline, fly in, rent a car and explore, this way you can look at lots of different regions, speak to lots of different people and agents, this will give you a balanced view of what is available and at what price, rather than a carefully managed viewing trip where you have no freedom.

Its easy to rent a car here, easy to find a place to stay, so why not just do it that way, you will enjoy the trip more, have your free time and be allowed to choose where you want to visit and what property you want to look at.

If you speak with some agents by email before you go, they will advice on places to stay in thier regions, if you need help.

As far as all the does and donts of buying property here in Portugal, if you do your research, ask lots of questions, you will soon understand the buying process and will not be led astray by dodgy sellers.

take a look at the post about Tips for home buyers, some good info for anyone thinking about moving to Portugal or buying property.
Tips for home buyers

good luck with your plans.

The possibility of foreign investors looking elsewhere soon persuaded the Portuguese authorities to act, and all estate agents are now highly regulated and can only operate under license.

The country continues to prosper and the long-term signs are still very positive, although whether property prices can continue to increase at historic rates is another matter.  Average temperatures of 13C in the North and 18C in the South perhaps offer a strong reason for the popularity of the country!

Contents: Property Market Performance in PortugalProperty Costs in Portugal

Market Performance in Portugal

Even though the Portuguese property market has grown and developed over the last 20 years, many investors are still attracted by what they see as real value, a reasonable cost of living and a strong demand for properties.  It has not taken the Portuguese authorities too long to realise that the property market has the potential to substantially increase tax revenue for the country, and they have taken measures to ensure a fairer distribution of the cost of buying and maintaining property.

There are no restrictions on foreign ownership of Portuguese property for non-investment reasons – i.e. if foreign nationals relocate, or someone were to buy a holiday home.  However, the government have introduced stricter laws for speculators looking to make a quick turn in the market, and all investment properties need to be registered with the Portuguese authorities – thereby allowing them to monitor and control the number of speculators active in the market.

While growth over 12% in 2006 is unlikely to be bettered in 2007, especially against the back drop of a possible slowing of the worldwide economy, many analysts are still forecasting impressive price growth of some 10% for 2007. The financial crisis of 2008 though has showcased the resiliency of the Portuguese property market as top notch developments in noted areas of Algarve in the country have chosen recreational developments to residential ones.

Many other places in Portugal have benefited from the continued strength of the property market, and as the market becomes more organized and transparent to buyers, interest is starting to shift away from the holiday “hot spots” into the relatively untouched beauty of the countryside.  The market still has lots to offer for those looking to relocate to the country and there is the opportunity to acquire a fairly priced property that should perform well in the future.

Property Costs in Portugal

Generally, there are no restrictions on foreign ownership of real property that is for personal use in Portugal. Expats recommend places indicated in a post at the Portugal Expat Forum last October 14, 2009:

Some of the most popular sea side cities in Spain are Alicante, Malaga and Almeria. You will find a quite decent size expat community in any of them. Silver Coast in Portugal is lovely; Lisbon is lovely, expensive to buy, but no other city in the country offers you, the same quality of shops, restaurants, bars, museums, theatres, job´s for Portuguese speakers, etch… You have time, just do your homework

Like many European countries there are quite a few tax implications and costs to consider when acquiring property in Portugal.  On average extra costs may add upwards of 15% to the overall, purchase price (although some situations can be very much higher).  Some of the costs you need to consider include :-

  1. Transfer Tax – a sliding scale tax from 0% to 26%.  This has been at the centre of much controversy over the years, and there are moves afoot to lower the charge.
  2. VAT – 19% on all new properties (normally included on the price)
  3. Notary (Solicitor) Fees – Normally around 153 Euros per transaction.
  4. Legal Fees – Conveyancing, etc which normal amount to between 1% and 2% of the purchase price.
  5. Deed Registration – Between 0.75% and 1% of purchase price.
  6. Surveyors Fee – Normally a set fee.
  7. Selling Agent’s Fee – Normally between 5% and 10% of the selling price.
  8. Mortgage Fees – Normally in the region of 1% to set up the arrangement.

It is essential that you check what fees are already included in the price and which fees need to be paid separately, as well as your own capital gains tax situation (should you decide to sell).  It can have a major effect on the final cost!

{ 2 comments… read them below or add one }

Jim Edmeades February 10, 2010 at 8:26 pm

Dear Sir/Madam,
I think you will find this information is pretty out of date.
Hope this is of help.



Ron Hevener March 4, 2010 at 11:31 pm

Can you tell me how to research deeds in Portugal? I am settling an estate and I have reason to believe property was purchased in Portugal, or possibly there was a bank account set up to purchase the property. Any advice would be appreciated.
Best Regards,
Ron Hevener


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